G.R. No.

175604 April 10, 2008

THE PEOPLE OF THE PHILIPPINES, appellee,

vs.
SALVADOR PEAFLORIDA, JR., Y CLIDORO, appellant.

DECISION

TINGA, J.:

Subject of this appeal is the Decision1 of the Court of Appeals in CA-G.R. CR No. 01219, dated 31 July 2006,
affirming in toto the judgment2 of the Regional Trial Court of Camarines Sur, Branch 30, in Criminal Case No. T-
1476. The trial court found appellant Salvador Peaflorida y Clidoro guilty of transporting marijuana and sentenced
him to suffer the penalty of reclusion perpetua and to pay a fine of one million pesos.

The Information against appellant reads:

That on or about the 7th day of June, 1994, in the afternoon thereat, at Barangay Huyon-huyon, Municipality
of Tigaon, Province of Camarines Sur, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, with intent to sell, possess and to deliver with the use of a bicycle, did then and
there, willfully, unlawfully and feloniously have in his possession, control and custody, [o]ne bundle
estimated to be one (1) kilo more or less, of dried marijuana leaves (Indian Hemp) without the necessary
license, permit or authority to sell, administer, deliver, give away to another, distribute, dispatch in transit or
transport any prohibited drug from a competent officer as required by law.

ACTS CONTRARY TO LAW.3

Upon arraignment, appellant pleaded not guilty. Trial ensued.

Two police officers and one forensic chemist testified for the prosecution.

SPO3 Vicente Competente (Competente) narrated that in his capacity as chief of the Investigation and Operation
Division of the Philippine National Police (PNP) station in Tigaon, Camarines Sur, that he received a tip from an
asset that a bundle of marijuana was being transported by appellant to Huyon-huyon from another barangay in
Tigaon, Camarines Sur.4 Major Domingo Agravante (Agravante), chief of police of Tigaon, then organized a team
composed of Competente as team leader, SPO2 Ricardo Callo (Callo), SPO1 Portugal, PO3 Pillos and PO2 Edgar
Latam. The team boarded the police mobile car and proceeded to Sitio Nasulan in Barangay Huyon-huyon.5 They
overtook appellant who was on a bicycle. The police officers flagged appellant down and found marijuana wrapped
in a cellophane and newspaper together with other grocery items. The amount of P1550.00 was also found in
appellant's possession. The police officers confiscated these items and took photographs thereof. Appellant was
then brought to the headquarters where he was booked. 6

Callo, who was the chief intelligence officer of Tigaon PNP, recounted that at around 1:00 p.m. on 7 June 1994, he
was called by Competente and was briefed about the operation. While they were in Nasulan, the members of the
police team caught a man riding a bicycle who turned out to be appellant. Callo saw the marijuana wrapped in a
cellophane and newspaper in the bicycle of appellant so the latter was brought to the police headquarters and
turned over to the desk officer. 7

Major Lorlie Arroyo (Arroyo), a forensic chemist at the PNP Crime Laboratory Regional Office No. V, was presented
as an expert witness to identify the subject marijuana leaves. She related that after taking a representative sample
from the 928-gram confiscated dried leaves, the same was tested positive of marijuana. The findings were reflected
in Chemistry Report No. D-26-94 dated 9 June 1994.8

Appellant denied the accusations against him. Appellant, who is a resident of Huyon-huyon, Tigaon, Camarines Sur,
testified that in the morning of 7 June 1994, he first went to the house of Igmidio Miranda (Miranda) in Sagnay,
Camarines Sur. The latter accompanied appellant to the house of Arnel Dadis in San Francisco, Tigaon to buy a
dog. They, however, failed to get the dog; prompting them to leave. On their way home, they met Boyet Obias
(Obias) who requested appellant to bring a package wrapped in a newspaper to Jimmy Gonzales
(Gonzales).9Appellant placed it in the basket in front of his bicycle and Gonzales proceeded to the Tiagon town
proper. He and Miranda parted ways when they reached the place. Appellant dropped by the grocery store and the
blacksmith to get his scythe. On his way home, he was flagged down by the police and was invited to go with them
to the headquarters. Upon inspection of the package in his bicycle, the police discovered the subject marijuana.
Appellant tried to explain that the package was owned by Obias but the police did not believe him. He was sent to
jail.10

Miranda corroborated the testimony of appellant that the two of them went to San Francisco, Tigaon, Camarines Sur
in the morning of 7 June 1994 to buy a dog. On their way back to the town proper of Tigaon, they met Obias who
requested appellant to bring a package, which Miranda thought contained cookies, to Gonzales. Upon reaching the
town proper, they parted ways.11

On 26 October 1998, the trial court rendered judgment finding appellant guilty beyond reasonable doubt of
transporting a prohibited drug, a violation of Section 4, Article II of Republic Act (R.A.) No. 6425, otherwise known as
The Dangerous Drugs Act of 1972, as amended by R.A. No. 7659. The dispositive portion of the decision reads:

WHEREFORE, the accused Salvador Peaflorida[,Jr.] is hereby sentenced to suffer the penalty of
imprisonment of reclusion perpetua and to pay a fine of One Million (P1,000,000.00) Pesos, with subsidiary
imprisonment in accordance with law, in case of insolvency for the fine and for him to pay the costs.

The accused Salvador Peaflorida[,Jr.] shall be entitled to full credit of his preventive imprisonment if he
agreed to abide with the rules imposed upon convicted person, otherwise, he shall be entitled to four-fifth
(4/5) credit thereof.

The subject marijuana consisting of 928 grams, possession thereof being mala prohibita, the court hereby
orders its confiscation in favor of the Government to be destroyed in accordance with law.

This court, however, hereby recommends to His Excellency, the President of the Philippines, through the
Honorable Secretary of Justice to commute the above penalty herein imposed, being too harsh; accordingly,
the said penalty imposed to accused Salvador Peaflorida[,Jr] shall be six (6) years of prision correccional,
as minimum, to eight (8) years and one (1) day of prision mayor, as maximum.

SO ORDERED.12

In convicting appellant, the trial court lent credence to the testimonies of the police officers, thus:

Now going over the evidence adduced, the court is convinced that the accused Salvador Peaflorida[,Jr.]
committed the offense of illegal possession of 928 grams of marijuana, if not, of transporting it, as charged.
This is so, because it appears undisputed that on June 7, 1994, at about 1:00 o'clock in the afternoon police
officers Vicente Competente and his four (4) other co-police officers apprehended the accused Salvador
Peaflorida[,Jr.] on the roadside at Nasulan, Huyon-huyon, Tigaon, Camarines Sur [,] then riding on his
bicycle and placed on the still structure at its front, a thing wrapped in a newspaper and found to be 928
grams of marijuana. No ill-motive has been presented by the defense against the police officers Vicente
Competente and companions by falsely testifying against the accused Salvador Peaflorida, Jr. So, the
conclusion is inevitable that the presumption that the police officers were in the regular performance of their
duties apply. The confiscation of the marijuana subject of the instant case and the arrest of the accused
Salvador Peaflorida[,Jr.] by the said police officers being lawful, having been caught in flagrante delicto,
there is no need for the warrant for the seizure of the fruit of the crime, the same being incidental to the
lawful arrest. Rightly so, because a person caught illegally possessing or transporting drugs is subject to the
warrantless search. Besides, object in the "plain view" of an officer who has the right to be in the position to
have that view are subject to seizure and may be presented as evidence.13

In view of the penalty imposed, the case was directly appealed to this Court on automatic review. Pursuant to our
decision in People v. Mateo,14 however, this case was referred to the Court of Appeals. The appellate court affirmed
appellant's conviction on 31 July 2006.
In a Resolution15 dated 14 February 2007, the parties were given to file their supplemental briefs, if they so desire.
Both parties manifested their intention not to file any supplemental brief since all the issues and arguments have
already been raised in their respective briefs.16

Hence, the instant case is now before this Court on automatic review.

In assailing his conviction, appellant submits that there is doubt that he had freely and consciously possessed
marijuana. First, he claims that the alleged asset did not name the person who would transport the marijuana to
Huyon-huyon. In view of the "vague" information supplied by the asset, the latter should have been presented in
court. Second, upon receipt of the information from the asset, the police officers should have first investigated and
tried to obtain a warrant of arrest against appellant, instead of arbitrarily arresting him. Third, appellant maintains
that he is not aware of the contents of the package. Fourth, upon arrival at the headquarters, the police did not
determine the contents and weight of the package. Fifth, appellant argues that the findings of the forensic expert are
questionable because there is doubt as to the identity of the package examined.17

Prefatorily, factual findings of the trial courts, including their assessment of the witness' credibility are entitled to
great weight and respect by this Court, particularly when the Court of Appeals affirm the findings.18 Indeed, the trial
court is in the best position to assess the credibility of witnesses since it has observed firsthand their demeanor,
conduct and attitude under grilling examination.19 After a review of the records of this case, we find no cogent
reason to disregard this time-honored principle.

We shall retrace the series of events leading to the arrest of appellant and resolve the issues raised by him.

Acting on an asset's tip, a police team was organized to apprehend appellant who was allegedly about to transport
the subject marijuana. Appellant is wrong in concluding that the asset did not name appellant. As early as 16
November 1996, appellant through counsel had already conceded in his Memorandum20 filed with the trial court that
based on the tip, he was about to transport the contraband. It further cited excerpts from the result of the preliminary
investigation conducted by the judge on Competente, and we quote:

Q: Did your [a]sset tell you the place and the person or persons involved?

A: Yes[,]sir.

Q: Where and who?

A: He said that marijuana is being transported from Tigaon town to Bgy. Huyon-huyon by Salvador
Peaflorida, Jr.21

Moreover, on cross-examination, the defense counsel even assumed that according to the asset's tip it was
appellant who was assigned to deliver the contraband. And the witness under cross-examination affirmed it was
indeed appellant who would be making the delivery according to the tip:

Q: Will you inform this Honorable Court who has given you the tip that the accused was going to deliver
that marijuana[?] [W]ho is [this] person?

A: It was a confidential tip.

Q: Now, but [sic] on June 1 you were in your office?

A: Yes[,] sir[.] I was in the office.

Q: Since your office is just near the Municipal Trial Court of Tigaon and you were given a tip that Salvador
Peaflorida[,Jr.] will be delivering marijuana, why did you not get a [w]arrant of [a]rrest?

xxx
 Q: The tip that was given to you that it was Salvador Peaflorida [who] will be dealing marijuana on that
date and according to you Salvador was to travel from a certain town to Tigaon, is that the tip?

A: Yes[,] sir[.] That he would deliver marijuana.

Q: So, at the time that you form[ed] a team, Salvador was nowhere to be seen, you have not seen the
shadow of Salvador?

A: When the tip was given to us[,] I have not seen him[.] [B]ut the tip is he will deliver from Tigaon to
Huyon-huyon, that is why we chased him.22 [Emphasis supplied]

Prescinding from the above argument, appellant insists that the asset should have been presented in court. He
invoked the court ruling in People v. Libag,23 wherein the non-presentation of the informant was fatal to the case of
the prosecution. Libag cannot find application in this case. In that case, the crime charged was the sale
of shabu where the informant himself was a poseur-buyer and a witness to the transaction. His testimony as a
poseur-buyer was indispensable because it could have helped the trial court in determining whether or not the
appellant had knowledge that the bag contained marijuana, such knowledge being an essential ingredient of the
offense for which he was convicted.24 In this case, however, the asset was not present in the police operation. The
rule is that the presentation of an informant in an illegal drugs case is not essential for conviction nor is it
indispensable for a successful prosecution because his testimony would merely be corroborative and cumulative.
Informants are generally not presented in court because of the need to hide their identity and preserve their
invaluable service to the police.25

Competente testified that his team caught up with appellant who was riding a bicycle. He saw the marijuana in a
package which appellant was carrying inside his basket, thus:

Q: And so as the team leader x x x and in connection with the instruction of Chief Domingo Agravante, what
did you do?

A: We used the mobile and proceeded to the place, to the route where the marijuana was being transported.

Q: When you said we to whom are you referring to?

A: The team.

Q: Were you able to go to the place as you said?

A: Yes, sir.

Q: So, upon reaching the place, [sic] what place was that?

A: Sitio Nasulan, Barangay Huyon-huyon, Tigaon, Camarines Sur.

Q: And upon reaching the place together with the other member of the team, what did you find if you found
any?

A: We overtook our suspect while riding in a bicycle and we stopped him.

Q: And did the suspect stop?

A: Yes[,] sir.

Q: Tell us the name of your suspect?

A: Salvador Peaflorida[,] Jr. y Clidoro.

 Q: And after stopping the accused in this case, what else did you do[,] if any[,] together with the team?

A: When we saw the marijuana and other groceries in his bicycle we invited him to the headquarters.26

Callo also confirmed that he saw appellant transporting and in possession of the subject marijuana:

Q: When you reached there[,] what happened next?

A: We have not reached yet [sic] the Huyon-huyon proper. [W]e are in Nasulan when we met the man who
had with him the marijuana.

xxx

Q: After you talked with the person with marijuana[,] what happened next?

A: We saw on his bicycle a wrap[ped] marijuana.

Q: Who was in possession of that?

A: Salvador Peaflorida[,] Jr.

Q: How is that person related to the accused in this case now?

A: He is the one, sir.

Q: Kindly describe to us the marijuana that you are able to tell that it was marijuana?

A: It was wrapped on [cellophane] and newspaper. We saw the edges of the marijuana.

Q: For the [record], kindly describe to us the edges of the marijuana[;] its appearance and color.

A: It was like a shape of ream of coupon bond and the color is green.27

These positive and categorical declarations of two police officers deserve weight and credence in light of the
presumption of regularity accorded to them and the lack of motive on their part to falsely testify against appellant.

Appellant resorts to a challenge on the validity of his arrest predicated on lack of a warrant of arrest. The OSG
correctly justifies the failure to apply for an arrest warrant because at that point, time was of the essence in
appellant's apprehension, noting in the same breath that there is no law requiring investigation and surveillance
upon receipt of tips from assets before conducting police operations.28 The police officers succinctly testified on this
point when cross-examined, viz:

Q: Will you inform this Honorable Court who has given you the tip that the accused was going to deliver that
marijuana, who is that person?

A: It was a confidential tip.

Q: Now, but [sic] on June 1 you were in your office?

A: Yes[,] sir[.] I was in the office.

Q: Since your office is just near the Municipal Trial Court of Tigaon and you were given a tip that Salvador
Peaflorida[,Jr.] will be delivering marijuana, why did you not get a [w]arrant of [a]rrest from the court?
 A: There was no time to apply for a search warrant because just after the information was received, we
proceeded.

xxx

Q: If that is true, Mr. Competente that you were given a tip, the most that you will do is first see the Judge of
Tigaon in as much as you have not seen yet [sic] the said person carrying marijuana?

A: There was no time for us to apply, because the marijuana is being delivered so we have no more time to
see the Judge.

xxx

Q: Are you aware of the law that illegally confiscated marijuana cannot be used in court?

FISCAL SOLANO: Conclusion of law.

A: Yes, sir[.] [I]f it is illegally confiscated it cannot be used in court.

ATTY. CLEDERA: Despite that prohibition under the rules[,] you insisted in apprehending Salvador
Peaflorida[,Jr.] without warrant of arrest inspite of the fact that you know that restriction?

A: Our apprehension was in plain view.

Q: How can you see that it was in open view when according to you the house of Salvador is 120 meters[?]
[H]ow can you see that distance?

A: I could see that because the marijuana was carried in his bicycle, we have seen it.

Q: In what street?

A: Huyon-huyon[,] Sitio Nasulan, Tigaon, Camarines Sur.

Q: About what time did you see him?

A: 1:00 o'clock sir.

x x x29

The police was tipped off at around 1:00 p.m. that appellant was transporting marijuana to Huyon-huyon. Certainly,
they had no time to secure an arrest warrant as appellant was already in transit and already committing a crime. The
arrest was effected after appellant was caught in flagrante delicto. He was seen riding his bicycle and carrying with
him the contraband, hence, demonstrating that a crime was then already being committed. Under the
circumstances, the police had probable cause to believe that appellant was committing a crime. Thus, the
warrantless arrest is justified.

Article II, Section 4 of R.A. No. 6425, as amended by R.A. No. 7659, states:

SEC. 4. Sale, Administration, Delivery, Distribution and Transportation of Prohibited Drugs. The penalty
of reclusion perpetua to death and a fine ranging from five hundred thousand pesos to ten million pesos
shall be imposed upon any person who, unless authorized by law, shall sell, administer, deliver, give away
to another, distribute, dispatch in transit or transport any prohibited drug, or shall act as broker in any of such
transactions. x x x.
Jurisprudence defines "transport" as "to carry or convey from one place to another."30 In the instant case, appellant
was riding his bicycle when he was caught by the police. He admitted that he was about to convey the package,
which contained marijuana, to a certain Jimmy Gonzales.

Appellant, however, denies any knowledge that the package in his possession contained marijuana. But the trial
court rejected his contention, noting that it was impossible for appellant not to be aware of the contents of the
package because "marijuana has a distinct sweet and unmistakable aroma x x x which would have alarmed him."31

Taking one step further, the appellate court went on to declare that being mala prohibita, one commits the crime
under R.A. No. 6425 by mere possession of a prohibited drug without legal authority. Intent, motive or knowledge
thereof is not necessary.32

Appellant, in the main, asserts that he did not freely and consciously possess marijuana.33 In criminal cases
involving prohibited drugs, there can be no conviction unless the prosecution shows that the accused knowingly
possessed the prohibited articles in his person, or that animus possidendi is shown to be present together with his
possession or control of such article. Animus possidendi is only prima facie. It is subject to contrary proof and may
be rebutted by evidence that the accused did not in fact exercise power and control over the thing in question, and
did not intend to do so. The burden of evidence is thus shifted to the possessor to explain absence of animus
possidendi.34

Knowledge refers to a mental state of awareness of a fact. Since courts cannot penetrate the mind of an accused
and thereafter state its perceptions with certainty, resort to other evidence is necessary. Animus possidendi, as a
state of mind, may be determined on a case-to-case basis by taking into consideration the prior or
contemporaneous acts of the accused, as well as the surrounding circumstances. Its existence may and usually
must be inferred from the attendant events in each particular case.35

Appellant failed to satisfactorily establish his lack of knowledge of possession in the instant case. First, the
marijuana was found in the bicycle he himself was driving. Second, the police officers first readily saw in plain view
the edges of the marijuana leaves jutting out of the package. Third, it is incredulous that appellant did not ask Obias
what the package contained when the latter requested him to do the delivery errand since the package was
wrapped in a newspaper and weighed almost one kilogram. The same observation was reached by the trial court:

Finally, it is very hard for the court to accept the claim of the accused Salvador Peaflorida[,Jr.] that he does
not know that the thing wrapped in a newspaper which Boyet Obias, now dead, requested the accused
Peaflorida[,Jr.] would deliver to a certain Jimmy Gonzales whose present whereabouts is not known, was a
marijuana. Its odor is different especially from tobacco. This was observed by the court during the trial of the
case, everytime the wrapper containing the subject marijuana with a volume of 928 grams is brought to court
its odor is noticeable. For the accused Peaflorida[,Jr.], not to notice it is hard to believe. Rightly so,
because marijuana has a distinct sweet and unmistakable aroma very different from (and not nauseating)
unlike tobacco. This aroma would have alarmed him.36

Furthermore, it appeared from the cross-examination of appellant that Obias was an acquaintance. In the ordinary
course of things, one is expected to inquire about the contents of a wrapped package especially when it is a mere
acquaintance who requests the delivery and, more so, when delivery is to a place some distance away.

Anent appellant's claim that the package examined by Arroyo was not the one confiscated from him, the appellate
court had this to say:

SPO3 Competente testified that marijuana was confiscated from appellant. The pictures of appellant,
together with the items seized from him, depict a package containing dry leaves suspected to be marijuana.
On the other hand, Forensic Chemist Arroyo testified that the specimen she examined was delivered to her
by Major Agravante on June 9, 1994 or two days after the apprehension. From these series of events, it can
be inferred that the package confiscated from appellant and the specimen delivered to Forensic Chemist
Arroyo for laboratory examination were one and the same.37

Despite intense grilling from the defense counsel, Arroyo never faltered and was in fact consistent in declaring that
she received the specimen from Agravante on 9 June 1994 and immediately conducted the laboratory test.
Finally, the lower courts correctly sentenced appellant to suffer the penalty of reclusion perpetua and to pay a fine of
one million pesos by virtue of the amendment to Section 4, R.A. No. 6425 by R.A. No. 7659.38

WHEREFORE, in view of the foregoing, the decision of the Regional Trial Court of San Jose, Camarines Sur,
Branch 30 in Criminal Case No. T-1476, finding appellant Salvador Peaflorida y Clidoro guilty beyond reasonable
doubt of violation of Section 4, Article II of R.A. No. 6425 (Dangerous Drugs Act) as amended, and sentencing him
to suffer the penalty of reclusion perpetua and to pay a fine of One Million Pesos (P1,000,000.00), is AFFIRMED
in toto.

MARK SOLEDAD y CRISTOBAL, G.R. No. 184274

Petitioner,
Present:

CARPIO, J.,
Chairperson,
- versus - VELASCO, JR.,*
NACHURA,
ABAD, and
MENDOZA, JJ.

