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FIRST DIVISION

[G.R. No. 223254. December 1, 2016.]

ROSALIE SY AYSON , petitioner, vs. FIL-ESTATE PROPERTIES, INC.,


and FAIRWAYS AND BLUEWATER RESORT AND COUNTRY CLUB,
INC. , respondent.

[G.R. No. 223269. December 1, 2016.]

FIL-ESTATE PROPERTIES, INC., and FAIRWAYS & BLUEWATER


RESORT & COUNTRY CLUB, INC. , petitioners, vs. ROSALIE SY AYSON ,
respondent.

DECISION

PERLAS-BERNABE , J : p

Assailed in these consolidated petitions for review on certiorari 1 are the


Decision 2 dated March 1, 2013 and the Resolution 3 dated February 22, 2016 of the
Court of Appeals (CA) in CA-G.R. CV. No. 03010, which af rmed with modi cation the
Decision 4 dated March 1, 2004 and the Order 5 dated February 6, 2009 of the Regional
Trial Court of Kalibo, Aklan, Branch 9 (RTC) in Civil Case No. 5627 and, accordingly,
ordered Fil-Estate Properties, Inc. (Fil-Estate) and Fairways & Bluewater Resort &
Country Club, Inc. (Fairways) to pay Rosalie Sy Ayson (Ayson), inter alia, the amount of
US$40,000.00 or its Philippine Peso equivalent, representing the value of the land
subject of litigation.
The Facts
The instant case arose from a Complaint 6 for recovery of possession and
damages led by Ayson against Fil-Estate and Fairways before the RTC, alleging that
she is the registered owner of a 1,000-square meter parcel of land, more or less,
located in Yapak, Malay, Aklan, i.e., the northwestern area of Boracay Island,
denominated as Lot No. 14-S and covered by Transfer Certi cate of Title (TCT) No. T-
24562 7 (subject land). Sometime in June 1997, she discovered that Fil-Estate and
Fairways illegally entered into the subject land and included it in the construction of its
golf course without her prior consent and authorization. Despite receipt of a Notice to
Cease and Desist 8 from Ayson, Fil-Estate and Fairways continued their encroachment
and development of the subject land making it now a part of the entire golf course.
Thus, she was constrained to file the instant complaint. 9
In their defense, 1 0 Fil-Estate and Fairways maintain that the subject land was
formerly owned by one Divina Marte Villanueva (Villanueva), with whom they entered
into a Joint Venture Agreement (JVA) for the development of the Fairways and
Bluewater Resort Golf and Country Club. Fil-Estate and Fairways explained that prior to
the JVA, Villanueva sold portions of her property to various buyers, including Ayson,
with the caveat that such portions may be used in a development project. In this light,
Villanueva allegedly convinced her buyers to agree to a land swap should such
development push through. When the project commenced, the other buyers readily
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agreed to said land swaps. Unfortunately, talks with Ayson stalled, prompting Fil-Estate
and Fairways to "exclude" development work on the subject land. Nevertheless, Fil-
Estate and Fairways commenced construction on the subject land, allegedly relying in
good faith upon Villanueva's assurance that her other former buyers, e.g., Ayson, would
eventually agree with the land swap agreements. According to Fil-Estate and Fairways,
Ayson only signi ed her objection to the inclusion of the subject land in the
development project when construction was almost nished. Fil-Estate and Fairways
further averred that they tried to remedy the situation by negotiating with Ayson, but to
no avail. 1 1
The RTC Ruling
In a Decision 1 2 dated March 1, 2004, the RTC ruled in Ayson's favor and,
accordingly, ordered Fil-Estate and Fairways to pay her the following amounts: (a)
US$100,000.00 or its Philippine Peso equivalent, representing the value of the subject
land, plus P50,000.00 monthly rentals for the use and occupancy of said land starting
December 1997 until the aforesaid value has been fully paid; (b) P900,000.00 as actual
damages; (c) P1,000,000.00 as moral damages; (d) P1,000,000.00 as exemplary
damages; (e) P300,000.00 as attorney's fees and other litigation expenses; and (f) the
costs of suit. 1 3
The RTC found that contrary to Fil-Estate and Fairways' assertions, Ayson never
agreed to any future land swapping arrangement with Villanueva, considering that
Ayson already paid Villanueva the amount of US$20,000.00 representing the purchase
price of the subject land way back April 1994 (albeit the Deed of Sale 1 4 was only
executed on April 15, 1996), while the construction of the golf course was only
conceptualized sometime in early 1995. As such, it was error for Fil-Estate and
Fairways to merely rely on Villanueva's assurance that she will be able to convince her
buyers to enter into a land swapping arrangement, especially considering that the title
to the same was already in Ayson's name. In this regard, the RTC opined that Fil-Estate
and Fairways should have rst secured permission from Ayson to enter into the subject
land before proceeding with the construction of the golf course. Thus, the RTC
concluded that Fil-Estate and Fairways did not exercise the ordinary diligence of a good
father of a family before entering into the subject land, which caused damage to Ayson
for which they should be liable. The foregoing notwithstanding, the RTC no longer
ordered the return of the subject land to Ayson, ratiocinating that its exclusion from Fil-
Estate and Fairways' development project at this late stage would lead to major re-
planning, re-routing, and relocation works, which in turn, would massively prejudice the
Fil-Estate and Fairways' economic position, and affect its integrity and reputation.
Instead, the RTC ordered Fil-Estate and Fairways to pay Ayson the purported
reasonable value of the subject land, which it pegged at US$100,000.00, or her
acquisition cost multiplied by ve, in view of the rapid increase of real estate properties
in Boracay Island for the past few years. 1 5
DETACa