Promulgated:
PEOPLE OF THE PHILIPPINES,
Respondent. February 23, 2011
x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse
and set aside the Court of Appeals (CA) Decision[1] dated June 18, 2008 and Resolution[2] dated
August 22, 2008 in CA-G.R. CR. No. 30603. The assailed Decision affirmed with modification
the September 27, 2006 decision[3] of the Regional Trial Court (RTC), Branch 202, Las Pias City,
finding petitioner Mark C. Soledad guilty beyond reasonable doubt of Violation of Section 9(e),
Republic Act (R.A.) No. 8484, or the Access Devices Regulations Act of 1998; while the assailed
Resolution denied petitioners motion for reconsideration.

The facts of the case, as narrated by the CA, are as follows:

Sometime in June 2004, private complainant Henry C. Yu received a call on his mobile
phone from a certain Tess or Juliet Villar (later identified as Rochelle Bagaporo), a
credit card agent, who offered a Citifinancing loan assistance at a low interest rate.
Enticed by the offer, private complainant invited Rochelle Bagaporo to go to his office
in Quezon City. While in his office, Rochelle Bagaporo indorsed private complainant
to her immediate boss, a certain Arthur [later identified as petitioner]. In their telephone
 conversation, [petitioner] told private complainant to submit documents to a certain
Carlo (later identified as Ronald Gobenchiong). Private complainant submitted various
documents, such as his Globe handyphone original platinum gold card, identification
cards and statements of accounts. Subsequently, private complainant followed up his
loan status but he failed to get in touch with either [petitioner] or Ronald Gobenchiong.

During the first week of August 2004, private complainant received his Globe
handyphone statement of account wherein he was charged for two (2) mobile phone
numbers which were not his. Upon verification with the phone company, private
complainant learned that he had additional five (5) mobile numbers in his name, and
the application for said cellular phone lines bore the picture of [petitioner] and his
forged signature. Private complainant also checked with credit card companies and
learned that his Citibank Credit Card database information was altered and he had a
credit card application with Metrobank Card Corporation (Metrobank).

Thereafter, private complainant and Metrobanks junior assistant manager Jefferson

Devilleres lodged a complaint with the National Bureau of Investigation (NBI) which
conducted an entrapment operation.

During the entrapment operation, NBIs Special Investigator (SI) Salvador Arteche
[Arteche], together with some other NBI operatives, arrived in Las Pias around 5:00
P.M. [Arteche] posed as the delivery boy of the Metrobank credit card. Upon reaching
the address written on the delivery receipt, [Arteche] asked for Henry Yu. [Petitioner]
responded that he was Henry Yu and presented to [Arteche] two (2) identification cards
which bore the name and signature of private complainant, while the picture showed
the face of [petitioner]. [Petitioner] signed the delivery receipt. Thereupon, [Arteche]
introduced himself as an NBI operative and apprehended [petitioner]. [Arteche]
recovered from [petitioner] the two (2) identification cards he presented to [Arteche]
earlier.[4]

Petitioner was thus charged with Violation of Section 9(e), R.A. No. 8484 for possessing a
counterfeit access device or access device fraudulently applied for. The accusatory portion of the
Information reads:

That on or about the 13th day of August 2004, or prior thereto, in the City of Las Pias,
and within the jurisdiction of this Honorable Court, the above-named accused,
conspiring and confederating with certain Rochelle Bagaporo a.k.a. Juliet Villar/Tess
and a certain Ronald Gobenciong a.k.a. Carlo and all of them mutually helping and
aiding each other, did then and there willfully, unlawfully and feloniously defraud
complainant HENRY YU by applying a credit card, an access device defined under
R.A. 8484, from METROBANK CARD CORPORATION, using the name of
complainant Henry C. Yu and his personal documents fraudulently obtained from him,
and which credit card in the name of Henry Yu was successfully issued and delivered
 to said accused using a fictitious identity and addresses of Henry Yu, to the damage and
prejudice of the real Henry Yu.

CONTRARY TO LAW.[5]

Upon arraignment, petitioner pleaded not guilty. Trial on the merits ensued. After the
presentation of the evidence for the prosecution, petitioner filed a Demurrer to Evidence, alleging
that he was not in physical and legal possession of the credit card presented and marked in
evidence by the prosecution. In an Order dated May 2, 2006, the RTC denied the Demurrer to
Evidence as it preferred to rule on the merits of the case.[6]

On September 27, 2006, the RTC rendered a decision finding petitioner guilty as charged,
the dispositive portion of which reads:

In the light of the foregoing, the Court finds accused Mark Soledad y
Cristobal a.k.a. Henry Yu, Arthur GUILTY beyond reasonable doubt of violation of
Section 9(e), Republic Act 8484 (Access Device Regulation Act of 1998). Accordingly,
pursuant to Section 10 of Republic Act 8484 and applying the Indeterminate Sentence
Law, said accused is hereby sentenced to suffer an imprisonment penalty of six (6) years
of prision correccional, as minimum, to not more than ten (10) years of prision mayor,
as maximum. Further, accused is also ordered to pay a fine of Ten Thousand Pesos
(P10,000.00) for the offense committed.

SO ORDERED.[7]

On appeal, the CA affirmed petitioners conviction, but modified the penalty imposed by the RTC
by deleting the terms prision correccional and prision mayor.

Hence, this petition raising the following issues:

(1) Whether or not the Information is valid;

(2) Whether or not the Information charges an offense, or the offense petitioner was
found guilty of;

(3) Whether or not petitioner was sufficiently informed of the nature of the accusations
against him;

(4) Whether or not petitioner was legally in possession of the credit card subject of
the case.[8]
The petition is without merit.
 Petitioner was charged with Violation of R.A. No. 8484, specifically Section 9(e), which
reads as follows:
Section 9. Prohibited Acts. The following acts shall constitute access device
fraud and are hereby declared to be unlawful:

xxxx

(e) possessing one or more counterfeit access devices or access devices

fraudulently applied for.
Petitioner assails the validity of the Information and claims that he was not informed of the
accusation against him. He explains that though he was charged with possession of an access
device fraudulently applied for, the act of possession, which is the gravamen of the offense, was
not alleged in the Information.

We do not agree.

Section 6, Rule 110 of the Rules of Criminal Procedure lays down the guidelines in
determining the sufficiency of a complaint or information. It states:

SEC. 6. Sufficiency of complaint or information. A complaint or information is

sufficient if it states the name of the accused; the designation of the offense given by
the statute; the acts or omissions complained of as constituting the offense; the name of
the offended party; the approximate date of the commission of the offense; and the place
where the offense was committed.

In the Information filed before the RTC, it was clearly stated that the accused is petitioner Mark
Soledad y Cristobal a.k.a. Henry Yu/Arthur. It was also specified in the preamble of the
Information that he was being charged with Violation of R.A. No. 8484, Section 9(e) for
possessing a counterfeit access device or access device fraudulently applied for. In the accusatory
portion thereof, the acts constituting the offense were clearly narrated in that [petitioner], together
with other persons[,] willfully, unlawfully and feloniously defrauded private complainant by
applying [for] a credit card, an access device defined under R.A. [No.] 8484, from Metrobank
Card Corporation, using the name of complainant Henry C. Yu and his personal documents
fraudulently obtained from him, and which credit card in the name of Henry Yu was successfully
issued, and delivered to said accused using a fictitious identity and addresses of Henry Yu, to the
damage and prejudice of the real Henry Yu. Moreover, it was identified that the offended party
was private complainant Henry Yu and the crime was committed on or about the 13th day of
August 2004 in the City of Las Pias. Undoubtedly, the Information contained all the necessary
details of the offense committed, sufficient to apprise petitioner of the nature and cause of the
accusation against him. As aptly argued by respondent People of the Philippines, through the
Office of the Solicitor General, although the word possession was not used in the accusatory
portion of the Information, the word possessing appeared in its preamble or the first paragraph
thereof. Thus, contrary to petitioners contention, he was apprised that he was being charged with
violation of R.A. No. 8484, specifically section 9(e) thereof, for possession of the credit card
fraudulently applied for.

The Courts discussion in People v. Villanueva[9] on the relationship between the preamble
and the accusatory portion of the Information is noteworthy, and we quote:

The preamble or opening paragraph should not be treated as a mere aggroupment

of descriptive words and phrases. It is as much an essential part [of] the Information as
the accusatory paragraph itself. The preamble in fact complements the accusatory
paragraph which draws its strength from the preamble. It lays down the predicate for
the charge in general terms; while the accusatory portion only provides the necessary
details. The preamble and the accusatory paragraph, together, form a complete whole
that gives sense and meaning to the indictment. x x x.

xxxx

Moreover, the opening paragraph bears the operative word accuses, which sets
in motion the constitutional process of notification, and formally makes the person
being charged with the commission of the offense an accused. Verily, without the
opening paragraph, the accusatory portion would be nothing but a useless and miserably
incomplete narration of facts, and the entire Information would be a functionally sterile
charge sheet; thus making it impossible for the state to prove its case.

The Information sheet must be considered, not by sections or parts, but as one
whole document serving one purpose, i.e., to inform the accused why the full panoply
of state authority is being marshaled against him. Our task is not to determine whether
allegations in an indictment could have been more artfully and exactly written, but
solely to ensure that the constitutional requirement of notice has been fulfilled x x x.[10]
Besides, even if the word possession was not repeated in the accusatory portion of the
Information, the acts constituting it were clearly described in the statement [that the] credit card
in the name of Henry Yu was successfully issued, and delivered to said accused using a fictitious
identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu. Without
a doubt, petitioner was given the necessary data as to why he was being prosecuted.

Now on the sufficiency of evidence leading to his conviction.

Petitioner avers that he was never in possession of the subject credit card because he was
arrested immediately after signing the acknowledgement receipt. Thus, he did not yet know the
contents of the envelope delivered and had no control over the subject credit card.[11]
 Again, we find no value in petitioners argument.

The trial court convicted petitioner of possession of the credit card fraudulently applied
for, penalized by R.A. No. 8484. The law, however, does not define the word possession. Thus,
we use the term as defined in Article 523 of the Civil Code, that is, possession is the holding of a
thing or the enjoyment of a right. The acquisition of possession involves two elements:
the corpus or the material holding of the thing, and the animus possidendi or the intent to possess
it.[12] Animus possidendi is a state of mind, the presence or determination of which is largely
dependent on attendant events in each case. It may be inferred from the prior or contemporaneous
acts of the accused, as well as the surrounding circumstances.[13]

In this case, prior to the commission of the crime, petitioner fraudulently obtained from
private complainant various documents showing the latters identity. He, thereafter, obtained
cellular phones using private complainants identity. Undaunted, he fraudulently applied for a
credit card under the name and personal circumstances of private complainant. Upon the delivery
of the credit card applied for, the messenger (an NBI agent) required two valid identification
cards. Petitioner thus showed two identification cards with his picture on them, but bearing the
name and forged signature of private complainant. As evidence of the receipt of the envelope
delivered, petitioner signed the acknowledgment receipt shown by the messenger, indicating
therein that the content of the envelope was the Metrobank credit card.

Petitioner materially held the envelope containing the credit card with the intent to
possess. Contrary to petitioners contention that the credit card never came into his possession
because it was only delivered to him, the above narration shows that he, in fact, did an active part
in acquiring possession by presenting the identification cards purportedly showing his identity as
Henry Yu. Certainly, he had the intention to possess the same. Had he not actively participated,
the envelope would not have been given to him. Moreover, his signature on the acknowledgment
receipt indicates that there was delivery and that possession was transferred to him as the
recipient. Undoubtedly, petitioner knew that the envelope contained the Metrobank credit card,
as clearly indicated in the acknowledgment receipt, coupled with the fact that he applied for it
using the identity of private complainant.

Lastly, we find no reason to alter the penalty imposed by the RTC as modified by the CA.
Section 10 of R.A. No. 8484 prescribes the penalty of imprisonment for not less than six (6) years
and not more than ten (10) years, and a fine of P10,000.00 or twice the value of the access device
obtained, whichever is greater. Thus, the CA aptly affirmed the imposition of the indeterminate
penalty of six years to not more than ten years imprisonment, and a fine of P10,000.00.
 WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court
of Appeals Decision dated June 18, 2008 and Resolution dated August 22, 2008 in CA-G.R. CR.
No. 30603 are AFFIRMED.

SO ORDERED.

[G.R. No. 109595. April 27, 2000]

CRISTETA CHUA-BURCE, petitioner, vs. COURT OF APPEALS AND PEOPLE OF

THE PHILIPPINES, respondents.

DECISION

QUISUMBING, J.:

Subject of the present appeal by certiorari is the decision dated November 27, 1992 of the
Court of Appeals in CA-G.R. CR No. 12037, (a) affirming in toto the trial courts decision
finding petitioner guilty of estafa, and (b) denying her Motion for Reconsideration in a
Resolution dated March 25, 1993. The Regional Trial Court, Calapan, Oriental Mindoro,
Branch 40, rendered a joint decision finding petitioner guilty of estafa under Article 315,
par. 1 (b) of the Revised Penal Code, in Criminal Case No. C-2313, and likewise found
petitioner liable for the amount of P150,000.00 in Civil Case No. R-3733. Only the criminal
case is before us for review. h Y

The uncontroverted facts, as found by the Court of Appeals, are as follows:

On August 16, 1985, Ramon Rocamora, the Manager (of Metropolitan Bank and Trust
Company, Calapan Branch, Oriental Mindoro) requested Fructuoso Peaflor, Assistant
Cashier, to conduct a physical bundle count of the cash inside the vault, which should total
P4,000,000.00, more or less. During this initial cash count, they discovered a shortage of
fifteen bundles of One Hundred Pesos denominated bills totalling P150,000.00. The One
Hundred Peso bills actually counted was P3,850,000.00 as against the balance of
P4,000,000.00 in the Cash in Vault (CIV) Summary Sheet, or a total shortage of
P150,000.00. The next day, to determine if there was actually a shortage, a re-verification
of the records and documents of the transactions in the bank was conducted. There was
still a shortage of P150,000.00.

The bank initiated investigations totalling four (4) in all. The first was by Ramon
Rocamora, the Manager. The second was by the banks internal auditors headed by
Antonio Batungbakal. Then, the banks Department of Internal Affairs conducted an
independent investigation. Thereafter, the National Bureau of Investigation (NBI) came in
to investigate. All of these investigations concluded that there was a shortage of
P150,000.00, and the person primarily responsible was the banks Cash Custodian,
Cristeta Chua-Burce, the herein accused. Jksm
On November 4, 1985, unable to satisfactorily explain the shortage of P150,000.00, the
accuseds service with the bank was terminated.

To recover the missing amount, Metropolitan Bank and Trust Company (Metrobank) filed
a Civil Case for Sum of Money and Damages with Preliminary Attachment and
Garnishment docketed as Civil Case No. R-3733 against petitioner and her husband,
Antonio Burce. Esm

Prior to the filing of the Answer, the following Information for Estafa was filed against
petitioner:

"That on or about the 16th day of August 1985, and for a period prior and
subsequent thereto, the above-named accused, with unfaithfulness or abuse
of confidence, and with intent to defraud, did then and there wilfully,
unlawfully, and feloniously, in her capacity as Cash Custodian of the
Metrobank, Calapan Branch, take from the Banks Vault the amount of ONE
HUNDRED FIFTY THOUSAND (P150,000.00) PESOS, which is under her
direct custody and/or accountability, misappropriate and convert to her own
personal use and benefit, without the knowledge and consent of the offended
party, despite repeated demands for her to account and/or return the said
amount, she refused and failed, and still fails and refuses to the damage and
prejudice of the Metrobank, Calapan Branch, in the aforementioned amount of
ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS.

Contrary to Article 315 of the Revised Penal Code.

Calapan, Oriental Mindoro, November 27, 1985." [1]

Both civil and criminal cases were raffled to the same branch of the Regional Trial Court of
Calapan, Oriental Mindoro, Branch 40. Esmsc

Thereafter, petitioner moved for the suspension of the criminal case on the ground of the
existence of a prejudicial question, viz., that the resolution of the civil case was
determinative of her guilt or innocence in the criminal case. The trial court, over the
[2]

vehement opposition of the private and public prosecutors, granted the motion and
suspended the trial of the criminal case. On petition for certiorari to the Court of Appeals,
[3]

the appellate court ruled that there was no prejudicial question. [4]

Petitioner was arraigned and assisted by counsel de parte, entered a plea of not
guilty. While the trial of the criminal case was suspended, the trial of the civil case
[5]

continued. At the time of arraignment, the civil case was already submitted for decision.
Hence, during the pre-trial conference of the criminal case, the parties agreed to adopt
their respective evidence in the civil case as their respective evidence in the criminal
case. The trial court ordered the parties to submit their written agreement pursuant to
[6]

Section 4 of Rule 118 of the Rules of Court. Thereafter, petitioner, duly assisted by her
[7]

counsel, with the conforme of the public prosecutor, entered into the following pre-trial
agreement: [8]
 "COMES NOW, the accused, assisted by counsel, and unto this Honorable
Court most respectfully submits this Pre-Trial agreement:

1. That the evidence already adduced by the plaintiff in Civil Case No. R-3733
will be adopted by the prosecution as its evidence in Criminal Case No. C-
2313;

2. That the evidence to be adduced by the defendant in Civil Case No. R-3733
will also be adopted as evidence for the defense in Criminal Case No. C-2313.

WHEREFORE, premises considered, it is prayed that the foregoing pre-trial

agreement be admitted in compliance with the Order of this Court dated April
19, 1988.

RESPECTFULLY SUBMITTED.

Calapan, Oriental Mindoro, August 20, 1990.

CRISTETA CHUA-BURCE (sgd.)

Accused

Assisted By:

RODRIGO C. DIMAYACYAC (sgd.)

Defense Counsel

San Vicente, Calapan

Oriental Mindoro

IBP O.R. No. 292575

May 11, 1990

Quezon City

With Conformity:

EMMANUEL S. PANALIGAN (sgd.)

Prosecuting Fiscal

Pursuant to the pre-trial agreement, the public prosecutor filed a Motion to Adopt
Evidence. Both the pre-trial agreement and said Motion were granted by the trial court.
[9] [10]
On March 18, 1991, the trial court rendered a consolidated decision finding petitioner (a)
[11]

guilty of estafa under Article 315 (1) (b) of the Revised Penal Code in the criminal case,
and (b) liable for the amount of P150,000.00 in the civil case. The dispositive portion of
decision provides -

- In Criminal Case No. C-2313 -

WHEREFORE, the Court hereby finds the accused Cristeta Chua-Burce guilty
beyond reasonable doubt of the crime of Estafa, punishable under Art. 315,
paragraph 1 (b) of the Revised Penal Code, which imposes a penalty
of prision correccional in its maximum period to prision mayor in its minimum
period but considering that the amount involved exceeds P22,000.00, the
penalty provided for shall be imposed in its maximum period, adding one year
for each additional P10,000.00, but the total amount not to exceed twenty
years. Esmmis

Applying the Indeterminate Sentence Law, the imposable penalty shall be one
degree lower as minimum of arresto mayor with a penalty range of One Month
and One Day to Six Months, as minimum to prision mayor in its maximum
period, as maximum, or a penalty of Six years to Twelve Years. Considering
the mitigating circumstance of voluntary surrender, the court hereby imposes
upon the accused to suffer imprisonment from SIX (6) MONTHS of arresto
mayor in its maximum period, as minimum, to EIGHT (8) YEARS of prision
mayor, in its minimum period, as maximum. The civil liability shall not be
imposed in this case due to a separate civil action. Esmso

- In Civil Case No. R-3733 -

WHEREFORE, judgment is hereby rendered in favor of the plaintiff

Metrobank, ordering defendants Cristeta Chua-Burce and Antonio Burce,
spouses, to pay Metrobank the amount of P150,000.00 representing the
amount misappropriated with the legal rate of six percent (6%) per annum
from August 15, 1985 until fully paid and to pay the costs of suit.

SO ORDERED."

Petitioner seasonably appealed her conviction in the criminal case to the Court of
Appeals. Petitioner filed a separate appeal in the civil case.

In a decision dated November 27, 1992, the Court of Appeals affirmed the trial courts
[12]

decision in toto. Petitioners Motion for Reconsideration was likewise denied. Hence, the
[13]

recourse to this Court. Msesm

Petitioner raises the following issues: [14]

1. IS THE RESULT OF POLYGRAPH EXAMINATION ADMISSIBLE IN

EVIDENCE?
 2. CAN THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT
ADMIT IN EVIDENCE THE EVIDENCE WHICH WAS ALREADY DENIED
ADMISSION IN THE ORDER OF THE FORMER JUDGE OF THE SAME
COURT?

3. DOES PRIMA FACIE PRESUMPTION OF MISAPPROPRIATION OR

CONVERSION EXISTS (sic) AGAINST THE PETITIONER WHEN THERE
WERE OTHER PERSONS WHO HAD DIRECT AND GREATER ACCESS IN
THE CASH-IN-VAULT?

4. IS RULE 111 SECTION 2 (a) OF THE REVISED RULES ON CRIMINAL

PROCEDURE APPLICABLE IN (sic)THE CASE AT BAR?

5. WAS THERE A VALID PROCEEDING WHEN THE FISCAL WAS NOT

ACTUALLY PRESENT AND DID NOT CONTROL AND SUPERVISE THE
PROSECUTION OF THE CASE? Exsm

In gist, (1) petitioner contends that the trial court erred in taking into account the results of
the polygraph examination as circumstantial evidence of guilt considering the inherent
unreliability of such tests, and the fact that the previous trial judge who handled the case
already ruled such evidence as inadmissible; (2) petitioner insists that there can be no
presumption of misappropriation when there were other persons who had access to the
cash in vault; and (3) petitioner questions the validity of the trial of criminal case
considering that the pre-trial agreement dispensed with the intervention of the public
prosecutor in a full-blown trial of the criminal case. Kyle

The Office of the Solicitor General, for the State, contends that the guilt of petitioner has
been proven beyond reasonable doubt by the following facts which were duly established
during trial - first, petitioner was the cash custodian who was directly responsible and
accountable for the cash-in-vault. Second, the other persons who had access to the vault
facilities never used the duplicate keys to open the safety deposit boxes and the cash safe
from where the P100.00 bill denominations were located. In fact, the duplicate keys were
offered in evidence still in their sealed envelopes. Third, alterations and superimposition
on the cash-in-vault summary sheet were made by petitioner to cover the cash shortage.
Lastly, there was a valid joint trial of the civil and criminal cases.

The crucial issues, in our mind, are (1) whether there was a valid trial of the criminal case,
and (2) whether the elements of the crime of estafa under Article 315 (1) (b) of the
Revised Penal Code were duly proven beyond reasonable doubt. Kycalr

First, petitioner assails the validity of the proceedings in the trial court on the ground that
the public prosecutor did not intervene and present any evidence during the trial of the
criminal case. The records clearly show that the pre-trial agreement was prepared by
petitioner with the conforme of the public prosecutor. Thereafter, petitioner filed
a consolidated memorandum for both civil and criminal cases. Section 5 of Rule
110 requires that all criminal actions shall be prosecuted under the direction and control
[15]

of the public prosecutor. The rationale behind the rule is "to prevent malicious or
unfounded prosecutions by private persons." The records show that the public
[16]

prosecutor actively participated in the prosecution of the criminal case from its inception. It
was during pre-trial conference when the parties agreed to adopt their respective evidence
in the civil case to the criminal case. This is allowed under Section 2 (e) of Rule 118 of the
Rules of Court which provides that during pre-trial conference, the parties shall consider
[17]

"such other matters as will promote a fair and expeditious trial." The parties, in compliance
with Section 4 of Rule 118, reduced to writing such agreement. Petitioner, her counsel,
[18]

and the public prosecutor signed the agreement. Petitioner is bound by the pre-trial
agreement, and she cannot now belatedly disavow its contents. [19]

On the second issue. Petitioner was charged with the crime of estafa under Article 315 (1)
(b) of the Revised Penal Code. In general, the elements of estafa are: (1) that the
[20]

accused defrauded another (a) by abuse of confidence or (b) by means of deceit; and (2)
that damage or prejudice capable of pecuniary estimation is caused to the offended party
or third person. Deceit is not an essential requisite of estafa with abuse of confidence,
[21]

since the breach of confidence takes the place of the fraud or deceit, which is a usual
element in the other estafas. [22]

The elements of estafa through conversion or misappropriation under Art. 315 (1) (b) of
the Revised Penal Code are: [23]

(1) that personal property is received in trust, on commission, for

administration or under any other circumstance involving the duty to make
delivery of or to return the same, even though the obligation is guaranteed by
a bond;

(2) that there is conversion or diversion of such property by the person who
has so received it or a denial on his part that he received it;

(3) that such conversion, diversion or denial is to the injury of another and

(4) that there be demand for the return of the property.

Have the foregoing elements been met in the case at bar? We find the first element
absent. When the money, goods, or any other personal property is received by the
offender from the offended party (1) in trust or (2) on commission or (3) for administration,
the offender acquires both material or physical possession and juridical possession of the
thing received. Juridical possession means a possession which gives the transferee a
[24]

right over the thing which the transferee may set up even against the owner. In this case,
[25]

petitioner was a cash custodian who was primarily responsible for the cash-in-vault. Her
possession of the cash belonging to the bank is akin to that of a bank teller, both being
mere bank employees. Calrky

In People v. Locson, the receiving teller of a bank misappropriated the money received
[26]

by him for the bank. He was found liable for qualified theft on the theory that the
possession of the teller is the possession of the bank. We explained in Locson that -
 "The money was in the possession of the defendant as receiving teller of the
bank, and the possession of the defendant was the possession of the bank.
When the defendant, with grave abuse of confidence, removed the money
and appropriated it to his own use without the consent of the bank, there was
the taking or apoderamiento contemplated in the definition of the crime of
theft."
[27]

In the subsequent case of Guzman v. Court of Appeals, a travelling sales agent

[28]

misappropriated or failed to return to his principal the proceeds of things or goods he was
commissioned or authorized to sell. He was, however, found liable for estafa under Article
315 (1) (b) of the Revised Penal Code, and not qualified theft. In the Guzman case, we
explained the distinction between possession of a bank teller and an agent for purposes of
determining criminal liability -

"The case cited by the Court of Appeals (People vs. Locson, 57 Phil. 325), in
support of its theory that appellant only had the material possession of the
merchandise he was selling for his principal, or their proceeds, is not in point.
In said case, the receiving teller of a bank who misappropriated money
received by him for the bank, was held guilty of qualified theft on the theory
that the possession of the teller is the possession of the bank. There is an
essential distinction between the possession by a receiving teller of funds
received from third persons paid to the bank, and an agent who receives the
proceeds of sales of merchandise delivered to him in agency by his principal.
In the former case, payment by third persons to the teller is payment to the
bank itself; the teller is a mere custodian or keeper of the funds received, and
has no independent right or title to retain or possess the same as against the
bank. An agent, on the other hand, can even assert, as against his own
principal, an independent, autonomous, right to retain money or goods
received in consequence of the agency; as when the principal fails to
reimburse him for advances he has made, and indemnify him for damages
suffered without his fault (Article 1915, [N]ew Civil Code; Article 1730,
old)." Mesm

Petitioner herein being a mere cash custodian had no juridical possession over the
missing funds. Hence, the element of juridical possession being absent, petitioner cannot
be convicted of the crime of estafa under Article 315, No. 1 (b) of the Revised Penal
Code. [29]

WHEREFORE, the petition is hereby granted and petitioner is ACQUITTED of the crime of
estafa under Article 315 (1) (b) of the Revised Penal Code. Petitioner is ordered
RELEASED from custody unless she is being held for some other lawful cause. No
costs. Slx

SO ORDERED.
THIRD DIVISION
 G.R. No. 204626, June 09, 2014

PAUL P. GABRIEL, JR., IRENEO C. CALWAG, THOMAS L. TINGGA-AN, AND THE HEIRS OF JULIET B.
PULKERA, Petitioners, v. CARMELING CRISOLOGO, Respondent.

DECISION

MENDOZA, J.:

Assailed in this petition for review on certiorari under Rule 45 is the June 14, 2012 Decision1 of the Court of Appeals (CA) and
its November 14, 2012 Resolution2 which reversed the April 18, 2011 Decision3 of the Regional Trial Court, Branch 6, Baguio
City (RTC), and reinstated the September 15, 2009 Decision4 of the Municipal Trial Court in Cities, Branch 1, Baguio
City (MTCC), in Civil Case No. 13209, a complaint for recovery of possession.

The Facts

Records show that Carmeling Crisologo (Crisologo), represented by her attorney-in-fact, Pedro Isican (Isican), filed her
complaint5 for Recovery of Possession and/or Ownership with Damages against Juliet B. Pulkera, Paul P. Gabriel, Ireneo C.
Calwag, and Thomas L. Tingga-an (petitioners) before the MTCC.

Crisologo alleged, among others, that she was the registered owner of two parcels of land with a total area of approximately
2,000 square meters, described in, and covered by, two (2) certificates of title Transfer Certificate of Title (TCT) Nos. T-
13935 and T-13936; that the properties were covered by an Assessment of Real Property; that the payments of realty taxes
on the said properties were updated; that sometime in 2006, she discovered that petitioners unlawfully entered, occupied
her properties by stealth, by force and without her prior consent and knowledge, and constructed their houses thereon; that
upon discovery of their illegal occupation, her daughter, Atty. Carmelita Crisologo, and Isican personally went to the
properties and verbally demanded that petitioners vacate the premises and remove their structures thereon; that the
petitioners begged and promised to buy the said properties for ?3,500.00 per square meter; that she gave petitioners time to
produce the said amount, but they reneged on their promise to buy them; that petitioners refused to vacate the subject
properties despite several demands; that the petitioners knew full well that the subject premises they were occupying were
titled properties but they insisted on unlawfully holding the same; and that she was unlawfully dispossessed and displaced
from the subject properties due to petitioners illegal occupation.

On the other hand, petitioners countered that the titles of Crisologo were products of Civil Registration Case No. 1, Record
211, which were declared void by the Supreme Court in Republic v. Marcos,6 and reiterated in Republic v. Marcos;7 that the
said case was later enacted into law, Presidential Decree (P.D.) No. 1271, entitled An Act Nullifying Decrees of Registration
and Certificates of Title within the Baguio Townsite Reservation Case No.1, GLRO Record No. 211, pursuant to Act No. 931,
as amended, but Considering as Valid Certain Titles of Lands that are Alienable and Disposable Under Certain Conditions and
For Other Purposes which took effect on December 22, 1977; that Crisologo failed to comply with the conditions provided in
Section 1 of P.D. No. 1271 for the validation of said titles, hence, the titles were void; that petitioners had been in open,
actual, exclusive, notorious, uninterrupted, and continuous possession of the subject land, in good faith; and that Crisologo
was never in prior possession and had no valid title over the subject land.8

MTCC Ruling

On September 15, 2009, the MTCC rendered a decision in favor of Crisologo, the dispositive portion of which reads: chanroblesvirtuallawlibrary

WHEREFORE, the Court renders JUDGMENT in favor of the plaintiff directing the defendants, their heirs, assigns,
representatives and/or any person acting for and in their behalves to:
a) Immediately vacate the subject properties, and to demolish/dismantle all their houses and other structures on the
properties; should defendants refuse to comply, the plaintiff may demolish/dismantle them at the expense of the defendants;

b) Pay reasonable rentals of the use and occupation of the subject properties at Php4,000.00 per month from January 2006
for each of the defendants;

c) Pay Php20, 000.00 as attorneys fees, and

d) Costs of litigation.
SO ORDERED.

The MTCC ruled that Crisologo was the registered owner of the subject parcels of land, who, as such, had declared these
properties for taxation purposes since 1969 and regularly paid the realty taxes thereon. It stated that with Crisologo being
the owner, petitioners were illegally occupying the land.

The MTCC added that petitioners could not question Crisologos titles over the subject parcels of land in an ordinary civil
action for recovery of possession because such defense was a collateral attack which was prohibited under P.D. No. 1529,
otherwise known as the Property Registration Decree. Thus, it could not inquire into the intrinsic validity of Crisologos titles.
Ruling of the RTC

On April 18, 2011, the RTC reversed and set aside the decision of the MTCC. It was of the view that petitioners assertion of
the TCTs invalidity was not a collateral attack. It cited the rulings in Republic v. Marcos,9 and Republic v. Marcos,10 which
perpetually prohibited the reopening of Civil Reservation Case No. 1, LRC Rec. No. 211, and, therefore, the registration of
parcels of lands. For said reason, the titles of Crisologo were products of illegal proceedings nullified by this Court. She also
failed to comply with the conditions set forth in P.D. No. 1271. Accordingly, the titles were void and the same could not be a
legal basis for Crisologo to justify the eviction of petitioners from the subject premises. Having been nullified, these
certificates of title ceased to be the best proof of ownership.

Ruling of the CA

On June 14, 2012, the CA rendered the assailed decision, setting aside the RTC decision and reinstating that of the MTCC.

The CA held that Crisologo was entitled to the possession of the subject parcels of land. It explained that her possession was
established when she acquired the same by sale sometime in 1967 and when the certificates of title covering the properties
were subsequently issued. It added that her payment of realty taxes due on the said properties since 1969 further
strengthened her claim of possession. Moreover, her appointment of Isican as administrator of the subject properties and her
offer to sell the lots to the petitioners showed that she had control over the same. Accordingly, the CA concluded that
Crisologos right to remain in possession of the subject lots should be preferred over the petitioners possession regardless of
the actual condition of her titles. Hence, the petitioners, who used force in occupying her properties, should respect, restore
and not disturb her lawful possession of the subject parcels of land.

Unsatisfied with the CA decision, the petitioners instituted this petition anchored on the following

ASSIGNMENT OF ERRORS

(1)

THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT RULED THAT
RESPONDENT HAS ACTUAL OR WAS IN PRIOR POSSESSION OF THE LANDS INVOLVED CONTRARY TO THE
EVIDENCE, THE FACTS AND THE CIRCUMSTANCES OF THIS CASE.

(2)

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE PURPORTED
EXECUTION AND REGISTRATION OF THE PUBLIC INSTRUMENTS RELATIVE TO THE SALE IN 1967 OF THE
SUBJECT LANDS AND THE SUBSEQUENT ISSUANCE OF THE TITLES IN HER NAME ESTABLISH POSSESSION.

(3)

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE TAX
DECLARATIONS AND RECEIPTS IN THE NAME OF THE RESPONDENT ESTABLISH HER POSSESSION OVER THE
SUBJECT LOTS.

(4)

THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT THE SUPPOSED
APPOINTMENT OF PEDRO ISICAN AS ADMINISTRATOR ESTABLISHES HER POSSESSION OVER THE LANDS IN
DISPUTE.

(5)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT IS THE PRESENT
POSSESSOR OF THE SUBJECT LANDS REGARDLESS OF THE ACTUAL CONDITION OF HER TITLES, IGNORING THE
PRINCIPLE OF STARE DECISIS AND ADHERENCE TO LAW.

(6)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS DISTURBED THE
POSSESSION OF HEREIN RESPONDENT BY FORCE.

(7)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENTS SUPPOSED
POSSESSION OVER THE SUBJECT LOTS SHOULD BE PREFERRED DESPITE THE NATURE OR CONDITION OF THE
PROPERTY AS PART OF THE PUBLIC DOMAIN.11
Petitioners position

Petitioners aver that Crisologo failed to show documentary or testimonial evidence that she acquired the subject properties
by sale or by any other mode of acquisition from its previous owner. Her only bases in claiming them were the titles issued in
her name, without a deed of sale.

Petitioners further argue that assuming that there was really a sale that took place, its execution and registration cannot
establish her right of possession, whether actual or constructive. First, the validity of the subject titles was stricken down
by Republic vs. Marcos cases and P.D. No. 1271. Hence, the TCTs could not be sources of legal rights. Second, Crisologo
never took actual possession of the subject properties after the alleged sale in 1967. She appointed an administrator over
the said property only in 2006.

Moreover, petitioners claim that her tax declarations and receipts evidencing payment of taxes cannot prove her possession
or ownership over the subject properties without proof of actual possession.

Finally, petitioners submit that there are facts and circumstances that militate against her claim of possession. They point out
that the titles over the subject properties have no encumbrances or annotations whatsoever; that for more than forty (40)
years, the subject lots have not been subjected to any deed, agreement, contract, mortgage or any other property dealings;
that the said titles are not validated up to the present as certified by the Register of Deeds of Baguio City; that she presented
no witnesses to prove her intention to possess the subject lots; that the documents she presented are not reliable because
they were issued only in 2008; that no improvements were introduced by her; and that she is guilty of laches due to her
inaction to validate her titles.

Respondents position

Crisologo opposes the petition mainly on technical grounds. First, she argues that the supposed representatives of the
petitioners who filed this petition and signed the certification on non-forum shopping have no authority to do so. Hence, they
have no standing to prosecute because they are not the real parties in interest. Second, she claims that the petitioners failed
to furnish the CA a copy of their motion for extension of time to file this petition for review.
cra1awredjgc

The Courts Ruling

The only question that needs to be resolved in this petition is who between petitioners and respondent Crisologo have a
better right of possession over the subject parcels of land. Both contending parties claim that they have a superior
possessory right over the disputed lands.

After a careful review of the records, the Court holds that Crisologo has a better right of possession over the subject parcels
of land.

Accion Publiciana: its nature and purpose

Also known as accion plenaria de posesion, accion publiciana is an ordinary civil proceeding to determine the better right of
possession of realty independently of title. It refers to an ejectment suit filed after the expiration of one year from the accrual
of the cause of action or from the unlawful withholding of possession of the realty.

The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership. When parties, however,
raise the issue of ownership, the court may pass upon the issue to determine who between the parties has the right to
possess the property. This adjudication, nonetheless, is not a final and binding determination of the issue of ownership; it is
only for the purpose of resolving the issue of possession, where the issue of ownership is inseparably linked to the issue of
possession. The adjudication of the issue of ownership, being provisional, is not a bar to an action between the same parties
involving title to the property. The adjudication, in short, is not conclusive on the issue of ownership.12

In her complaint, Crisologo prayed that she be declared in prior actual possession of the properties in dispute and that
petitioners vacate the same and demolish their houses therein. She alleged, among others, that she was the registered
owner of the subject parcels of land and that petitioners unlawfully entered her properties by stealth, force and without her
prior consent and knowledge. Clearly, she primarily wanted to recover possession of the subject parcels of land from
petitioners. Hence, the case is an accion publiciana.

Nonetheless, the petitioners have raised the issue of ownership in their pleadings. They mainly argue that Crisologos titles
on the subject properties are void and that they have been in open, actual, exclusive, notorious, uninterrupted and
continuous possession over the subject properties in good faith.

The nullity of the decrees of registration

and certificates of titles in Section 1 of
P.D. No. 1271 is not absolute

Although Section 1 of P.D. No. 127113 invalidated decrees of registration and certificates of title within the Baguio Townsite
Reservation Case No. 1, GLRO Record No. 211, the nullity, however, is not that sweeping. The said provision expressly states
that all certificates of titles issued on or before July 31, 1973 shall be considered valid and the lands covered by them shall
be deemed to have been conveyed in fee simple to the registered owners upon 1) showing proof that the land covered by
the subject title is not within any government, public or quasi-public reservation, forest, military or otherwise, as certified by
appropriating government agencies; and 2) compliance by the title holder with the payment to the Republic of the Philippines
of the correct assessed value of the land within the required period.

In the case at bench, the records show that the subject parcels of land were registered on August 24, 1967. The titles are,
thus, considered valid although subject to the conditions set. But whether or not Crisologo complied with the said conditions
would not matter because, this would be a collateral attack on her registered titles, as would be discussed later.

At any rate, petitioners, as private individuals, are not the proper parties to question the status of the respondents
registered titles. Section 6 of P.D. No. 127114 expressly states that the Solicitor General shall institute such actions or
suits as may be necessary to recover possession of lands covered by all void titles not validated under this Decree.

The respondents certificates of title

give her the better right to possess
the subject parcels of land

It is settled that a Torrens title is evidence of indefeasible title to property in favor of the person in whose name the title
appears. It is conclusive evidence with respect to the ownership of the land described therein. It is also settled that the
titleholder is entitled to all the attributes of ownership of the property, including possession. Thus, in Arambulo v.
Gungab,15 this Court declared that the age-old rule is that the person who has a Torrens title over a land is entitled to
possession thereof.16

The records show that TCT No. T-1393517 and TCT No. T-1393618 bear the name of Carmeling P. Crisologo, as the registered
owner. Petitioners do not dispute the fact that she has a Torrens title over the subject parcels of land.

The respondents Torrens certificates of title

are immune from a collateral attack.

As a holder of a Torrens certificate of title, the law protects Crisologo from a collateral attack on the same. Section 48 of P.D.
No. 1529, otherwise known as the Property Registration Decree, provides that a certificate of title cannot be the subject of a
collateral attack. Thus: chanroblesvirtuallawlibrary

SEC. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.

This rule has been applied in innumerable cases, one of which was Francisco Madrid v. Spouses Mapoy,19 where it was
written:chanroblesvirtuallawlibrary

Registration of land under the Torrens system, aside from perfecting the title and rendering it indefeasible after the lapse of
the period allowed by law, also renders the title immune from collateral attack. A collateral attack transpires when, in
another action to obtain a different relief and as an incident of the present action, an attack is made against the judgment
granting the title. This manner of attack is to be distinguished from a direct attack against a judgment granting the title,
through an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet
implemented, or to seek recovery if the property titled under the judgment had been disposed of. To permit a collateral
attack on respondents-plaintiffs title is to water down the integrity and guaranteed legal indefeasibility of a Torrens title.

The petitioners-defendants attack on the validity of respondents-plaintiffs title, by claiming that fraud attended its
acquisition, is a collateral attack on the title. It is an attack incidental to their quest to defend their possession of the
properties in an "accion publiciana," not in a direct action whose main objective is to impugn the validity of the
judgment granting the title. This is the attack that possession of a Torrens Title specifically guards against; hence, we
cannot entertain, much less accord credit to, the petitioners-defendants claim of fraud to impugn the validity of the
respondents-plaintiffs title to their property.

As the lawful possessor, the respondent

has the right to eject the petitioners

The Court agrees with the CA that the only question that needs to be resolved in this suit to recover possession is who
between the parties is entitled to the physical or material possession of the subject parcels of land. Therefore, the foremost
relevant issue that needs to be determined here is simply possession, not ownership.