Fil-Estate and Fairways moved for reconsideration, 1 6 which was, however,


denied in an Order 1 7 dated February 6, 2009. Aggrieved, they appealed 1 8 to the CA.
The CA Ruling
In a Decision 1 9 dated March 1, 2013, the CA af rmed the RTC ruling with
modi cation reducing the award of damages as follows: (a) US$40,000.00 or its
Philippine Peso equivalent, representing the value of the subject land, plus P1,000.00
monthly rentals for the use and occupancy of said land starting December 1997 until
the aforesaid value has been fully paid; (b) P52,666.00 plus US$4,316.06 or its
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Philippine Peso equivalent as actual damages; (c) P500,000.00 as moral damages; (d)
P300,000.00 as exemplary damages; and (e) P200,000.00 as attorney's fees and other
litigation expenses. 2 0
The CA held that despite recognizing Ayson as the registered owner of the
subject land, Fil-Estate and Fairways still entered into the same and included it in its
golf course development project without the former's prior knowledge and consent. In
this regard, it held that Fil-Estate and Fairways should not have relied on Villanueva's
assurances that she would secure Ayson's acquiescence to a land swap arrangement,
but instead, exercised due diligence and prudence in taking steps to ensure that Ayson
indeed agreed to the inclusion of her property in the golf course development project.
Further, the CA agreed with the RTC that the subject land should no longer be returned
to Ayson, and that Fil-Estate and Fairways should pay her its value instead. However,
absent any competent evidence on the valuation of the subject land, the CA xed its
value at US$40,000.00, or the amount double its acquisition cost, and likewise reduced
the rent to P1,000.00 per month. In the same vein, the CA found it appropriate to reduce
the other awards of damages to Ayson in keeping with the evidence adduced in the
case as well as the prevailing circumstances. 2 1
Dissatis ed, both parties separately moved for reconsideration 2 2 assailing the
valuation of the subject land as well as the other monetary awards. Fil-Estate and
Fairways likewise assailed the CA's failure to expressly state in its Decision that upon
full payment of the value of the subject land, Ayson should surrender her title over the
same and that a new title be issued in their names. 2 3
In a Resolution 2 4 dated February 22, 2016, the CA denied the parties' respective
motions, holding that: (a) in pegging the value of the subject land, it took judicial notice
of the rapid increase and appreciation of the value of the real estate properties in
Boracay Island for the past years; (b) the amounts xed representing the awards for
damages are correct, fair, and reasonable under the circumstances; and (c) there is no
more necessity to expressly declare that upon Fil-Estate and Fairways' payment of the
value of the subject land, Ayson should surrender her title over the same and a new title
must be issued in their names, as such is a necessary consequence of its Decision. 2 5
Hence, these consolidated petitions.
The Issues Before the Court
At the outset, the Court notes that the issues raised in the instant petition largely
pertain only to the propriety of the awards of moral damages, exemplary damages, and
attorney's fees in Ayson's favor and the corresponding amounts thereof, as well as the
correctness of the valuation of the subject land at US$40,000.00 and the monthly rental
therefor. As such, the Court shall limit its discussion on the foregoing and shall no
longer delve on other matters not raised before it.
Essentially, Fil-Estate and Fairways contend that there is no basis to award moral
damages, exemplary damages, and attorney's fees to Ayson as they were in good faith
in relying on Villanueva's assurances that Ayson will agree on the land swap