The testimonial and documentary evidence on record prove that Crisologo has a preferred claim of possession over that of
petitioners. It cannot be denied that she bought the subject properties from the previous owner in 1967, which was why the
transfer certificates of title were subsequently issued in her name. Records further show that she has been paying the realty
taxes on the said properties since 1969. She likewise appointed Isican as administrator of the disputed lands. More
importantly, there is no question that she offered to sell to petitioners the portions of the subject properties occupied by
them. Hence, she deserves to be respected and restored to her lawful possession as provided in Article 539 of the New Civil
Code.20
WHEREFORE, the petition is DENIED.

SO ORDERED.

SECOND DIVISION

G.R. No. 193426 September 29, 2014

SUBIC BAY LEGEND RESORTS AND CASINOS, INC., Petitioner,

vs.
BERNARD C. FERNANDEZ, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the April 27, 2010 Decision2 and August 24, 2010 Resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 91758, entitled "Bernard C. Fernandez, Plaintiff-Appellee, versus Subic
Bay Legend Resorts and Casinos, Inc., Defendant-Appellant," which affirmed in toto the May 17, 2006 Decision4 of
the Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil Case No. 237-0-97.

Factual Antecedents

Petitioner Subic Bay Legend Resorts d Casinos, Inc., a duly organized and e)(isting corporation operating under
Philippine laws, operates the Legenda Hotel and Casino (Legenda) located in the Subic Bay Freeport Zone in
Zambales. On the other hand, respondent Bernard C. Fernandez is the plaintiff in Civil Case No. 237-0-97
prosecuted against petitioner in Olongapo RTC.

As determined by the CA, the facts of the case are as follows:

At around eleven o'clock in the evening of 6 June 1997, the appellee's5 brother[,] Ludwin Fernandez[,] visited the
Legenda Hotel and Casino x x x owned and operated by the appellant6 and located along the Waterfront Road,
Subic Bay Freep011 Zone. Legenda had strategically installed several closedcircuit television (CCTV) cameras as
part of security measures required by its business. The monitors revealed that Ludwin changed x x x $5,000.00
w011h of chips into smaller denominations. Legenda admitted in its brief that its surveillance staff paid close
attention to Ludwin simply because it was "wmsual" for a Filipino to play using dollar-denominated chips. After
Ludwin won $200.00 in a game of baccarat, he redeemed the value of chips worth $7,200.00. A review of the CCTV
recordings showed that the incident was not the first time Ludwin visited the Casino, as he had also been there on 5
June 1997.

An operation was launched by Legenda to zero-in on Ludwin whose picture was furnished its security section. Thus,
unbeknownst to him, he was already closely watched on 13 June 1997 when he went with another brother,
Deoven[,] to the casino at around the same time or at 11: 17 p.m. After playing (and losing $100.00) only one round
of baccarat, the siblings had their chips encashed at two separate windows. Since the cashiers were apprised of a
supposed irregularity, they "froze" the transaction.

Shortly thereafter, Legenda's internal security officers accosted Ludwin and Deoven and ordered them to return the
cash and they complied without ado because they were being pulled away. The two were eventually escorted to
private rooms where they were separately interrogated about the source of the chips they brought. They were held
for about seven hours w1til the wee hours of the morning, without food or sleep. The ultimaturn was simple: they
confess that the chips were given by a certain employee, Michael Cabrera, or they would not be released from
questioning. The same line of questioning confronted them when they were later twned-over for blotter preparation
to the Intelligence and Investigation Office of the Subic Bay Metropolitan Authority (IIO SBMA). Finally, the brothers
succwnbed to Legenda's instruction to execute a joint statement implicating Cabrera as the illegal source of the
chips. Due to hunger pangs and fatigue, they did not disown the statement even when they subscribed the same
before the prosecutor in whose office they were [later] brought. On the other hand, they signed for basically the
san1e reason a document purporting to show that they were "released to [their] brother's custody in good condition."
At the time, Deoven was about 21 years old, in his second year of engineering studies and was not familiar with the
so-called "estafa" with which the security personnel threatened to sue him for; although he was quite aware of the
consequences of a crime such as direct assault because he had previously been convicted thereof. About two
weeks later, Deoven exec ted a retraction in Baguio City where he took up his engineering course.7

On July 1, 1997, respondent filed Civil Case No. 237-0-97 for recovery of sum of money with damages against
petitioner, on the premise that on June 13, 1997, he went to Legenda with his brothers Ludwin and Deoven; that he
handed over Legenda casino chips worth US$6,000.00, which belonged to him, to his brothers for the latter to use
at the casino; that petitioner accosted his brothers and unduly and illegally confiscated his casino chips equivalent to
US$5,900.00; and that petitioner refused and continues to refuse to return the same to him despite demand. His
Complaint8 prayed for the return of the casino chips and an award of P50,000.00 moral damages, P50,000.00
exemplary damages, P30,000.00 attorney's fees, P20,000.00 litigation expenses, and costs.

Petitioner's Answer with Compulsory Counterclaim9 essentially alleged that right after Ludwin and Deoven's
transactions with the Legenda cashier were frozen on June 13, 1997, they voluntarily agreed to proceed to the
Legenda security office upon invitation, where Ludwin voluntarily informed security officers that it was a certain
Michael Cabrera (Cabrera) - a Legenda table inspector at the time - who gave him the casino chips for encashment,
taught him how to play baccarat and thereafter encash the chips, and rewarded him with Pl,000.00 for every
$1,000.00 he encashed; that Ludwin pointed to a picture of Cabrera in a photo album of casino employees shown to
him; that Ludwin and Deoven were then brought to the IIO SBMA, where they reiterated their statements made at
the Legenda security office; that they volunteered to testify against Cabrera; that respondent himself admitted that it
was Cabrera who gave him the casino chips; that Ludwin and Deoven voluntarily executed a joint affidavit before
the Olongapo City Prosecutor's Office, which they subsequently recanted; that respondent had no cause of action
since the confiscated casino chips worth US$5,900.00 were stolen from it, and thus it has the right to retain them.
By way of counterclaim, petitioner sought an award of P 1 million moral damages, P1 million exemplary damages,
and P.5 million attorney's fees and litigation expenses.

Respondent filed his Answer10 to petitioner's counterclaim.

Ruling of the Regional Trial Court

After pre-trial and trial, the trial court rendered its May 17, 2006 Decision, which decreed as follows:

WHEREFORE, finding that the evidence preponderates in favor of the plaintiff, judgment is rendered against the
defendant ordering it to:

1) Return to plaintiff casino chips worth USD $5,900.00 or its equivalent in Philippine Peso at the rate
of P38.00 to USD $1 in 1997.

2) Pay plaintiff attorney's fees in the amount of P30,000.00 3) [Pay] [c]ost of this suit.

SO DECIDED.11

In arriving at the above conclusion, the trial court held:

The primordial issue is whether or not plaintiff can be considered the lawful owner of the USD $5,900 worth of
casino chips that were confiscated.

There is no dispute that the subject chips were in the possession of the plaintiff. He claims he got hold of them as
payment for car services he rendered to a Chinese individual. Defendant however, contends that said chips were
stolen from the casino and it is the lawful owner of the same.

The onus fell on defendant to prove that the casino chips were stolen. The proof adduced however, is wanting. The
statements of Deoven and Ludwin C. Fernandez, confessing to the source of the chips were recanted hence, have
little probative value. The testimony of defendant's witnesses narrated defendant's action responding to the
suspicious movements of the Fernandez brothers based on surveillance tapes. The tapes, however, do not show
how these persons got hold of the chips. The alleged source in the person of Mike Cabrera, a table inspector of the
casino[,] was based on the recanted declarations of the brothers. No criminal charge was shown to have been filed
against him nor the plaintiff and his brothers. Neither was there an explanation given as to how those chips came
into the possession of Mike Cabrera much less that he passed them on to the brothers for the purpose of encashing
and dividing the proceeds amongst themselves. All told therefore, there is no direct evidence to prove the theory of
the defendant and the circumstantial evidence present is, to the mind of the court, not sufficient to rebut the legal
presw11ption that a person in possession of personal property is the lawful owner of the same (Art. 559, Civil Code
of the Philippines).12

Ruling of the Court of Appeals

Petitioner appealed the May 1 7, 2006 Decision of the trial court, arguing that Ludwin and Deoven's admission in
their joint affidavit before the Olongapo City Prosecutor's Office that it was Cabrera who gave them the casino chips
strongly indicates that the chips were stolen from Legenda; that the subsequent recantation by Ludwin and Deoven
of their joint affidavit should be looked upon with disfavor, given that recanted testimony is unreliable and
recantations can be easily secured from poor and ignorant witnesses and for monetary consideration or through
intimidation; that respondent's explanation that he gave the chips to his brothers Ludwin and Deoven for them to
play in the casino is highly doubtful; that the true purpose of Ludwin and Deoven was to encash the stolen chips;
that no force or intimidation attended the treatment accorded Ludwin and Deoven when they were accosted and
asked to explain their possession of the chips; and that the trial court erred in awarding attorney's fees and costs for
the filing of a baseless suit solely aimed at unjustly enriching respondent at petitioner's expense.

On April 27, 2010, the CA issued the assailed Decision which affirmed the trial court's May 17, 2006 Decision.
Petitioner's Motion for Reconsideration was rebuffed as well.

In deciding against petitioner, the CA held that, applying Article 559 of the Civil Code,13 respondent had the legal
presumption of title to or ownership of the casino chips. This conclusion springs from respondent's admission during
trial that the chips represented payment by a Chinese customer for services he rendered to the latter in his car shop.
The CA added that since respondent became the owner of the chips, he could very well have given them to Ludwin
and Deoven, who likewise held them as "possessors in good faith and for value" and with "presumptive title" derived
from the respondent. On the other hand, petitioner failed to convincingly show that the chips were stolen; for one, it
did not even file a criminal case against the supposed mastermind, Cabrera - nor did it charge Ludwin or Deoven -
for the alleged theft or taking of its chips.

The CA likewise held that Ludwin' s and Deoven' s statements and admissions at the Legenda security office are
inadmissible because they were obtained in violation of their constitutional rights: they were held in duress, denied
the right to counsel and the opportunity to contact respondent, and deprived of sleep, which is one of the "more
subtler [sic] techniques of physical and psychological torture to coerce a confession."14 It found that the actions and
methods of the Legenda security personnel in detaining and extracting confessions from Ludwin and Deoven were
illegal and in gross violation of Ludwin's and Deoven's constitutional rights.15

Finally, the CA held that petitioner was guilty of bad faith in advancing its theory and claim against respondent by
unduly accusing him of dealing in stolen casino chips, which thus entitles respondent to the reduced award of
attorney's fees in the amount of P30,000.00

Issues

Petitioner raises the following issues:

a) The Honorable Court seriously erred in ruling that the recanted statements of Deoven Fernandez and
Ludwin C. Fernandez have [no] probative value;

b) The Honorable Court seriously erred in ruling that the circumstantial evidence present is not sufficient to
rebut the legal presumption that a person in possession of personal property is the lawful owner of the
same;
 c) The Honorable Court seriously erred in finding that the evidence preponderates in favor of the herein
respondent; [and]

d) The Honorable Court seriously erred in awarding attorney's fees and costs of suit I favor of the
respondent.16

Petitioner's Arguments

In its Petition and Reply,17 petitioner mainly argues that the assailed dispositions are grounded entirely on
speculation, and the inferences made are manifestly mistaken and based on a misappreciation of the facts and law;
that the CA failed to consider the testimonial and documentary evidence it presented to prove the fact that the
casino chips were missing and were stolen by Cabrera, who thereafter gave them to respondent's brothers, Ludwin
and Deoven. Petitioner maintains that the presumption of title under Article 559 cannot extend to respondent's
brothers, who admitted during the investigation at the Legenda security office and in their Joint Affidavit18 that the
chips came from Cabrera, and not responcient; that the subsequent Sworn Statement19 recanting the Joint Affidavit
should not be given credence, as affidavits of recantation can easily be secured - which thus makes them unreliable;
and that no duress attended the taking of the brothers' Joint Affidavit, which was prepared by Henry Marzo of the
Intelligence and Investigation Office (IIO) of the Subic Bay Metropolitan Authority (SBMA).

Petitioner asserts that it is unbelievable that respondent would give US$6,000.00 worth of casino chips to his
brothers with which to play at the casino; that with the attending circumstances, the true intention of respondent's
brothers was to encash the stolen chips which Cabrera handed to them, and not to play at the casino. Petitioner
thus concludes that no coercion could have attended the investigation of Ludwin and Deoven; that their subsequent
recantation should not be given weight; and that for suing on a baseless claim, respondent is not entitled to
attorney's fees and costs of litigation.

Petitioner thus prays for the reversal of the assailed dispositions and the corresponding dismissal of Civil Case No.
237-0-97.

Respondent's Arguments

In his Comment,20 respondent generally echoes the pronouncement of the CA. He likewise notes that petitioner has
raised only questions of fact; that the Petition is being prosecuted to delay the proceedings; that the trial and
appellate courts are correct in finding that petitioner failed to prove its case and show that the casino chips were
stolen; that petitioner failed to rebut the presumption that a person in possession of personal property is the lawful
owner of the same, pursuant to Article 559 of the Civil Code; and that the P30,000.00 award of attorney's fees
should be increased to P100,000.00.

Our Ruling

The Petition is denied.

Petitioner's underlying theory is that the subject casino chips were in fact stolen by its employee Cabrera, then
handed over to respondent's brothers, Ludwin and Deoven, for encashment at the casino; that Ludwin and Deoven
played at the casino only for show and to conceal their true intention, which is to encash the chips; that respondent's
claim that he owned the chips, as they were given to him in payment of services he rendered to a Chinese client, is
false. These arguments require the Court to examine in greater detail the facts involved. However, this may not be
done because the Court is not a trier of facts and does not normally undertake the re-examination of the evidence
presented during trial; the resolution of factual issues is the function of lower courts, whose findings thereon are
received with respect and are binding on the Court subject only to specific exceptions.21 In tum, the factual findings
of the Court of Appeals carry even more weight when they are identical to those of the trial court's.22

Besides, a question of fact cannot properly be raised in a petition for review on certiorari.23 Moreover, if petitioner
should stick to its theory that Cabrera stole the subject casino chips, then its failure to file a criminal case against the
latter -including Ludwin and Deoven for that matter - up to this point certainly does not help to convince the Court of
its position, especially considering that the supposed stolen chips represent a fairly large amount of money. Indeed,
for purposes of this proceeding, there appears to be no evidence on record - other than mere allegations and
suppositions - that Cabrera stole the casino chips in question; such conclusion came unilaterally from petitioner, and
for it to use the same as foundation to the claim that Ludwin, Deoven and respondent are dealing in stolen chips is
clearly irregular and unfair.

Thus, there should be no basis to suppose that the casino chips found in Ludwin's and Deoven's possession were
stolen; petitioner acted arbitrarily in confiscating the same without basis. Their Joint Affidavit - which was later
recanted - does not even bear such fact; it merely states that the chips came from Cabrera. If it cannot be proved, in
the first place, that Cabrera stole these chips, then there is no more reason to suppose that Ludwin and Deoven
were dealing in or possessed stolen goods; unless the independent fact that Cabrera stole the chips can be proved,
it cannot be said that they must be confiscated when found to be in Ludwin's and Deoven's possession.

It is not even necessary to resolve whether Ludwin's and Deoven's Joint Affidavit was obtained by duress or
otherwise; the document is irrelevant to petitioner's cause, as it does not suggest at all that Cabrera stole the
subject casino chips. At most, it only shows that Cabrera gave Ludwin and Deoven casino chips, if this fact is true at
all - since such statement has since been recanted.

The fact that Ludwin and Deoven appear to be indecisive as to who gave them the casino chips does not help
petitioner at all. It cannot lead to the conclusion that Cabrera stole the chips and then gave them to the two; as
1wphi1

earlier stated, petitioner had to prove this fact apart from Ludwin's and Deoven's claims, no matter how incredible
they may seem.

Though casino chips do not constitute legal tender,24 there is no law which prohibits their use or trade outside of the
casino which issues them. In any case, it is not unusual nor is it unlikely that respondent could be paid by his
Chinese client at the former' s car shop with the casino chips in question; said transaction, if not common, is
nonetheless not unlawful. These chips are paid for anyway; petitioner would not have parted with the same if their
corresponding representative equivalent - in legal tender, goodwill, or otherwise was not received by it in return or
exchange. Given this premise - that casino chips are considered to have been exchanged with their corresponding
representative value - it is with more reason that this Court should require petitioner to prove convincingly and
persuasively that the chips it confiscated from Ludwin and Deoven were indeed stolen from it; if so, any Tom, Dick
or Harry in possession of genuine casino chips is presumed to have paid for their representative value in exchange
therefor. If petitioner cannot prove its loss, then Article 559 cannot apply; the presumption that the chips were
exchanged for value remains.

Finally, the Court sustains the award of attorney's fees. Under Article 2208 of the Civil Code,25 attorney's fees may
be recovered when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim, or in any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered. Petitioner's act of arbitrarily confiscating the casino chips and
treating Ludwin and Deoven the way it did, and in refusing to satisfy respondent's claim despite the fact that it had
no basis to withhold the chips, confirm its bad faith, and should entitle respondent to an award.

With the foregoing view of the case, a discussion of the other issues raised is deemed irrelevant and unnecessary.

WHEREFORE, the Petition is DENIED. The assailed April 27, 2010 Decision and August 24, 2010 Resolution of the
Court of Appeals in CA-G.R. CV No. 91758 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

FIRST DIVISION

G.R. No. 161589 November 24, 2014

PENTA PACIFIC REALTY CORPORATION, Petitioner,
vs.
LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, Respondent.

DECISION

BERSAMIN, J.:

Jurisdiction over the subject matter of an action is determined from the allegations of the initiatory pleading.

The Case

Under review is the decision promulgated on October 9, 2003,1 whereby the Court of Appeals (CA) affirmed the
judgment rendered on June 10, 2002 by the Regional Trial Court (RTC), Branch 58, in Makati City2 nullifying for lack
of jurisdiction the decision rendered on January 12, 2000 by the Metropolitan Trial Court (MeTC), Branch 64, in
Makati City.3

Antecedents

The petitioner owned the 25th floor of the Pacific Star Building located in Makati City with an area of 1,068.67
square meters. The respondent leased 444.03 square meters of the premises (subject property) through the
petitioners authorized agent, Century Properties Management, Inc. (Century Properties). Under the terms of the
contract of lease dated January 31, 1997, the petitioner gavethe respondent possession of the subject property
under a stipulation to the effect that in case of the respondents default in its monthly rentals, the petitioner could
immediately repossess the subject property.

On March 19, 1997, the respondent expressed the intention to purchase the entire 1,068.67 square meters,
including the subject property. The parties executed a contract to sell, denominated as a reservation agreement, in
which they set the purchase price at US$3,420,540.00, with the following terms of payment: 20%down payment
equivalent of US$684,108.00 payable within eight months; and US$85,513.00/monthly for eight months with
interestof 9.75%, commencing on the 6th month. The 80% balance was to be paid in 13 installments beginning on
March 1, 1997 until March 1, 1998. The reservation agreement contained the following cancellation or forfeiture
provision, viz:

Any failure on [the respondents] part to pay the full downpayment, or deliver the post-dated checks or pay the
monthly amortization on the due date, shall entitle [the petitioner], at its option, to impose a penalty interest at the
rate of three percent (3%) per month on the outstanding balance or to cancel this agreement without need of any
court action and to forfeit, in its favor, any reservation deposits or payments already made on the unit, without prior
notice.4

After paying US$538,735.00, the respondent stopped paying the stipulated monthly amortizations. An exchange of
letters ensued between Janet C. Ley, President of the respondent, or Efren Yap, Assistant to the President of the
respondent, on one hand, and Jose B.E. Antonio, ViceChairman of the petitioner, and the petitioners counsel, Atty.
Reynaldo Dizon, on the other. In the September 23, 1997 letter,5 the respondent asked the petitioner to modify the
terms of the reservation agreement to allow it to purchase only the subject property. In the February 5, 1998
letter,6the petitioners counsel reminded the respondent of its US$961,546.50 liability to the petitioner under the
terms of the reservation agreement. In another letter dated February 5, 1998,7 the petitioners counsel informed the
respondent of its failure to pay its amortizations since August 1997, and demanded the payment of US$961,564.50.

Through its letter of February 17, 1998,8 the respondent submitted the following proposals, namely: (1) that the
US$538,735.00 paid under the reservation agreement be applied asrental payments for the use and occupation of
the subject property in the period from March 1997 to February 28, 1998; (2) that the balance of US$417,355.45
after deducting the rental payments from March 1997 to February 28, 1998 should be returned to it; and (3) that the
respondent be allowed to lease the subject property beginning March 1998.

The petitioner, through its counsels letter of March 9, 1998,9 rejected the respondents proposals, and demanded
the payment of US$3,310,568.00, representing the respondents unpaid balance (as of March 2, 1998) under the
reservation agreement. The petitioner further evinced its intention to cancel the contract to sell, and to charge the
respondent for the rentals of the subject property corresponding to the period from August 1997 to March 1998,
during which no amortization payments were made.

In the letter dated February 4, 1999,10 the petitioners counsel informed the respondent of the cancellation of the
reservation agreement and the forfeiture of the respondents payments; and demanded that respondent pay the
rentals of P9,782,226.50 and vacate the subject property.