arrangement before they proceeded with the golf course development project. They
likewise contend that Ayson never objected to the construction on the subject land until
after the golf course had been completed. 2 6 As to the valuation of the subject land, Fil-
Estate and Fairways argue that the CA's appraisal of the same at US$40,000.00 (or
even that of the RTC at US$100,000.00) does not have any basis as no competent
evidence on record supports such estimation. In this regard, Fil-Estate and Fairways
insist that the value of the subject land is only P100,000.00, as stated in the Deed of
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Sale 2 7 executed by Ayson and Villanueva. 2 8
On the other hand, Ayson disputes the reduction of the amounts of moral
damages, exemplary damages, and attorney's fees awarded to her, justifying the RTC's
higher awards as just, proper, and equitable in light of Fil-Estate's gross and utter bad
faith in entering into her property and making it a part of its golf course without her
knowledge and consent. 2 9 In the same vein, Ayson assails CA's reduced valuation of
the subject land as well as the monthly rent therefor, maintaining that the RTC correctly
took judicial notice of the rapid valuation of properties in Boracay Island. 3 0
The Court's Ruling
The petition is partly meritorious.
I.
To recapitulate, both the RTC and the CA found that Ayson is the undisputed
owner of the subject land, as evidenced by TCT No. T-24562. Despite such knowledge,
Fil-Estate and Fairways nevertheless chose to rely on Villanueva's empty assurances
that she will be able to convince Ayson to agree on a land swap arrangement; and
thereafter, proceeded to enter the subject land and introduce improvements thereon.
The courts a quo further found that since such acts were without Ayson's knowledge
and consent, she, thus: (a) suffered sleepless nights and mental anguish knowing that
the property she and her husband had invested for their future retirement had been
utilized by Fil-Estate and Fairways for their own sake; and (b) had to seek legal
remedies to vindicate her rights. Thus, both lower courts concluded that Fil-Estate and
Fairways' acts were done in bad faith and resulted in injury to Ayson; hence, they are
liable for, inter alia, moral damages, exemplary damages, and attorney's fees.
Verily, the nding of Fil-Estate and Fairways' bad faith, 3 1 as well as their liability
for moral damages, 3 2 exemplary damages, 3 3 and attorney's fees, 3 4 are all factual
matters which are not within the ambit of the instant petition for review on certiorari
under Rule 45 of the Rules of Court. In this regard, it has long been settled that factual
ndings of the trial court, af rmed by the CA, are nal and conclusive and may not be
reviewed on appeal, 3 5 save for certain exceptions, 3 6 which Fil-Estate and Fairways
failed to show in this case — at least regarding this issue.
Relatedly, the CA correctly reduced the awards for moral damages, exemplary
damages, and attorney's fees to P500,000.00, P300,000.00, and P200,000.00,
respectively, in light of the evidence adduced as well as the prevailing circumstances of
the instant case. It must be stressed that "[m]oral damages are not meant to be
punitive but are designed to compensate and alleviate the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar harm unjustly caused to a person." 3 7 Similarly, exemplary
damages are imposed "by way of example or correction for the public good, in addition
to the moral, temperate, liquidated or compensatory damages" and are awarded "only if
the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner." 3 8 Lastly, attorney's fees should be reasonable in all cases where an award
thereof is warranted under the circumstances. 3 9 aDSIHc