In its letter of May 25, 1999,11 the petitioners counsel wrote to the respondent thuswise:

We write in behalf of our client, Penta Pacific Realty Corporation, regarding the Reservation Agreement and/or sale
between you and our client over the latters unit located at the 25th Floor, Pacific Star Building, Sen. Gil Puyat
Avenue corner Makati Avenue, Makati City.

We regret to inform you that inview of your continued refusal and/or failure to pay to our client the balance of the
agreed-upon purchase price of the office unit you are currently occupying, our client is constrained to make a
notarial cancellation of the Reservation Agreement and/or sale of the above-mentioned unit and to forfeit the
payments you made in favor of our client.

In this connection, there is no more valid reason for you to continue occupying the subject premises. Hence, final
and formal demand is hereby made upon you to peacefully and quietly vacate the same within ten (10) days from
receipt hereof. Otherwise, we shall be constrained to file the appropriate legal action to protect our clients interests.

Lastly, we would like to inform you that our client will also be constrained to charge you the amount
of P9,782,226.50 corresponding to reasonable rentals and other charges as of January 22, 1999.

Trusting that you are guided accordingly.

On July 9, 1999, the petitioner filed the complaint for ejectment in the MeTC following the respondents failure to
comply with the demands to pay and vacate.

The respondent resisted the complaint,12 arguing that the contract of lease dated January 31, 1997 had been
simulated or, in the alternative, had been repealed, negated, extinguished and/or novated by the reservation
agreement; that the petitioner had failed to observe its undertaking to allow the respondent to collect rentals from
the other lessees of the subject property; that the petitioner had unjustifiably refused to renegotiate or to amend the
reservation agreement; and that the petitioner had violated the rule on non-forum shopping considering the
pendency of another case between the parties in Branch 57 of the RTC in Makati City.13

Decision of the MeTC

On January 12, 2000, the MeTC, ruling in favor of the petitioner, found that the respondents lawful possession of
the property had been by virtue of the contract of lease, but had become unlawful when the respondent had failed to
comply with its obligation to pay the monthly rentals for the subject property; and that, in any event, the reservation
agreement proved that the petitioner had held the better right to possess the subject property as the owner thereof.
The MeTC disposed:

WHEREFORE, judgment is rendered ordering defendant Ley Construction and Development Corporation and all
persons claiming rights under it to vacate and surrender the possession of the Property to the plaintiff; to pay the
sum of P32,456,953.06 representing unpaid rentals and other charges as of June 23, 1999; the further amount
of P443,741.38 starting July, 1999, and the same amount every month thereafter as reasonable compensation for
the continued and illegal use and occupancy of the Property, until finally restituted to the plaintiff; the sum
of P100,000.00 for as (sic) attorneysfees plus cost of suit.14

The respondent appealed to the RTC.

In the meantime, on November 6, 2001, the respondent turned over the possession of the leased premises to the
petitioner.
Judgment of the RTC

On June 10, 2002, the RTC rendered its judgment nullifying the MeTCs decision on the ground of lackof jurisdiction,
holding that the appropriate action was either accion publiciana or accion reivindicatoria over which the MeTC had
no jurisdiction. It found that the basis of recovery of possession by the petitioner was the respondents failure to pay
the amortizations arising from the violations of the reservation agreement; that the complaint did not specifically aver
facts constitutive of unlawful detainer, i.e., it did not show how entry had been effected and how the dispossession
had started; and that the requirement of formal demand had not been complied with by the petitioner.

Decision of the CA

The petitioner appealed to the CA.

By its decision promulgated on October 9, 2003, the CA affirmed the judgment of the RTC,15 declaring that the
respondents possession was not by virtue of the contract of lease but pursuant to the reservation agreement, which
was more of a "contract of sale."16 It concluded that the petitioners action was not unlawful detainer, but another
kind of action for the recovery of possession.17

Not in agreement with the decision of the CA, the petitioner filed the present petition.

Issue

The decisive question is whether the complaint was for unlawful detainer, or accion publiciana, or accion
reivindicatoria.

The petitioner submits that the MeTC had jurisdiction because its complaint made out a clear case of unlawful
detainer, emphasizing that the basis of the complaint was the failure of the respondent to pay the stipulated monthly
rentals under the revived contract of lease; that even if the cause of action was upon the nonpayment of the
purchase price under the reservation agreement, the MeTC still had jurisdiction over the action because an unlawful
detainer case could also arise from a vendor-vendee relationship; and that, accordingly, the nonpayment ofrentals
or of the purchase price sufficiently established its better right to possess the subject property.

In contrast, the respondent maintains that it had not violated any existing contract of lease with the petitioner
because the contract of lease dated January 31, 1997 was based on the agreement between the respondent and
Century Properties; that it had entered into the possession of the subject property as the buyer-owner pursuant
tothe reservation agreement; and that the recovery of possession should have been by accion publiciana or accion
reivindicatoria, not unlawful detainer.

Ruling

The appeal has merit.

1. Kinds of Possessory Actions

There are three kinds of real actions affecting title to or possession of real property, or interest therein, namely:
accion de reivindicacion, accion publiciana and accion interdictal. The first seeks the recovery of ownership as well
as possession of realty.18 The second proposes to recover the right to possess and is a plenary action in an ordinary
civil proceeding.19 The third refers to the recovery of physical or actual possession only (through a special civil action
either for forcible entry or unlawful detainer).

If the dispossession is not alleged totake place by any of the means provided by Section 1,20 Rule 70, Rules of
Court, or, if the dispossession allegedly took place by any of such means but the action is not brought within one
year from deprivation ofpossession, the action is properly a plenary action of accion publiciana or accion de
reivindicacion. The explanation is simply that the disturbance of the peace and quiet of the local community due to
the dispossession did not materialize; hence, the possessor thus deprived has no need for the summary proceeding
of accion interdictal under Rule 70.
The Municipal Trial Court (MTC) has exclusive original jurisdiction over accion interdictal. Until April 15, 1994, the
MTC had no original jurisdiction over the other possessory actions. By such date, its jurisdiction was expanded to
vest it with exclusive original jurisdiction over the other possessory actions ofaccion publiciana and accion de
reivindicacion where the assessed value of the realty involved did not exceed P20,000.00, or, if the realty involved
was in Metro Manila, such value did not exceed P50,000.00. The expansion of jurisdiction was by virtue of the
amendment by Section 1 of Republic Act No. 769121 to make Section 19 of Batas Pambansa Blg. 129 pertinently
provide thusly:

Section 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

xxxx

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the
assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro
Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

xxxx

Section 3 of Republic Act No. 7691 similarly revised Section 33 of Batas Pambansa Blg. 129 (the provision defining
the exclusive original jurisdiction of the MTC over civil actions) to make the latter provision state, pertinently, thus:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil
Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand
pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs:
Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined
by the assessed value of the adjacent lots.

xxxx

As can be seen, the amendments have made the assessed value of the property whose possession or ownership is
in issue, or the assessed value of the adjacent lots if the disputed land is not declared for taxation purposes
determinative of jurisdiction. The allegation of the assessed value of the realty must be found in the complaint, if the
action (other than forcible entry or unlawful detainer) involves title to or possession of the realty, including quieting of
title of the realty. If the assessed value is not found in the complaint, the action should be dismissed for lack of
jurisdiction because the trial court is not thereby afforded the means of determining from the allegations of the basic
pleading whether jurisdiction over the subject matter of the action pertains to it or to another court. Courts cannot
take judicial notice of the assessed or market value of the realty.22

2. MeTC had jurisdiction over

the complaint of the petitioner

The settled rule is that the nature of the action as appearing from the averments in the complaint or other initiatory
pleading determines the jurisdiction of a court; hence, such averments and the character of the relief sought are to
be consulted.23 The court must interpret and apply the law on jurisdiction in relation to the averments of ultimate facts
in the complaint or other initiatory pleading regardless ofwhether or not the plaintiff or petitioner is entitled to recover
upon all or some of the claims asserted therein.24 The reliefs to which the plaintiff or petitioner is entitled based on
the facts averred, although not the reliefs demanded, determine the nature of the action.25 The defense contained in
the answer of the defendant is generally not determinant.26
Is this present action onefor unlawful detainer?

A suit for unlawful detainer is premised on Section 1, Rule 70, 1997 Rules of Civil Procedure, of which there are two
kinds, namely: (1) that filed against a tenant, and (2) that brought against a vendee or vendor, or other person
unlawfully withholding possession of any land or building after the expiration or termination of the rightto hold
possession by virtue of any contract, express or implied.

"In an action for forcible entry or unlawful detainer, the main issue is possession de facto, independently of any
claim of ownership or possession de jurethat either party may set forth in his pleading."27 The plaintiff must prove
that it was in prior physical possession of the premises until it was deprived thereof by the defendant.28 The principal
issue must be possession de facto, or actual possession, and ownership is merely ancillary to such issue. The
summary character of the proceedings is designed to quicken the determination of possession de factoin the
interest of preserving the peace of the community, but the summary proceedings may not be proper to resolve
ownership of the property. Consequently, any issue on ownership arising in forcible entry or unlawful detainer is
resolved only provisionally for the purpose of determining the principal issue of possession.29 On the other hand,
regardless of the actual condition of the title to the property and whatever may be the character of the plaintiffs prior
possession, if it has in its favor priority in time, it has the security that entitles it to remain on the property until it is
lawfully ejected through an accion publiciana or accion reivindicatoria by another having a better right.30

In unlawful detainer, the complaint must allege the cause of action according to the manner set forth in Section 1,
Rule 70 of the Rules of Court, to wit:

Section 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a
person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a
lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld
after the expiration or termination of the rightto hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1)
year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages and costs. (Emphasis supplied)

The complaint must further allege the plaintiff s compliance with the jurisdictional requirement of demand as
prescribed by Section 2, Rule 70 of the Rules of Court, viz:

Section 2. Lessor to proceed against lessee only after demand. Unless otherwise stipulated, suchaction by the
lessor shall be commenced only after demand to pay orcomply with the conditions of the lease and to vacate is
made upon the lessee, or by serving written notice of such demand upon the person found on the premises, or by
posting such notice on the premises if no person be found thereon, and the lessee fails to comply therewith after
fifteen (15) days in the case of land or five (5) days in the case of buildings.

For the action to come under the exclusive original jurisdiction of the MTC, therefore, the complaint must allege that:
(a) the defendant originally had lawful possession of the property, either by virtue of a contract or by tolerance of the
plaintiff; (b) the defendants possession of the property eventually became illegal or unlawful upon notice by the
plaintiff to the defendant of the expiration or the termination of the defendants right of possession; (c) the defendant
thereafter remained in possession of the property and thereby deprived the plaintiff the enjoyment thereof; and (d)
the plaintiff instituted the action within one year from the unlawful deprivation or withholding of possession.31

The complaint herein sufficientlyalleged all the foregoing requisites for unlawful detainer, to wit: x x x x

3. On January 31, 1997, the defendant and the plaintiffs authorized agent, Century Properties Management Inc.
(CPMI), a corporation duly organized and existing under and by virtue of the laws of the x x x Philippines x x x
entered into a Contract of Lease whereby the latter leased from the former a portion of the 25th Floor of the PSB
(hereinafter referred to as the PROPERTY). x x x.

4. On March 19, 1997, the defendant decided to purchase from the plaintiff the 25th Floor of the PSB by virtue of a
Reservation Agreement of the same date. x x x.
5. However, on August 1997, the defendant started to default in its amortization payments on the above-mentioned
purchase. x x x.

xxxx

8. Sometime in March 1999, the defendant requested from the plaintiff and CPMI that the Reservation Agreement
be cancelled and in lieu thereof, the above-mentioned Contract of Lease be revived. The plaintiff and CPMI acceded
to such request x x x.

9. However, contrary to the express provisions of the Contract of Lease, the defendant failed to pay to the plaintiff
the rentals for the use of the PROPERTY when they fell due.

10. x x x the plaintiff also formally made a notarial cancellation of the aforementioned purchase and demanded that
defendant peacefully vacate the PROPERTY. x x x.

11. However, despite such demand, the defendant has failed and/or refused and continues to refuse and fail to
peacefully vacate the PROPERTY. x x x.32

As earlier shown, the final letter dated May 25, 1999 of the petitioners counsel demanded that the respondent
vacate the subject property,33 to wit:

In this connection, there is no more valid reason for you to continue occupying the subject premises. Hence,final
1wphi1

and formal demand is hereby made upon you to peacefully and quietly vacate the same within ten (10) days from
receipt hereof. Otherwise, we shall be constrained to file the appropriate legal action to protect our clients interests.

Lastly, we would like to inform you that our client will also be constrained to charge you the amount
of P9,782,226.50 corresponding to reasonable rentals and other charges as of January 22, 1999.

After the demand went unheeded, the petitioner initiated this suit in the MeTC on July 9, 1999, well within the one-
year period from the date of the last demand.

The aforequoted allegations of the complaint made out a case of unlawful detainer, vesting the MeTC with exclusive
original jurisdiction over the complaint. As alleged therein,the cause of action of the petitioner was to recover
possession of the subject property from the respondent upon the latters failure to comply with the formers demand
tovacate the subject property after the latters right to remain thereon terminated by virtue of the demand to vacate.
Indeed, the possession of the latter, although lawful at its commencement, became unlawful upon its non-
compliance with the formers demand to vacate.

The jurisdiction of the MeTC was not ousted by the fact that what was ultimately proved as to how entry by the
respondent had been made or when the dispossession had started might have departed from that alleged in the
complaint. As earlier stated, jurisdiction over the subject matter was determined from the allegations of the
complaint, which clearly set forth a cause of action for unlawful detainer.34

The MeTC correctly exercised its authority in finding for the petitioner as the plaintiff. In unlawful detainer, the
possession was originally lawful but became unlawful by the expiration or termination of the right to possess; hence,
the issue of rightful possession is decisive for, in the action, the defendant is in actual possession and the plaintiffs
cause of action is the termination of the defendant's right to continue in possession.35

A defendant's claim of possession de Jure or his averment of ownership does not render the ejectment suit either
accion publiciana or accion reivindicatoria. The suit remains an accion interdictal, a summary proceeding that can
proceed independently of any claim of ownership.36 Even when the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership is to be resolved only to determine the issue of
possession.37

WHEREFORE, we REVERSE and SET ASIDE the decision promulgated on October 9, 2003 by the Court of
Appeals affirming the decision rendered on June 10, 2002 by the Regional Trial Court of Makati City, Branch 58;
REINSTATE the decision rendered on January 12, 2000 by the Metropolitan Trial Court, Branch 64, of Makati City;
and ORDER the respondent to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

FIRST DIVISION

G.R. No. 203760 December 3, 2014

HOMER C. JAVIER, represented by his mother and natural guardian, SUSAN G. CANENCIA, Petitioner,
vs.
SUSAN LUMONTAD, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated September 29, 2011 and the
Resolution3dated October 1, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 113046 which set aside the
Decision4 dated August 20, 2009 and the Order5 dated January 18, 2010 of the Regional Trial Court of Antipolo City,
Branch 74 (RTC) in Sp. Civil Case No. 08-744, finding that the action instituted by petitioner was not one for forcible
entry, but for recovery of ownership and possession, hence, within the original jurisdiction of the latter.
Consequently, the CA ordered the remand of the case to the R TC for trial on the merits.

The Facts

This case originated from a forcible entry Complaint6 dated July 3, 2007 filed by petitioner Homer C. Javier,
represented by his mother and natural guardian Susan G. Canencia (petitioner), against respondent Susan
Lumontad (respondent) before the Municipal Trial Court of Taytay, Rizal (MTC), docketed as Civil Case No. 1929.

In his complaint, petitioner alleged that he is one of the sons of the late Vicente T. Javier (Vicente), who was the
owner of a 360-square meter (sq. m.) parcel of land located at Corner Malaya and Gonzaga Streets, Barangay
Dolores, Taytay Rizal (subject land),7 covered by Tax Declaration (TD) No. 00-TY-002-11458.8 Since his birth,
petitioners family has lived in the residential house erected thereon.9 Upon Vicentes death, petitioner, together with
his mother, continued their possession over the same. On March 26, 2007, respondent gained entry into the subject
land and started to build a two (2)-storey building (subject building) on a 150 sq. m. portion thereof, despite
petitioners vigorous objections and protests.10 The dispute was submitted to barangay conciliation but no amicable
settlement was reached between the parties.11 Thus, petitioner was constrained to file against respondent the instant
forcible entry complaint, averring, in addition to the foregoing, that reasonable compensation for the use and
occupancy of the above-said portion may be fixed at 5,000.00 per month.12

In her Answer13 dated July 30, 2007, respondent admitted that during Vicentes lifetime, he indeed was the owner
and in physical possession of the subject land.14 Nevertheless, she claimed tobe the owner of the portion where the
subject building was being constructed, as evidenced by TD No. 00-TY-002-1303115 in her name.16 Hence, she took
possession of the said portion not as an illegal entrant but as its owner.17

The MTC Ruling

In a Judgment18 dated November 11, 2007, the MTC dismissed the complaint for want of cause of action and lack of
jurisdiction.19

It found that Vicente actually subdivided the subject land into two (2) lots: the first lot, with an area of 187.20 sq. m.,
was given to petitioner, while the second lot, with an area of 172.80 sq. m. and where the subject building was
erected, was given toone Anthony de la Paz Javier (Anthony), son of Vicente by a previous failed marriage, but was
eventually acquired by respondent from the latter through sale.20 Based on this finding, the MTC concluded that
petitioner had no cause of action against respondent since she was merely exercising her rights asthe owner of the
172.80 sq. m. subdivided lot.21

Also, the MTC observed that petitioners complaint failed to aver the required jurisdictional facts as it merely
contained a general allegation that respondents entry into the disputed portion was made by means of force and
intimidation, without specifically stating how, when, and where were such means employed. With such failure, the
MTC intimated that petitioners remedy should either be an accion publiciana or an accion reivindicatoria instituted
before the proper forum.22 Dissatisfied, petitioner appealed to the RTC.

The RTC Ruling

In a Decision23 dated August 20, 2009, the RTC reversed and set aside the MTC ruling, and accordingly ordered
respondent to vacate the disputed portion and surrender possession thereof to petitioner. Likewise, it ordered
respondent to pay petitioner the amounts of P5,000.00 a month from March 2007, until she vacates said portion, as
reasonable compensation for its use and occupation, and P20,000.00 as attorneys fees, including costs of suit.24

Preliminarily, the RTC ruled that the facts averred in petitioners complaint namely, that petitioner, through his late
father, owned and possessed the subject land, and that by means of force and intimidation, respondent gainedentry
thereto25 show that his cause of action is indeed one of forcible entry that falls within the jurisdiction of the MTC.26

On the merits, the RTC found that petitioner, being the owner and possessor of the property in question, has the
right to be respected in his possession and that respondent forcibly and unlawfully deprived him of the same.27

Unconvinced, respondent moved for reconsideration,28 which was, however, denied in an Order29 dated January 18,
2010, prompting petitioner to file an appeal before the CA.

The CA Ruling

In a Decision30 dated September 29, 2011, the CA set aside the RTC ruling and remanded the case to the latter
court for trial on the merits.31

It held that the issue of possession of the subject land is intimately intertwined with the issue of ownership, such that
the former issue cannot be determined without ruling on who really owns such land. Thus, it remanded the case to
the RTC for trial on the merits in the exercise of the latters original jurisdiction in an action for recovery of ownership
and possession pursuant to Section 8 (2), Rule 40 of the Rules of Court.32

This notwithstanding, the CA still concluded that respondent had the subject building constructed in the concept of
being the owner of the 172.80 sq. m. portion of the subject land.33 In this relation, it was observed that petitioner
gave a misleading description of TD No. 00-TY-002-11458, considering that said tax declaration only covered
petitioners family house and not the subject land where said improvement was built, as petitioner alleged in his
complaint.34 In truth, the CA found that the subject land is separately covered by TD No. 00-TY-002-9660,35 which
was cancelled when the land was subdivided into two (2) lots, namely: (a) the 187.20 sq. m. lot covered by TD No.
00-TY-002-1282536 given by Vicente to petitioner; and (b) the 172.80 sq. m. lot covered by TD No. 00-TY-002-
1282437 given by Vicente to Anthony, which the latter sold to respondent, resulting in the issuance of TD No. 00-TY-
002-1303138 in her name.

Further, the CA stated that petitioner was not able to sufficiently establish that respondent employed force and
intimidation in entering the 172.80 sq. m. portion of the subject landas he failed to demonstrate the factual
circumstances that occurred during his dispossession of said property.39

Aggrieved, petitioner filed a motion for reconsideration,40 which was, however, denied in a Resolution41 dated
October 1, 2012, hence, this petition.

The Issue Before the Court

The main issue for the Courts resolution is whether or not the CA correctly set aside the RTC Ruling and ordered
the remand of the case to the latter court for trial on the merits in anaction for recovery of ownership and
possession.

The Courts Ruling

Although the Court finds that the complaint was indeed one for forcible entry, petitioners case nonetheless fails to
impress on the merits.

A. Nature of the Case: Forcible Entry.

The Court disagrees with the findings of both the MTC and the CA that the allegations in the petitioners complaint
do not make a case for forcible entry but another action cognizable by the RTC.42

As explicated in the case of Pagadora v. Ilao,43 "[t]he invariable rule is that what determines the nature of the action,
as well as the court which has jurisdiction over the case, are the allegations in the complaint. In ejectment cases, the
complaint should embody such statement of facts as to bring the party clearly within the class of cases for which
[Section 1, Rule 70 of the Rules of Court] provides a summary remedy, and must show enough on its face to give
the court jurisdiction without resort to parol evidence. Hence, in forcible entry, the complaint must necessarily allege
that one in physical possession of a land or building has been deprived of that possession by another through force,
intimidation, threat, strategy or stealth. It is not essential, however, that the complaint should expressly employ the
language of the law, but it would suffice that facts are set up showing that dispossession took place under said
conditions. In other words, the plaintiff must allege that he, prior to the defendants act of dispossession by force,
intimidation, threat, strategy or stealth, had been in prior physical possession of the property. This requirement is
jurisdictional, and as long as the allegations demonstrate a cause of action for forcible entry, the court acquires
jurisdiction over the subject matter."44

A plain reading of petitioners complaint shows that the required jurisdictional averments, so as to demonstrate a
cause of action for forcible entry, have all been complied with. Said pleading alleges that petitioner, as the original
owners, i.e., Vicentes, successor-in-interest, was in prior physical possession of the subject land but was
eventually dispossessed of a 150 sq. m. portion thereof on March 26, 2007 by respondent who, through force and
intimidation, gained entry into the same and, thereafter, erected a building thereon. Clearly, with these details, the
means by which petitioners dispossession was effected cannot be said to have been insufficiently alleged as
mistakenly ruled by the MTC and later affirmed by the CA. The "how" (through unlawful entry and the construction of
the subject building), "when" (March 26, 2007), and "where" (a 150 sq. m. portion of the subject land) of the
dispossession all appear on the face of the complaint. In Arbizo v. Sps. Santillan,45 the Court held that the acts of
unlawfully entering the disputed premises, erecting a structure thereon, and excluding therefrom the prior
possessor, would necessarily imply the use of force,46 as what had, in fact, been alleged in the instant complaint.
Hence, it was erroneous to conclude that petitioner only made a general allegation that respondents entry in the
premises was made by means of force and intimidation47 and, consequently, that a forcible entry case was not
instituted before the MTC. Given that a forcible entry complaint had been properly filed before the MTC, the CA thus
erred in ordering the remand of the case to the RTC for trial on the merits in an action for recovery of possession
and ownership, otherwise known as an accion reivindicatoria,48 pursuant to Paragraph 2, Section 8, Rule 40 of the
Rules of Court which reads:

SEC. 8. Appeal from orders dismissing case without trial; lack of jurisdiction. x x x.

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial
Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in
accordance with the preceding section, without prejudice to the admission of amended pleadings and additional
evidence in the interest of justice.

Verily, ejectment cases fall within the original and exclusive jurisdiction of the first level courts by express provision
of Section 33 (2)49 of Batas Pambansa Blg. 129,50 in relation to Section 1,51 Rule 70, of the Rules of Court.52 Even in
cases where the issue of possession is closely intertwined with the issue of ownership, the first level courts maintain
exclusive and original jurisdiction over ejectment cases,53 as they are given the authority to make an initial
determination of ownership for the purpose of settling the issue of possession.54 It must be clarified, however, that
such adjudication is merely provisional and would not bar or prejudice an action between the same parties involving
title tothe property. It is, therefore, not conclusive as to the issue of ownership.55

B. Merits of the Forcible Entry Complaint.

Notwithstanding petitioners proper classification of his action, his forcible entry complaint, nonetheless, cannot be
granted on its merits, considering that he had failed to justify his right to the de facto possession (physical or
material possession) of the disputed premises. 1wphi1

As pointed out by the CA, TD No. 00-TY-002-11458, or the supposed document from which petitioner hinges his
right to the de facto possession of the subject land, only covers his house and not the entire land itself. Nothing
appears on record to show that he has the right to the de facto possession of the 172.80 sq. m. portion which, on
the contrary, appears to be consistent with the claim of ownership of respondent in view of TD No. OOTY-002-
13031 covering the same property as registered in her name. Thus, with no evidence in support of petitioner's
stance, and the counter-evidence showing respondent's right to the de facto possession of the 172.80 sq. m. portion
as its ostensible owner, the forcible complaint must necessarily fail.

WHEREFORE, the petition is DENIED. Accordingly, petitioner's forcible entry complaint in Sp. Civil Case No. 08-
744 is DISMISSED for lack of merit.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

FIRST DIVISION

G.R. No. 80298 April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,

vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS
BOOKSTORE," and THE COURT OF APPEALS, respondents.

Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.

Cendana Santos, Delmundo & Cendana for private respondents.

CRUZ, J.:

The case before us calls for the interpretation of Article 559 of the Civil Code and raises the particular question of
when a person may be deemed to have been "unlawfully deprived" of movable property in the hands of another.
The article runs in full as follows:

Art. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in
possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in
good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

The movable property in this case consists of books, which were bought from the petitioner by an impostor who sold
it to the private respondents. Ownership of the books was recognized in the private respondents by the Municipal
Trial Court, 1 which was sustained by the Regional Trial Court, 2 which was in turn sustained by the Court of
Appeals. 3 The petitioner asks us to declare that all these courts have erred and should be reversed.

This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by
telephone with the petitioner company for 406 books, payable on delivery. 4 EDCA prepared the corresponding
invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of
P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after
verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. 6

Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first
check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there
was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the payment check. 7 EDCA then went to the police, which set
a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Pea and his
sale of 120 of the books he had ordered from EDCA to the private respondents. 8

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which
forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying
stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and
thereafter turned them over to the petitioner. 9

Protesting this high-handed action, the private respondents sued for recovery of the books after demand for their
return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal,
finally surrendered the books to the private respondents. 10 As previously stated, the petitioner was successively
rebuffed in the three courts below and now hopes to secure relief from us.

To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in taking the law into its
own hands and forcibly recovering the disputed books from the private respondents. The circumstance that it did so
with the assistance of the police, which should have been the first to uphold legal and peaceful processes, has
compounded the wrong even more deplorably. Questions like the one at bar are decided not by policemen but by
judges and with the use not of brute force but of lawful writs.

Now to the merits

It is the contention of the petitioner that the private respondents have not established their ownership of the disputed
books because they have not even produced a receipt to prove they had bought the stock. This is unacceptable.
Precisely, the first sentence of Article 559 provides that "the possession of movable property acquired in good faith
is equivalent to a title," thus dispensing with further proof.

The argument that the private respondents did not acquire the books in good faith has been dismissed by the lower
courts, and we agree. Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing
that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need.
Private respondents are in the business of buying and selling books and often deal with hard-up sellers who urgently
have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such
sellers she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and selling
books to buy them at a discount and resell them for a profit.

But the real issue here is whether the petitioner has been unlawfully deprived of the books because the check
issued by the impostor in payment therefor was dishonored.

In its extended memorandum, EDCA cites numerous cases holding that the owner who has been unlawfully
deprived of personal property is entitled to its recovery except only where the property was purchased at a public
sale, in which event its return is subject to reimbursement of the purchase price. The petitioner is begging the
question. It is putting the cart before the horse. Unlike in the cases invoked, it has yet to be established in the case
at bar that EDCA has been unlawfully deprived of the books.
The petitioner argues that it was, because the impostor acquired no title to the books that he could have validly
transferred to the private respondents. Its reason is that as the payment check bounced for lack of funds, there was
a failure of consideration that nullified the contract of sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject
matter and the consideration. According to the Civil Code:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law
governing the form of contracts.

xxx xxx xxx

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof.

Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has
fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass
to the buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule is that
such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing
sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the
case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another.

In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to Francisco Ang, who in turn sold
them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the articles from Tan, who
claimed he had validly bought them from Ang, paying for the same in cash. Finding that there was no conspiracy
between Tan and Ang to deceive Asiatic the Court of Appeals declared:

Yet the defendant invoked Article 464 12 of the Civil Code providing, among other things that "one who has
been unlawfully deprived of personal property may recover it from any person possessing it." We do not
believe that the plaintiff has been unlawfully deprived of the cartons of Gloco Tonic within the scope of this
legal provision. It has voluntarily parted with them pursuant to a contract of purchase and sale. The
circumstance that the price was not subsequently paid did not render illegal a transaction which was valid
and legal at the beginning.

In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to Jimenez. When the
payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle from Jimenez on
the ground that she had been unlawfully deprived of it by reason of Feist's deception. In ruling for Jimenez, the
Court of Appeals held:

The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully deprived of her
car. At first blush, it would seem that she was unlawfully deprived thereof, considering that she was induced
to part with it by reason of the chicanery practiced on her by Warner L. Feist. Certainly, swindling, like
robbery, is an illegal method of deprivation of property. In a manner of speaking, plaintiff-appellant was
"illegally deprived" of her car, for the way by which Warner L. Feist induced her to part with it is illegal and is
punished by law. But does this "unlawful deprivation" come within the scope of Article 559 of the New Civil
Code?

xxx xxx xxx

 . . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract (Article 1390
N.C.C.). Being a voidable contract, it is susceptible of either ratification or annulment. If the contract is
ratified, the action to annul it is extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its
defects (Article 1396, N.C.C.); if the contract is annulled, the contracting parties are restored to their
respective situations before the contract and mutual restitution follows as a consequence (Article 1398,
N.C.C.).

However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the
contract of sale remains valid and binding. When plaintiff-appellant Trinidad C. Tagatac delivered the car to
Feist by virtue of said voidable contract of sale, the title to the car passed to Feist. Of course, the title that
Feist acquired was defective and voidable. Nevertheless, at the time he sold the car to Felix Sanchez, his
title thereto had not been avoided and he therefore conferred a good title on the latter, provided he bought
the car in good faith, for value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There
being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good
faith.

The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied to the case before
us.

Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly
transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between him
and EDCA and did not impair the title acquired by the private respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be interpreted in the
manner suggested by the petitioner. A person relying on the seller's title who buys a movable property from him
would have to surrender it to another person claiming to be the original owner who had not yet been paid the
purchase price therefor. The buyer in the second sale would be left holding the bag, so to speak, and would be
compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he
had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to
Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had
been paid for on delivery. By contrast, EDCA was less than cautious in fact, too trusting in dealing with the
impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by
telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy
enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice
issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership
in the buyer.

Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books being offered
for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere
possession of the books, these being movable property, Leonor Santos nevertheless demanded more proof before
deciding to buy them.

It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result
of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in
1wphi1

good faith, and with proper care, when they bought the books from Cruz.

While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the private respondents
but against Tomas de la Pea, who has apparently caused all this trouble. The private respondents have
themselves been unduly inconvenienced, and for merely transacting a customary deal not really unusual in their
kind of business. It is they and not EDCA who have a right to complain.

WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the petitioner.

Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

 THIRD DIVISION

BPI FAMILY BANK, G.R. No. 123498

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

AMADO FRANCO and COURT OF Promulgated:

APPEALS,
Respondents. November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost
fidelity. We reiterate this exhortation in the case at bench.

Before us is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals (CA)
Decision[1] in CA-G.R. CV No. 43424 which affirmed with modification the judgment[2] of the
Regional Trial Court, Branch 55, Manila (Manila RTC), in Civil Case No. 90-53295.

This case has its genesis in an ostensible fraud perpetrated on the petitioner BPI Family Bank
(BPI-FB) allegedly by respondent Amado Franco (Franco) in conspiracy with other
individuals,[3] some of whom opened and maintained separate accounts with BPI-FB, San
Francisco del Monte (SFDM) branch, in a series of transactions.

On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a savings and
current account with BPI-FB. Soon thereafter, or on August 25, 1989, First Metro Investment
Corporation (FMIC) also opened a time deposit account with the same branch of BPI-FB with a
deposit of P100,000,000.00, to mature one year thence.

Subsequently, on August 31, 1989, Franco opened three accounts, namely, a

current,[4] savings,[5] and time deposit,[6] with BPI-FB. The current and savings accounts were
respectively funded with an initial deposit of P500,000.00 each, while the time deposit account
had P1,000,000.00 with a maturity date of August 31, 1990. The total amount of P2,000,000.00
used to open these accounts is traceable to a check issued by Tevesteco allegedly in consideration
of Francos introduction of Eladio Teves,[7] who was looking for a conduit bank to facilitate
Tevestecos business transactions, to Jaime Sebastian, who was then BPI-FB SFDMs Branch
Manager. In turn, the funding for the P2,000,000.00 check was part of the P80,000,000.00 debited
by BPI-FB from FMICs time deposit account and credited to Tevestecos current account pursuant
to an Authority to Debit purportedly signed by FMICs officers.

It appears, however, that the signatures of FMICs officers on the Authority to Debit were
forged.[8] On September 4, 1989, Antonio Ong,[9] upon being shown the Authority to Debit,
personally declared his signature therein to be a forgery. Unfortunately, Tevesteco had already
effected several withdrawals from its current account (to which had been credited
the P80,000,000.00 covered by the forged Authority to Debit) amounting to P37,455,410.54,
including the P2,000,000.00 paid to Franco.

On September 8, 1989, impelled by the need to protect its interests in light of FMICs
forgery claim, BPI-FB, thru its Senior Vice-President, Severino Coronacion, instructed Jesus
Arangorin[10] to debit Francos savings and current accounts for the amounts remaining
therein.[11] However, Francos time deposit account could not be debited due to the capacity
limitations of BPI-FBs computer.[12]

In the meantime, two checks[13] drawn by Franco against his BPI-FB current account were
dishonored upon presentment for payment, and stamped with a notation account under
garnishment. Apparently, Francos current account was garnished by virtue of an Order of
Attachment issued by the Regional Trial Court of Makati (Makati RTC) in Civil Case No. 89-
4996 (Makati Case), which had been filed by BPI-FB against Franco et al.,[14] to recover
the P37,455,410.54 representing Tevestecos total withdrawals from its account.

Notably, the dishonored checks were issued by Franco and presented for payment at BPI-
FB prior to Francos receipt of notice that his accounts were under garnishment.[15] In fact, at the
time the Notice of Garnishment dated September 27, 1989 was served on BPI-FB, Franco had yet
to be impleaded in the Makati case where the writ of attachment was issued.

It was only on May 15, 1990, through the service of a copy of the Second Amended Complaint
in Civil Case No. 89-4996, that Franco was impleaded in the Makati case.[16] Immediately, upon
receipt of such copy, Franco filed a Motion to Discharge Attachment which the Makati RTC
granted on May 16, 1990. The Order Lifting the Order of Attachment was served on BPI-FB on
even date, with Franco demanding the release to him of the funds in his savings and current
accounts. Jesus Arangorin, BPI-FBs new manager, could not forthwith comply with the demand
as the funds, as previously stated, had already been debited because of FMICs forgery claim. As
such, BPI-FBs computer at the SFDM Branch indicated that the current account record was not
on file.

With respect to Francos savings account, it appears that Franco agreed to an arrangement, as a
favor to Sebastian, whereby P400,000.00 from his savings account was temporarily transferred
to Domingo Quiaoits savings account, subject to its immediate return upon issuance of a
certificate of deposit which Quiaoit needed in connection with his visa application at the Taiwan
Embassy. As part of the arrangement, Sebastian retained custody of Quiaoits savings account
passbook to ensure that no withdrawal would be effected therefrom, and to preserve Francos
deposits.

On May 17, 1990, Franco pre-terminated his time deposit account. BPI-FB deducted the amount
of P63,189.00 from the remaining balance of the time deposit account representing advance
interest paid to him.

These transactions spawned a number of cases, some of which we had already resolved.

FMIC filed a complaint against BPI-FB for the recovery of the amount of P80,000,000.00 debited
from its account.[17] The case eventually reached this Court, and in BPI Family Savings Bank, Inc.
v. First Metro Investment Corporation,[18] we upheld the finding of the courts below that BPI-FB
failed to exercise the degree of diligence required by the nature of its obligation to treat the
accounts of its depositors with meticulous care. Thus, BPI-FB was found liable to FMIC for the
debited amount in its time deposit. It was ordered to pay P65,332,321.99 plus interest at 17% per
annum from August 29, 1989 until fully restored. In turn, the 17% shall itself earn interest at 12%
from October 4, 1989 until fully paid.

In a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica

(Buenaventura, et al.),[19] recipients of a P500,000.00 check proceeding from the P80,000,000.00
mistakenly credited to Tevesteco, likewise filed suit. Buenaventura et al., as in the case of Franco,
were also prevented from effecting withdrawals[20]from their current account with BPI-FB,
Bonifacio Market, Edsa, Caloocan City Branch. Likewise, when the case was elevated to this
Court docketed as BPI Family Bank v. Buenaventura,[21] we ruled that BPI-FB had no right to
freeze Buenaventura, et al.s accounts and adjudged BPI-FB liable therefor, in addition to
damages.

Meanwhile, BPI-FB filed separate civil and criminal cases against those believed to be the
perpetrators of the multi-million peso scam.[22] In the criminal case, Franco, along with the other
accused, except for Manuel Bienvenida who was still at large, were acquitted of the crime of
Estafa as defined and penalized under Article 351, par. 2(a) of the Revised Penal
Code.[23] However, the civil case[24] remains under litigation and the respective rights and
liabilities of the parties have yet to be adjudicated.

Consequently, in light of BPI-FBs refusal to heed Francos demands to unfreeze his accounts and
release his deposits therein, the latter filed on June 4, 1990 with the Manila RTC the subject suit.
In his complaint, Franco prayed for the following reliefs: (1) the interest on the remaining
balance[25] of his current account which was eventually released to him on October 31, 1991; (2)
the balance[26] on his savings account, plus interest thereon; (3) the advance interest[27] paid to
him which had been deducted when he pre-terminated his time deposit account; and (4) the
payment of actual, moral and exemplary damages, as well as attorneys fees.

BPI-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco
and refusing to release his deposits, claiming that it had a better right to the amounts which
consisted of part of the money allegedly fraudulently withdrawn from it by Tevesteco and ending
up in Francos accounts. BPI-FB asseverated that the claimed consideration of P2,000,000.00 for
the introduction facilitated by Franco between George Daantos and Eladio Teves, on the one
hand, and Jaime Sebastian, on the other, spoke volumes of Francos participation in the fraudulent
transaction.

On August 4, 1993, the Manila RTC rendered judgment, the dispositive portion of which reads
as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of [Franco] and
against [BPI-FB], ordering the latter to pay to the former the following sums:

1. P76,500.00 representing the legal rate of interest on the amount of P450,000.00 from May 18,
1990 to October 31, 1991;

2. P498,973.23 representing the balance on [Francos] savings account as of May 18, 1990, together
with the interest thereon in accordance with the banks guidelines on the payment therefor;

3. P30,000.00 by way of attorneys fees; and

4. P10,000.00 as nominal damages.

The counterclaim of the defendant is DISMISSED for lack of factual and legal anchor.

Costs against [BPI-FB].

SO ORDERED.[28]

Unsatisfied with the decision, both parties filed their respective appeals before the CA. Franco
confined his appeal to the Manila RTCs denial of his claim for moral and exemplary damages,
and the diminutive award of attorneys fees. In affirming with modification the lower courts
decision, the appellate court decreed, to wit:
 WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with
modification ordering [BPI-FB] to pay [Franco] P63,189.00 representing the interest deducted
from the time deposit of plaintiff-appellant. P200,000.00 as moral damages and P100,000.00 as
exemplary damages, deleting the award of nominal damages (in view of the award of moral and
exemplary damages) and increasing the award of attorneys fees from P30,000.00 to P75,000.00.

Cost against [BPI-FB].

SO ORDERED.[29]

In this recourse, BPI-FB ascribes error to the CA when it ruled that: (1) Franco had a better right
to the deposits in the subject accounts which are part of the proceeds of a forged Authority to
Debit; (2) Franco is entitled to interest on his current account; (3) Franco can recover
the P400,000.00 deposit in Quiaoits savings account; (4) the dishonor of Francos checks was not
legally in order; (5) BPI-FB is liable for interest on Francos time deposit, and for moral and
exemplary damages; and (6) BPI-FBs counter-claim has no factual and legal anchor.

The petition is partly meritorious.

We are in full accord with the common ruling of the lower courts that BPI-FB cannot unilaterally
freeze Francos accounts and preclude him from withdrawing his deposits. However, contrary to
the appellate courts ruling, we hold that Franco is not entitled to unearned interest on the time
deposit as well as to moral and exemplary damages.

First. On the issue of who has a better right to the deposits in Francos accounts, BPI-FB urges us
that the legal consequence of FMICs forgery claim is that the money transferred by BPI-FB to
Tevesteco is its own, and considering that it was able to recover possession of the same when the
money was redeposited by Franco, it had the right to set up its ownership thereon and freeze
Francos accounts.

BPI-FB contends that its position is not unlike that of an owner of personal property who regains
possession after it is stolen, and to illustrate this point, BPI-FB gives the following example:
where Xs television set is stolen by Y who thereafter sells it to Z, and where Z unwittingly entrusts
possession of the TV set to X, the latter would have the right to keep possession of the property
and preclude Z from recovering possession thereof. To bolster its position, BPI-FB cites Article
559 of the Civil Code, which provides:

Article 559. The possession of movable property acquired in good faith is equivalent to
a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.
 If the possessor of a movable lost or of which the owner has been unlawfully deprived,
has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.