In sum, Fil-Estate and Fairways' liability for moral damages, exemplary damages,
and attorney's fees, as well as the amounts thereof, must be upheld in light of the
surrounding circumstances of this case. In addition, a legal interest at the rate of six
percent (6%) per annum should be imposed on all monetary awards to Ayson from the
time of the finality of this Decision until fully paid. 4 0
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II.
Anent the valuation of the subject land, the RTC deemed the amount of
US$100,000.00 or its Philippine Peso equivalent as its reasonable value "considering
the rapid increase or appreciation of the value of real estate properties in Boracay
Island for the past 10 years." 4 1 On the other hand, the CA pegged its value at
US$40,000.00, or the amount double the purchase price, "in consideration and after
proper adjustment of the [RTC's] valuation which took judicial notice of the rapid
increase and appreciation of the value of real estate properties in Boracay Island for the
past years and considering further that the property is located in the prime tourist
destination." 4 2
After a judicious perusal of the records, the Court views such valuations as
grounded entirely on speculation, surmises, or conjectures as there was no evidence
presented by the parties supporting the same. In fact, even the CA acknowledged the
absence of any piece of evidence that would provide a competent valuation of the
subject land. 4 3 Undoubtedly, such valuations, including the amount of monthly rentals
that Fil-Estate and Fairways must pay Ayson for the use of the subject land, must be
struck down.
In the same vein, the Court likewise nds untenable Fil-Estate and Fairways'
assertion that the valuation of the subject land is only P100,000.00, as stated in the
Deed of Sale 4 4 executed by Ayson and Villanueva in 1996. 4 5 At the most, the value
stated in said Deed would only re ect the market value of the subject land at the time
of its execution and is in no way indicative of the current market value of the said land,
which is the amount that Fil-Estate and Fairways should pay Ayson. 4 6
In view of the foregoing circumstances, the Court nds it prudent to remand the
case back to the RTC for the determination of the current market value of the subject
land, as well as the reasonable amount of monthly rental. Once the current market value
as well as the reasonable rent has been reasonably ascertained, the same shall be
subjected to the appropriate interest rates. 4 7 Moreover, once the value of the subject
land, monthly rentals, and applicable interests have been fully paid, Ayson should
execute the necessary documents to effectuate the transfer of the property to Fil-
Estate and Fairways.
WHEREFORE , the petition is PARTLY GRANTED . The Decision dated March 1,
2013 and the Resolution dated February 22, 2016 of the Court of Appeals in CA-G.R.
CV. No. 03010 are hereby AFFIRMED with MODIFICATION as follows:
(a) petitioners Fil-Estate Properties, Inc. and Fairways & Bluewater
Resort & Country Club, Inc. are ORDERED to jointly and solidarily pay
Rosalie Sy Ayson the amounts of P52,666.00 and US$4,316.06 or its
Philippine Peso equivalent as actual damages, P500,000.00 as moral
damages, P300,000.00 as exemplary damages, and P200,000.00 as
attorney's fees and litigation expenses, with legal interest at the rate
of six percent (6%) per annum on all amounts due from finality of
judgment until fully paid;
(b) the issue of the proper valuation of Lot No. 14-S covered by Transfer
Certificate of Title No. T-24562 is REMANDED to the Regional Trial
Court of Kalibo, Aklan, Branch 9 to determine its current market value,
reasonable monthly rental, and the applicable interest rate thereon to
be paid by Fil-Estate Properties, Inc. and Fairways & Bluewater Resort
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& Country Club, Inc.; and
(c) upon full payment of the ascertained current market value, monthly
rental, and interests, Rosalie Sy Ayson shall execute the necessary
documents to effectuate the transfer of Lot No. 14-S covered by
Transfer Certificate of Title No. T-24562 to Fil-Estate Properties, Inc.
and Fairways & Bluewater Resort & Country Club, Inc.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Caguioa, JJ., concur.
Footnotes