BPI-FBs argument is unsound. To begin with, the movable property mentioned in Article 559 of
the Civil Code pertains to a specific or determinate thing.[30] A determinate or specific thing is
one that is individualized and can be identified or distinguished from others of the same kind. [31]

In this case, the deposit in Francos accounts consists of money which, albeit characterized
as a movable, is generic and fungible.[32] The quality of being fungible depends upon the
possibility of the property, because of its nature or the will of the parties, being substituted by
others of the same kind, not having a distinct individuality.[33]

Significantly, while Article 559 permits an owner who has lost or has been unlawfully
deprived of a movable to recover the exact same thing from the current possessor, BPI-FB simply
claims ownership of the equivalent amount of money, i.e., the value thereof, which it had
mistakenly debited from FMICs account and credited to Tevestecos, and subsequently traced to
Francos account. In fact, this is what BPI-FB did in filing the Makati Case against Franco, et al. It
staked its claim on the money itself which passed from one account to another, commencing with
the forged Authority to Debit.

It bears emphasizing that money bears no earmarks of peculiar ownership,[34] and this
characteristic is all the more manifest in the instant case which involves money in a banking
transaction gone awry. Its primary function is to pass from hand to hand as a medium of exchange,
without other evidence of its title.[35] Money, which had passed through various transactions in
the general course of banking business, even if of traceable origin, is no exception.

Thus, inasmuch as what is involved is not a specific or determinate personal property, BPI-
FBs illustrative example, ostensibly based on Article 559, is inapplicable to the instant case.

There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but
not as a legal consequence of its unauthorized transfer of FMICs deposits to Tevestecos account.
BPI-FB conveniently forgets that the deposit of money in banks is governed by the Civil Code
provisions on simple loan or mutuum.[36] As there is a debtor-creditor relationship between a bank
and its depositor, BPI-FB ultimately acquired ownership of Francos deposits, but such ownership
is coupled with a corresponding obligation to pay him an equal amount on demand.[37] Although
BPI-FB owns the deposits in Francos accounts, it cannot prevent him from demanding payment
of BPI-FBs obligation by drawing checks against his current account, or asking for the release of
the funds in his savings account. Thus, when Franco issued checks drawn against his current
account, he had every right as creditor to expect that those checks would be honored by BPI-FB
as debtor.

More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco
based on its mere suspicion that the funds therein were proceeds of the multi-million peso scam
Franco was allegedly involved in. To grant BPI-FB, or any bank for that matter, the right to take
whatever action it pleases on deposits which it supposes are derived from shady transactions,
would open the floodgates of public distrust in the banking industry.

Our pronouncement in Simex International (Manila), Inc. v. Court of Appeals[38] continues

to resonate, thus:

The banking system is an indispensable institution in the modern world and plays a vital
role in the economic life of every civilized nation. Whether as mere passive entities for
the safekeeping and saving of money or as active instruments of business and
commerce, banks have become an ubiquitous presence among the people, who have
come to regard them with respect and even gratitude and, most of all, confidence. Thus,
even the humble wage-earner has not hesitated to entrust his lifes savings to the bank
of his choice, knowing that they will be safe in its custody and will even earn some
interest for him. The ordinary person, with equal faith, usually maintains a modest
checking account for security and convenience in the settling of his monthly bills and
the payment of ordinary expenses. x x x.

In every case, the depositor expects the bank to treat his account with the utmost fidelity,
whether such account consists only of a few hundred pesos or of millions. The bank
must record every single transaction accurately, down to the last centavo, and as
promptly as possible. This has to be done if the account is to reflect at any given time
the amount of money the depositor can dispose of as he sees fit, confident that the bank
will deliver it as and to whomever directs. A blunder on the part of the bank, such as
the dishonor of the check without good reason, can cause the depositor not a little
embarrassment if not also financial loss and perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of
its functions, the bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of their relationship. x x x.

Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the
signatures of its customers. Having failed to detect the forgery in the Authority to Debit and in
the process inadvertently facilitate the FMIC-Tevesteco transfer, BPI-FB cannot now shift
liability thereon to Franco and the other payees of checks issued by Tevesteco, or prevent
withdrawals from their respective accounts without the appropriate court writ or a favorable final
judgment.
 Further, it boggles the mind why BPI-FB, even without delving into the authenticity of the
signature in the Authority to Debit, effected the transfer of P80,000,000.00 from FMICs to
Tevestecos account, when FMICs account was a time deposit and it had already paid advance
interest to FMIC. Considering that there is as yet no indubitable evidence establishing Francos
participation in the forgery, he remains an innocent party. As between him and BPI-FB, the latter,
which made possible the present predicament, must bear the resulting loss or inconvenience.

Second. With respect to its liability for interest on Francos current account, BPI-FB argues
that its non-compliance with the Makati RTCs Order Lifting the Order of Attachment and the
legal consequences thereof, is a matter that ought to be taken up in that court.

The argument is tenuous. We agree with the succinct holding of the appellate court in this
respect. The Manila RTCs order to pay interests on Francos current account arose from BPI-FBs
unjustified refusal to comply with its obligation to pay Franco pursuant to their contract of
mutuum. In other words, from the time BPI-FB refused Francos demand for the release of the
deposits in his current account, specifically, from May 17, 1990, interest at the rate of 12% began
to accrue thereon.[39]

Undeniably, the Makati RTC is vested with the authority to determine the legal
consequences of BPI-FBs non-compliance with the Order Lifting the Order of Attachment.
However, such authority does not preclude the Manila RTC from ruling on BPI-FBs liability to
Franco for payment of interest based on its continued and unjustified refusal to perform a
contractual obligation upon demand. After all, this was the core issue raised by Franco in his
complaint before the Manila RTC.

Third. As to the award to Franco of the deposits in Quiaoits account, we find no reason to
depart from the factual findings of both the Manila RTC and the CA.

Noteworthy is the fact that Quiaoit himself testified that the deposits in his account are
actually owned by Franco who simply accommodated Jaime Sebastians request to temporarily
transfer P400,000.00 from Francos savings account to Quiaoits account.[40] His testimony cannot
be characterized as hearsay as the records reveal that he had personal knowledge of the
arrangement made between Franco, Sebastian and himself.[41]

BPI-FB makes capital of Francos belated allegation relative to this particular

arrangement. It insists that the transaction with Quiaoit was not specifically alleged in Francos
complaint before the Manila RTC. However, it appears that BPI-FB had impliedly consented to
the trial of this issue given its extensive cross-examination of Quiaoit.
 Section 5, Rule 10 of the Rules of Court provides:

Section 5. Amendment to conform to or authorize presentation of evidence. 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. Such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to amend does not affect the
result of the trial of these issues. If evidence is objected to at the trial on the ground
that it is now within the issues made by the pleadings, the court may allow the pleadings
to be amended and shall do so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be subserved thereby. The court may grant
a continuance to enable the amendment to be made. (Emphasis supplied)

In all, BPI-FBs argument that this case is not the right forum for Franco to recover
the P400,000.00 begs the issue. To reiterate, Quiaoit, testifying during the trial, unequivocally
disclaimed ownership of the funds in his account, and pointed to Franco as the actual owner
thereof. Clearly, Francos action for the recovery of his deposits appropriately covers the deposits
in Quiaoits account.

Fourth. Notwithstanding all the foregoing, BPI-FB continues to insist that the dishonor of Francos
checks respectively dated September 11 and 18, 1989 was legally in order in view of the Makati
RTCs supplemental writ of attachment issued on September 14, 1989. It posits that as the party
that applied for the writ of attachment before the Makati RTC, it need not be served with the
Notice of Garnishment before it could place Francos accounts under garnishment.

The argument is specious. In this argument, we perceive BPI-FBs clever but transparent ploy to
circumvent Section 4,[42] Rule 13 of the Rules of Court. It should be noted that the strict
requirement on service of court papers upon the parties affected is designed to comply with the
elementary requisites of due process. Franco was entitled, as a matter of right, to notice, if the
requirements of due process are to be observed. Yet, he received a copy of the Notice of
Garnishment only on September 27, 1989, several days after the two checks he issued were
dishonored by BPI-FB on September 20 and 21, 1989. Verily, it was premature for BPI-FB to
freeze Francos accounts without even awaiting service of the Makati RTCs Notice of
Garnishment on Franco.

Additionally, it should be remembered that the enforcement of a writ of attachment cannot be

made without including in the main suit the owner of the property attached by virtue
thereof. Section 5, Rule 13 of the Rules of Court specifically provides that no levy or attachment
pursuant to the writ issued x x x shall be enforced unless it is preceded, or contemporaneously
accompanied, by service of summons, together with a copy of the complaint, the application for
attachment, on the defendant within the Philippines.

Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had yet to
acquire jurisdiction over the person of Franco when BPI-FB garnished his
accounts.[43] Effectively, therefore, the Makati RTC had no authority yet to bind the deposits of
Franco through the writ of attachment, and consequently, there was no legal basis for BPI-FB to
dishonor the checks issued by Franco.

Fifth. Anent the CAs finding that BPI-FB was in bad faith and as such liable for the advance
interest it deducted from Francos time deposit account, and for moral as well as exemplary
damages, we find it proper to reinstate the ruling of the trial court, and allow only the recovery of
nominal damages in the amount of P10,000.00. However, we retain the CAs award of P75,000.00
as attorneys fees.
In granting Francos prayer for interest on his time deposit account and for moral and exemplary
damages, the CA attributed bad faith to BPI-FB because it (1) completely disregarded its
obligation to Franco; (2) misleadingly claimed that Francos deposits were under garnishment; (3)
misrepresented that Francos current account was not on file; and (4) refused to return
the P400,000.00 despite the fact that the ostensible owner, Quiaoit, wanted the amount returned
to Franco.

In this regard, we are guided by Article 2201 of the Civil Code which provides:

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable consequences
of the breach of the obligation, and which the parties have foreseen or could have
reasonable foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non-
performance of the obligation. (Emphasis supplied.)

We find, as the trial court did, that BPI-FB acted out of the impetus of self-protection and not out
of malevolence or ill will. BPI-FB was not in the corrupt state of mind contemplated in Article
2201 and should not be held liable for all damages now being imputed to it for its breach of
obligation. For the same reason, it is not liable for the unearned interest on the time deposit.

Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong; it partakes of the nature of fraud.[44] We
have held that it is a breach of a known duty through some motive of interest or ill will.[45] In the
instant case, we cannot attribute to BPI-FB fraud or even a motive of self-enrichment. As the trial
court found, there was no denial whatsoever by BPI-FB of the existence of the accounts. The
computer-generated document which indicated that the current account was not on file resulted
from the prior debit by BPI-FB of the deposits. The remedy of freezing the account, or the
garnishment, or even the outright refusal to honor any transaction thereon was resorted to solely
for the purpose of holding on to the funds as a security for its intended court action,[46] and with
no other goal but to ensure the integrity of the accounts.

We have had occasion to hold that in the absence of fraud or bad faith,[47] moral damages cannot
be awarded; and that the adverse result of an action does not per se make the action wrongful, or
the party liable for it. One may err, but error alone is not a ground for granting such damages.[48]
An award of moral damages contemplates the existence of the following requisites: (1) there must
be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2)
there must be a culpable act or omission factually established; (3) the wrongful act or omission
of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award
for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.[49]

Franco could not point to, or identify any particular circumstance in Article 2219 of the Civil
Code,[50] upon which to base his claim for moral damages.

Thus, not having acted in bad faith, BPI-FB cannot be held liable for moral damages under Article
2220 of the Civil Code for breach of contract.[51]

We also deny the claim for exemplary damages. Franco should show that he is entitled to moral,
temperate, or compensatory damages before the court may even consider the question of whether
exemplary damages should be awarded to him.[52] As there is no basis for the award of moral
damages, neither can exemplary damages be granted.

While it is a sound policy not to set a premium on the right to litigate,[53] we, however, find that
Franco is entitled to reasonable attorneys fees for having been compelled to go to court in order
to assert his right. Thus, we affirm the CAs grant of P75,000.00 as attorneys fees.

Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect
his interest,[54] or when the court deems it just and equitable.[55] In the case at bench, BPI-FB
refused to unfreeze the deposits of Franco despite the Makati RTCs Order Lifting the Order of
Attachment and Quiaoits unwavering assertion that the P400,000.00 was part of Francos savings
account. This refusal constrained Franco to incur expenses and litigate for almost two (2) decades
in order to protect his interests and recover his deposits. Therefore, this Court deems it just and
equitable to grant Franco P75,000.00 as attorneys fees. The award is reasonable in view of the
complexity of the issues and the time it has taken for this case to be resolved.[56]
Sixth. As for the dismissal of BPI-FBs counter-claim, we uphold the Manila RTCs ruling, as
affirmed by the CA, that BPI-FB is not entitled to recover P3,800,000.00 as actual damages. BPI-
FBs alleged loss of profit as a result of Francos suit is, as already pointed out, of its own
making. Accordingly, the denial of its counter-claim is in order.

WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Decision

dated November 29, 1995 is AFFIRMED with the MODIFICATION that the award of
unearned interest on the time deposit and of moral and exemplary damages is DELETED.

SECOND DIVISION

G.R. No. 191710, January 14, 2015

DEMETRIA DE GUZMAN, AS SUBSTITUTED BY HER HEIRS OLGA C. BARBASO AND NOLI G. CEMENTTNA;* LOLITA
A. DE GUZMAN; ESTHER G.MILAN; BANAAG A. DE GUZMAN; AMOR G. APOLO, AS SUBSTITUTED BY HIS HEIRS
ALBERTO T. APOLO, MARK APOLO AND GEORGE APOLO;* HERMINIO A. DE GUZMAN; LEONOR G. VTVENCIO;
NORMA A. DE GUZMAN; AND JOSEFINA G. HERNANDEZ, Petitioners, v. FBLINVEST DEVELOPMENT
CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

In this Petition for Review on Certiorari,1 petitioners question the extent of the easement of right of way granted to them and
the indemnity for the same as fixed by the Court of Appeals (CA) in its September 25, 2009 Decision2 and March 1, 2010
Resolution3 in CA-G.R. CV No. 87920.

Factual Antecedents

Petitioners Demetria de Guzman, Lolita A. de Guzman, Esther G. Milan, Banaag A. de Guzman, Amor G. Apolo, Herminio A.
de Guzman, Leonor G. Vivencio, Norma A. de Guzman and Josefina G. Hernandez (petitioners)4 were co-owners in fee simple
of a parcel of land measuring 15,063 square meters and situated in Barrio Bulao, Cainta, Rizal, which was later subdivided
among them and for which individual titles were issued. The property is enclosed and surrounded by other real properties
belonging to various owners. One of its adjoining properties is Filinvest Home Subdivision Phase IV-A, a subdivision owned
and developed by respondent Filinvest Development Corporation (respondent) which, coming from petitioners' property, has
a potential direct access to Marcos highway either by foot or vehicle. As such, petitioners filed on August 17, 1988 a
Complaint for Easement of Right of Way5 against respondent before the Regional Trial Court (RTC) of Antipolo.

Unwilling to grant petitioners a right of way within its subdivision, respondent alleged in its Answer that petitioners have an
access to Sumulong Highway through another property adjoining the latter's property. In fact, the distance from petitioners'
property to Sumulong Highway using the said other property is only 1,500 meters or shorter as compared to the 2,500-
meter distance between petitioners' property and Marcos Highway using respondent's subdivision.6

On April 30, 1993, the RTC rendered a Decision7 granting petitioners the right of way across respondent's subdivision,
ratiocinating as follows:
chanroblesvirtuallawlibrary

The Court holds that a right of way as prayed in the complaint can be granted.

The adverted route by [respondent] is unfeasible and unavailing. The route, aside from being hilly, has to traverse raw lands
[denominated] 3043-A which belong to different owners with no designated road lot thus the impossibility of free access
thereon. Aside from that fact it is not passable by vehicular means.

Whereas if [petitioners] would pass through the [respondent's] road lot particularly Lot 15 access to the Marcos Highway is
readily available to [petitioners'] property. Only a fence [separates] the Filinvest Subdivision and the [petitioners'] property
[which] could be removed x x x anytime.

While in the survey of the property of the [petitioners] it is shown that the distance from the subject lot to the Marcos
Highway is approximately 2,350 meters and the distance from Sumulong Highway to the subject lot is 1,400 meters, such
short distance could not be used as absolute basis to deny the [petitioners] the relief prayed for.

As held in Bacolod-Murcia Milling Co. vs. Capitol Subd., Inc., L-25887, July 26, 1966 and by express provision of [A]rticles
649 and 650 of the Civil Code, a compulsory right of way cannot be obtained unless four requisites are first shown to exist,
namely: (1) that it is surrounded by other immovables and has no adequate outlet to a public highway; (2) that there is
payment of proper indemnity; (3) that the isolation is not due to the dominant estate's own acts; and (4) that the right of
way claimed is at the point least prejudicial to the servient estate and in so far as consistent with this rule where the distance
from the dominant estate to a public highway may be the shortest.

The foregoing requirements are present in this case.

As already stated even if it appears that the distance from the subject property to Sumulong Highway is the shortest route,
yet it is prejudicial to the [petitioners].

The road in said route is undeveloped, owned by several owners, a raw lot, hilly, while if it would be [respondent's] property
which would be the [servient] estate it only takes the removal of the fence in order that [petitioners] could have access to
the public highway.8 cralawlawlibrary

As to the indemnity, the RTC said: chanroblesvirtuallawlibrary

Lastly, as a requirement for the granting of the easement indemnity is hereby placed at P400,000.00 considering x x x the
benefits derived by the dominant estate and the type of the road therein which is concrete.9 cralawlawlibrary

Upon respondent's appeal, the CA, in its February 13, 1996 Decision,10 affirmed petitioners' entitlement to legal easement of
right of way. However, it set aside the P400,000.00 indemnity fixed by the RTC considering that the exact area of the right of
way, as well as its value per square meter, had not yet been determined. The CA thus remanded the case to the RTC for the
determination thereof and the corresponding amount of indemnity.

As none of the parties appealed the said CA Decision, the same became final and executory.

Ruling of the Regional Trial Court

Established during the remand proceedings was the fair market value of respondent's property which was pegged by the
Municipal Assessor's Office of Cainta at P1,620.00 per square meter. Anent the extent of the property affected by the right of
way granted by virtue of the April 30, 1993 RTC Decision as affirmed by the CA, the parties were, however, in
disagreement, viz: chanroblesvirtuallawlibrary

[Counsel for Petitioners]

Atty. Barbaso: x x x But if we are going to [take it from] this affirmed decision
of the trial court[,] it made [particular] mention of x x x Road Lot 15 access as
found in page 4 of the said decision and the said decision also mentioned
about a statement and [I] quote x x x: "and it only takes the removal of the
fence in order [that] the [petitioners] could have access on the highway.["]
So, this is [the] decision. I am quoting it from the decision. So if the decision
says it [would] only take the removal of the fence, [it is only] the fence that
we are going to remove. It's found on page 4 of the decision of the lower
court.

[Counsel for Respondent]

Atty. [Ma'am], may I?
Tolentino:

Atty. There is no other decision. This is the only decision we are referring to. [It is]
Barbaso: one and the same decision.

Court: Decision of the Court of Appeals.

Atty. Court of Appeals decision, page 12, states: ["]regrettably the lower court did
Tolentino:not adequately explain the basis for fixing the indemnity at P400,000.00.
There was no finding as to the exact measurement of the right of way, its area
in square meters, its value by square meters, the cost of the construction.["]
So...
 xxxx

Atty. Where the easement is established in such a manner that its use may be
Tolentino:continuous by the dominant [e]state [by] establishing a permanent passage
the indemnity will consist [of] the value of the land occupied and the amount
of damage.

Atty. We are not occupying the whole of the entrance up to this very point [Road
Barbaso: Lot 15].

Atty. But you cannot reach this point [Road Lot 15] if you don't pass the entrance.
Tolentino:

Atty. Only passing that's why the servitude was granted. That's why the easement
Barbaso: was granted.

Atty. We will submit, your honor, whatever ruling you make.

Tolentino:

Atty. Your honor...

Barbaso:

Court: The claim of [respondent] is from the gate up to here [Road Lot 15].

Atty. Yes, your honor.

Tolentino:

Court: [To Atty. Barbaso] And your claim is from that portion to here [from
petitioners' property to Road Lot 15].

xxxx

Court: Do it in writing including the jurisprudence in support of your respective

claim[s].11
As can be gleaned from the above, petitioners insisted that the right of way pertains only to Road Lot 15 where the fence
separating their property from respondent's subdivision, which was supposed to be removed to grant them access thereto, is
located. On the other hand, it was respondent's contention that the right of way covers the whole stretch from petitioners'
property all the way to its subdivision's gate leading to Marcos Highway.

In resolving the same in its Order12 of June 1, 2005, the RTC deduced, from the April 30, 1993 RTC Decision and the
February 13, 1996 CA Decision, that the right of way granted pertains only to Road Lot 15, viz: chanroblesvirtuallawlibrary

Based on the records of the case, the Decision of this Court and that of the Court of Appeals are pointing to Road Lot 15 as
the subject lot of the right of way granted to the [petitioners]. The said Decisions had long attained finality with respect to
the subjectlot which should be the basis for the determination of just compensation.13 cralawlawlibrary

Hence, it ruled:chanroblesvirtuallawlibrary

In view of the foregoing, the Court so holds that the appropriate amount of indemnity due to the [respondents] from the
[petitioners] for the right of way granted to the latter shall be assessed at One Thousand Six Hundred Twenty Pesos
(P1,620.00) per square meter of Road Lot 15 which consists of 264 square meters and the [petitioners] to contribute
proportionately to the costs of the construction of the right of way on Road Lot 15 to be determined by both parties.

SO ORDERED.14 cralawlawlibrary

Ruling of the Court of Appeals

Aggrieved, respondent appealed the said Order to the CA. It contended that under Articles 64915 and 65016 of the Civil Code,
the measurement of the land comprising a right of way should be the distance of the dominant estate to the public highway.
Thus, respondent argued that the right of way should not pertain only to Road Lot 15 as held by the RTC, but should also
include Road Lots 3, 10, 6, 4, 2 and 1 which petitioners would likewise use or traverse before they could reach Marcos
Highway. It thus contended that the total area to be indemnified is 23,500 square meters and not the mere 264-square
meter area of Road Lot 15. Respondent likewise insisted that petitioners should also share in the costs of the construction
and maintenance of these road lots.

The CA agreed with respondent and granted the appeal through its Decision17 of September 25, 2009. It held that the RTC
erred in concluding that the right of way pertains only to Road Lot 15. It gathered from the April 30,1993 RTC Decision that
what was actually granted to petitioners as a right of way from their property all the way to Marcos Highway had an
approximate distance of 2,350 meters. This fact was not disputed by petitioners when they appealed the said RTC Decision.
And as per evidence, such distance of 2,350 meters covers not only Road Lot 15 but also Road Lots 3, 10, 6, 4, 2, and 1.
Hence, the proper indemnity, per the case of Woodridge School, Inc. v. ARB Construction Co., Inc.,18 should consist of the
value of the entire stretch of the right of way, which measures 2,350 meters in length and 10 meters in width or of a total
area of 23,500 square meters at a price of P1,620.00 a square meter, plus damages caused to the servient estate.

As regards the amount of damages, the appellate court held that petitioners cannot be held liable for the cost of the
construction of the road lots as they are already existing road lots in respondent's subdivision. Neither is there a need for the
construction of new road lots. What it would take for petitioners to have access to Marcos Highway is merely the removal of a
fence that separates their property from respondent's subdivision. At the most, the only damage that petitioners may cause
in the establishment of the right of way is the wear and tear of the affected road lots.

Thus, the dispositive portion of the CA's Decision: chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the Order dated 1 June 2005 issued by the Regional Trial Court of Antipolo City, Branch
72, is MODIFIED. Plaintiffs-appellees are ordered to pay defendant-appellant the proper amount of indemnity for the legal
easement of right of way consisting of (1) the value of the road lots affected, which has an area of 23,500 square meters
assessed at PI,620.00 per square meter and (2) the contribution to be made by plaintiffs-appellees in the maintenance of
said road lots, to be determined by both parties.

SO ORDERED.19 cralawlawlibrary

Petitioners moved for reconsideration.20 The CA, however, denied the same in its March 1, 2010 Resolution21 for having been
filed out of time.

Hence, this Petition. chanRoblesvirtualLawlibrary

Issues

The essential questions to be answered in this Petition are the following: (1) What is the extent of the right of way granted to
petitioners under the April 30, 1993 RTC Decision as affirmed by the CA in its February 13, 1996 Decision? (2) Assuming that
the subject right of way pertains to the road network in respondent's subdivision, is the CA correct in its assessment of
indemnity?

Our Ruling

There is partial merit in the Petition.

The liberality rule must be observed in this case.

The Court notes the attendance of some procedural issues in this case which it deems proper to first pass upon.

The Petition is denominated as a petition for certiorari. However, under the subheading "IV. BRIEF STATEMENT OF MATTERS
INVOLVED" of the Petition, it was alleged that: chanroblesvirtuallawlibrary

This is an action brought by the plaintiffs-petitioners pursuant to Rule 45 of the Rules of Court against the assailed
decision and resolution of the Court of Appeals which are both not in accord with law as will be shown in the
discussion hereinafter.22 (Emphases supplied)
The main issue then assigned for resolution is whether the CA was correct in ruling that the property subject of the right of
way pertains not only to Road Lot 15 but to the whole stretch of road network commencing from Road Lot 15, then passing
through Road Lots 3, 10, 6, 4, 2 and 1, all the way to Marcos Highway. The Court notes that this matter is a proper
allegation found in a petition for review on certiorari under Rule 4523 of the Rules of Court.

Yet, in petitioners' Prefatory Statement, they anchor their Petition on the alleged grave abuse of discretion committed by the
CA. Thus: chanroblesvirtuallawlibrary

Plaintiffs-petitioners are left with no appeal, nor is there any plain, speedy, and adequate remedy in the ordinary
course of law after the respondent Court of Appeals incorrectly den[ied] their motion for reconsideration24 x x x

Respondent Court of Appeals gravely abused its discretion amounting to lack of jurisdiction not only in reversing a
final ruling of the trial Court, but also on the award of indemnity x x x.25 cralawlawlibrary

Then in their Arguments/Discussion, petitioners alleged that: chanroblesvirtuallawlibrary

The Court of Appeals whimsically and capriciously reversed the final ruling of the Regional Trial Court, Branch 72,
Antipolo City x x x.26 (Emphasis supplied)
Furthermore, petitioners impleaded the appellate court as public respondent. These, on the other hand, are salient features
of a petition for certiorari under Rule 65.

In the case of Bicol Agro-Industrial Producers Cooperative, Inc. (BAPCI) v. Obias,27 citing Active Realty and Development
Corporation v. Fernandez,28 the Court revisited the difference between a petition for review on certiorari (under Rule 45) and
a petition for certiorari (under Rule 65), to wit: chanroblesvirtuallawlibrary

A petition for certiorari under Rule 65 is proper to correct errors of jurisdiction committed by the lower court, or grave abuse
of discretion which is tantamount to lack of jurisdiction. This remedy can be availed of when "there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law."

Appeal by certiorari under Rule 45 of the Rules of Court, on the other hand, is a mode of appeal available to a party desiring
to raise only questions of law from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law.

xxx The general rule is that the remedy to obtain reversal or modification of judgment on the merits is appeal. Thus, the
proper remedy for the petitioner should have been a petition for review on certiorari under Rule 45 of the Rules of Court
since the decision sought to be reversed is that of the CA. The existence and availability of the right of appeal proscribes a
resort to certiorari, because one of the requisites for availment of the latter is precisely that there should be no appeal. The
remedy of appeal under Rule 45 of the Rules of Court was still available to the petitioner.29 cralawlawlibrary

It likewise stated in Bicol Agro-Industrial Producers Cooperative, Inc. (BAPCI) that: chanroblesvirtuallawlibrary

Rule 45 is clear that decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of
the action or proceeding involved, may be appealed to this Court by filing a petition for review, which would be but a
continuation of the appellate process over the original case.

Moreover, it is basic that one cannot avail of the remedy provided for under Rule 65 when an appeal is still available. x x
x30
cralawlawlibrary

Sifting through the issues and other matters raised in the present petition, it becomes apparent that the crucial question
calling for this Court's Resolution pertains to the CA's appreciation of the issue and evidence presented by the parties, and
not the alleged grave abuse of discretion committed by the appellate court in rendering its Decision. Therefore, the issue in
the present controversy clearly falls under the classification of errors of fact and law - questions which may be passed upon
by this Court only via a petition for review on certiorari under Rule 45. Albeit it must be made clear that questions of fact
may only be reviewed by this Court under exceptional circumstances like when the findings of facts of the CA are at variance
with those of the trial court,31 as in this case.

While the Court agrees with respondent's observation that based on the allegations, issues and other matters contained in
the Petition, there seems to be a general confusion on the part of petitioners' counsel in ascertaining which remedy is more
appropriate under the given circumstances, it shall nevertheless treat the petition as one filed under Rule 45, especially since
it was filed well within the reglementary period provided under the said rule.32 It was held in Sanchez v. Court of
Appeals:33 ChanRoblesVirtualawlibrary

The Rules of Court should be liberally construed in order to promote their object of securing a just, speedy and inexpensive
disposition of every action or proceeding.

The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive
determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to
effect substantial justice. Litigations should, as much as possible, be decided on their merits and not on mere
technicalities.34 cralawlawlibrary

Besides and as already mentioned, the conflicting findings of fact and conclusions arrived at by the RTC and CA,35 as well as
the fact that this case has been awaiting resolution for close to three decades now, are ample reasons for this Court to rule
on the issues raised herein without much resort to technicalities.

Finally, we note that in its March 1, 2010 Resolution, the CA denied petitioners' motion for reconsideration for having been
filed out of time. According to the CA, petitioners had until October 21, 2009 within which to file their motion for
reconsideration; yet, they filed the same on October 22, 2009.

We do not concur with the CA on this matter. We perused the records of the case and find that the petitioners timely filed
their motion for reconsideration. In the envelop attached to the dorsal portion of petitioners' transmittal letter,36 it was
shown that petitioners filed by registered mail their motion for reconsideration on October 21, 2009 at the Broadway
Centrum Post Office, Quezon City. It was thus timely filed.

Now the substantive issues.

The right of way granted to petitioners covers the network of roads within respondent's subdivision and not merely Road Lot
15.

Petitioners aver that the right of way granted them under the April 30, 1993 RTC Decision pertains only to Road Lot 15 based
on the following portion thereof: chanroblesvirtuallawlibrary
Whereas if [petitioners] would pass through the [respondent's] road lot particularly Lot 15 access to the Marcos Highway is
readily available to [petitioners'] property. Only a fence [separates] the Filinvest Subdivision and the [petitioners'] property
[which] could be removed x x x anytime.37 cralawlawlibrary

They argue that the CA in effect improperly reversed and set aside the above final ruling of the RTC when it declared instead
that the right of way is composed of the road network within respondent's subdivision.

Petitioners' argument is untenable.

To the Court's mind, the cause of confusion as regards the extent of the right of way granted to petitioners is the absence in
the said RTC Decision of any categorical statement with respect thereto. Be that as it may, it is not difficult to conclude
therefrom that what was intended to serve as petitioners' right of way consisted of the road network within respondent's
subdivision and not merely of Road Lot 15. As may be recalled, the RTC then in resolving the complaint for easement of right
of way was confronted with the contentious issue as to which between the two routes from petitioners' property, i.e., the one
passing through respondent's subdivision leading to Marcos Highway or the one passing through another property leading to
Sumulong Highway, is the more adequate and less prejudicial route pursuant to the requirement of the law. Thus, when it
made the following comparison and eventually concluded that the route passing through respondent's subdivision is the more
adequate and the less prejudicial way, what it obviously had it mind was the road network in respondent's subdivision since
the measurement thereof in meters corresponds with that mentioned by the RTC, viz: chanroblesvirtuallawlibrary

While in the survey of the property of the [petitioners] it is shown that the distance from the subject lot to the
Marcos Highway is approximately 2350 meters and the distance from Sumulong Highway to the subject lot is 1,400
meters, such short distance could not be used as absolute basis to deny the [petitioners] the relief prayed for.38 cralawlawlibrary

On the other hand, the portion of the RTC Decision relied upon by petitioners can in no way be taken to mean that Road Lot
15 alone comprises the right of way granted. By its context, it was only intended to support the RTC's conclusion that the
route within respondent's subdivision is the less prejudicial between the two considered routes because it would only take the
removal of the fence therein for petitioners to have access to respondent's network of roads which, in turn, would make
Marcos Highway accessible to them.

Also, the fact that the CA in its February 13, 1996 Decision observed that the RTC failed to provide in its April 30, 1993
Decision the exact measurement of the right of way does not negate the conclusion that the said right of way refers to
respondent's network of roads. It must be remembered that the RTC Decision merely mentioned the distance between
Marcos Highway and petitioners' property passing through respondent's subdivision as 2,350 meters. There was no mention
with respect to the width of the affected roads which is needed in order to come up with the total area in square meters. This
is why the CA also directed the determination of the exact measurement of the right of way when it remanded the case to
the RTC. During trial, evidence was received that the roads have a width of 10 meters. Multiplying these factors, i.e., length
of 2,350 meters x width of 10 meters, the total area of the roads affected is 23,500 square meters.

Moreover, petitioners already admitted during the remand proceedings that that the right of way granted to them affects
several road lots within respondent's subdivision. As borne out by the records, respondent formally offered as part of its
exhibits a scale map of its subdivision for the purpose of proving the identity of the road lots affected by the right of
way.39 In their Comment on the Formal Offer of Exhibits,40 petitioners did not proffer any objection to the said exhibit, but
merely averred that they find irrelevant respondent's submission of the fair market value of the said roads and that the same
were also being used in common by the subdivision dwellers.

Section 4, Rule 129 of the Rules of Court provides: chanroblesvirtuallawlibrary

SEC. 4. Judicial admissions. - An admission, verbal or written, made by a party in the course of the proceedings in the same
case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake
or that no such admission was made.
"A party may make judicial admissions in (a) the pleadings; (b) during the trial, either by verbal or written manifestations or
stipulations; or (c) in other stages of the judicial proceeding. It is an established principle that judicial admissions cannot be
contradicted by the admitter who is the party himself and binds the person who makes the same, and absent any showing
that this was made thru palpable mistake, no amount of rationalization can offset it."41 Since petitioners already judicially
admitted that the right of way affects a number of road lots, they cannot not now claim that it only comprises Road Lot 15.
Their admission is binding on them.

Besides and logically speaking, if petitioners would indemnify respondent only for Road Lot 15, it follows then that said
particular road lot should be the only road lot for which they shall be allowed access. They cannot be allowed access to the
other road lots leading to and from the highway as they are not willing to pay indemnity for it. In such a case, the purpose of
the right of way, that is, for petitioners to have access to the highway, would thus be defeated.

The ruling in Woodridge is applicable to the present case.

The CA in assessing the indemnity in this case relied on the case of Woodridge. Petitioners, however, question the
applicability of Woodridge to present case. According to them, Woodridge is not in point since in the said case the right of
way granted is for the exclusive occupation by the dominant estate. Unlike in this case, the road network is not for the
exclusive use by the dominant estate but for the common use together with the residents of respondent's subdivision.

For discussion purposes, a short background on Woodridge is needed. In the said case, the adjacent lots of co-petitioners
Woodridge School, Inc. and Miguela Jimenez-Javier were bounded in the west by a road in respondent ARB Construction Co.,
Inc's (ARB) Soldier Hills Subdivision IV, which leads to Marcos Alvarez Avenue, a public highway. There is no existing
adequate outlet to and from petitioners' properties except through the said road which was being used by the general public.
Subsequently, ARB fenced the perimeter of the road fronting the properties of petitioners, thus, effectively cutting off the
latter's access to and from the public highway. Petitioners thus filed a complaint before the trial court to enjoin ARB from
depriving them of the use of the subject subdivision road. The trial court rendered judgment in favor of petitioners but this
was reversed by the CA on appeal. The appellate court held that the road is private property; hence, ARB can exclude
petitioners from the use thereof. Nevertheless, it declared that a compulsory right of way exists in favor of petitioners and
awarded P500,000.00 indemnity to ARB for the use of the road lot. When the case reached this Court, it affirmed the grant of
right of way. With respect to the indemnity awarded, the Court said: chanroblesvirtuallawlibrary

In the case of a legal easement, Article 649 of the Civil Code prescribes the parameters by which the proper indemnity may
be fixed. Since the intention of petitioners is to establish a permanent passage, the second paragraph of Article 649 of the
Civil Code particularly applies:

Art. 649 xxx

Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant
estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the
amount of the damage caused to the servient estate. xxx

On that basis, we further hold that the appellate court erred in arbitrarily awarding indemnity for the use of the road lot.

The Civil Code categorically provides for the measure by which the proper indemnity may be computed: value of the land
occupied plus the amount of the damage caused to the servient estate. Settled is the rule in statutory construction that
'when the law is clear, the function of the courts is simple application.' Thus, to award indemnity using factors different from
[those] given by the law is a complete disregard of these clear statutory provisions and is evidently arbitrary. This the Court
cannot countenance. The Civil Code has clearly laid down the parameters and we cannot depart from them. Verba legis non
est recedendum.42 (Emphases and italics in the original)
But since the metes and bounds of the property covered by the easement were not yet defined, the Court
in Woodridge remanded the case to the trial court for the determination of the same and of the corresponding indemnity,
hinting that the trial court may take into consideration the fact that the affected road lot is being used by the general public
in mitigating the amount of damage that the servient estate is entitled to.

The above summary of Woodridge shows that petitioners' understanding of the said case is misplaced. Contrary to their
assertion, the right of way in the said case was not for the exclusive use or occupation of the dominant estate. It was
actually undisputed there that the road covered by the right of way was being used by the general public such that the Court
even advised the trial court that in fixing the amount of damages, it may take into consideration the said fact. Hence, the
alleged difference between Woodridge and this case is merely perceived by petitioners.

On the other hand, the Court notes the following factual similarities between the two cases: (1) the servient estates are both
subdivisions; (2) the easements of right of way consist of existing and developed road/roads; (3) the right of way would be
used in common by the dominant estates and the residents of the subdivisions; and (4) the intention of petitioners in both
cases is to establish a permanent passage. Indeed, Woodridge is on all fours with the present case. Hence, as held therein
and pursuant to the second paragraph of Article 649, the proper indemnity in this case shall consist of the value of the land
plus the damages caused to the servient estate.

It is the needs of the dominant estate which ultimately determines the width of the passage.

The Court, however, deems it necessary to modify the width of the easement which would serve as basis in fixing the value
of the land as part of the proper indemnity.

Article 651 of the Civil Code provides:

chanroblesvirtuallawlibrary

Art. 651. The width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and
may accordingly be changed from time to time.
According to Senator Arturo M. Tolentino, a noted civilist, it is the needs of the dominant tenement which determine the
width of the passage.43

As mentioned, the right of way constituting the easement in this case consists of existing and developed network of roads.
This means that in their construction, the needs of the dominant estate were not taken into consideration precisely because
they were constructed prior to the grant of the right of way. During the remand proceedings, it was established that the
width of the affected roads is 10 meters. Multiplied by the distance of 2,350 meters, the total area to be indemnified is
23,500 square meters and at a price of P1,620.00 per square meter, petitioners must pay respondent the whopping amount
of P38,070,000.00 for the value of the land. Under the circumstances, the Court finds it rather iniquitous to compute the
proper indemnity based on the 10-meter width of the existing roads. To stress, it is the needs of the dominant estate which
determines the width of the passage. And per their complaint, petitioners were simply asking for adequate vehicular and
other similar access to the highway. To the Court's mind, the 10-meter width of the affected road lots is unnecessary and
inordinate for the intended use of the easement. At most, a 3-meter wide right of way can already sufficiently meet
petitioners' need for vehicular access. It would thus be unfair to assess indemnity based on the 10-meter road width when a
three-meter width can already sufficiently answer the needs of the dominant estate. Therefore bearing in mind Article 651,
the Court finds proper a road width of 3 meters in computing the proper indemnity. Thus, multiplying the road length of
2,350 meters by a road width of 3 meters, the total area to be indemnified is 7,050 square meters. At a value of P1,620.00
per square meter, the total value of the land to form part of the indemnity amounts to P11,421,000.00. It must be made
clear, however, that despite their payment of the value of the land on the basis of a three-meter road width or basically for a
one-way traffic road only, petitioners must be allowed to use the roads within respondent's subdivision based on the existing
traffic patterns so as not to disrupt the traffic flow therein.

In addition, petitioners must bear as part of damages the costs for the removal of the fence in Road Lot 15. Also, the Court
takes judicial notice that subdivision residents are paying monthly dues for purposes of road maintenance, security, garbage
collection, use and maintenance of other subdivision facilities, etc. In view of the fact that the road lots affected would be
used by the dominant estate in common with the subdivision residents, the Court deems reasonable to require petitioners to
pay the homeowner's association in respondent's subdivision, by way of monthly dues, an amount equivalent to half of the
rate of the monthly dues that the subdivision residents are being assessed. This shall serve as petitioners' share in the
maintenance of the affected road lots.

In easement of right of way, there is no alienation of the land occupied.

Petitioners argue that it is unfair to require them to pay the value of the affected road lots since the same is tantamount to
buying the property without them being issued titles and not having the right to exercise dominion over it. The argument is
untenable. Payment of the value of the land for permanent use of the easement does not mean an alienation of the land
occupied.44 In fact under the law and unlike in purchase of a property, should the right of way no longer be necessary
because the owner of the dominant estate has joined it to another abutting on a public highway, and the servient estate
demands that the easement be extinguished, the value of the property received by the servient estate by way of indemnity
shall be returned in full to the dominant estate.45 This only reinforces the concept that the payment of indemnity is merely
for the use of the right of way and not for its alienation.
cralawred

WHEREFORE, the Petition is hereby PARTLY GRANTED. The September 25, 2009 Decision and March 1, 2010 Resolution
of the Court of Appeals in CA-G.R. CV No. 87920 are AFFIRMED with MODIFICATIONS with respect to the proper
indemnity in that petitioners shall: (1) pay respondent the amount of P11,421,000.00 representing the value of the road lots
constituting the right of way; (2) bear the cost of the removal of the fence located in respondent's Road Lot 15 as well as the
cost for the maintenance of such opening; and, (3) pay the homeowner's association in respondent's subdivision, by way of
monthly dues, an amount equivalent to half of the rate of the monthly dues that the subdivision residents are being
assessed. However, the Court of Appeal's ruling that petitioners' motion for reconsideration was filed out of time
is REVERSED and SET ASIDE.

SO ORDERED. chanroblesvirtuallawlibrary