1. Rollo (G.R. No. 223254), pp. 8-47. Rollo (G.R. No. 223269), pp. 16-59.
2. Rollo (G.R. No. 223269), pp. 61-78. Penned by Associate Justice Carmelita Salandanan-
Manahan with Associate Justices Edgardo L. Delos Santos and Maria Elisa Sempio
Diy concurring.
3. Id. at 81-83. Penned by Associate Justice Edgardo L. Delos Santos with Associate Justices
Edward B. Contreras and Geraldine C. Fiel-Macaraig concurring.
4. Id. at 185-195. Penned by Presiding Judge Dean R. Telan.

5. Id. at 228-229. Penned by Acting Presiding Judge Ledelia P. Aragona-Biliran.


6. Dated October 20, 1998. Id. at 170-174.
7. Id. at 145-146.
8. Not attached to the rollo.
9. See rollo (G.R. No. 223269), pp. 170-173. See also id. at 63-64.

10. See Answer (to the Complaint dated 20 October 1998) dated April 28, 1999; id. at 176-184.
11. See id. at 64-69 and 177-182.
12. Id. at 185-195.
13. See id. at 194-195.

14. Id. at 142-143.


15. See id. at 187-194.
16. See motion for reconsideration dated April 27, 2004; id. at 196-227.
17. Id. at 228-229.
18. See Brief for Defendant-Appellants dated January 6, 2010; id. at 230-289.

19. Id. at 61-78.


20. See id. at 77.
21. See id. at 70-76.
22. See Fil-Estate and Fairways' Motion for Partial Reconsideration (of the 1 March 2013
Decision) dated April 4, 2013 (id. at 84-91); and Ayson's motion for reconsideration
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dated March 26, 2013 (id. at 102-105).

23. See id. at 31.


24. Id. at 81-83.
25. Id. at 82-83.
26. See id. at 38-45.
27. Id. at 142-143.

28. See id. at 33-37.


29. See rollo (G.R. No. 223254), pp. 19-40.
30. See id. at 17-19.
31. "[T]he existence of bad faith is a question of fact and is evidentiary; . . . it requires that the
reviewing court look into the evidence to nd if indeed there is proof that is
substantial enough to show such bad faith." ( Meyr Enterprises Corporation v.
Cordero, G.R. No. 197336, September 3, 2014, 734 SCRA 253, 265, citing Tabangao
Shell Re nery Employees Association v. Pilipinas Shell Petroleum Corporation , G.R.
No. 170007, April 7, 2014, 720 SCRA 631, 649.)
32. "While no proof of pecuniary loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the discretion of the court, it is
nevertheless essential that the claimant should satisfactorily show the existence of
the factual basis of damages and its causal connection to defendants acts. This is
so because moral damages, though incapable of pecuniary estimation, are in the
category of an award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer. . . . ." ( Mahinay v. Velasquez, Jr. , 464
Phil. 146, 149-150 [2004], citing Keirulf v. CA, 336 Phil. 414, 431-432 [1997].)
33. "Our jurisprudence sets certain conditions when exemplary damages may be awarded:
First, they may be imposed by way of example or correction only in addition, among
others, to compensatory damages, and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be
awarded to the claimant. Second, the claimant must rst establish his right to moral,
temperate, liquidated or compensatory damages. Third, the wrongful act must be
accompanied by bad faith, and the award would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner." ( Mendoza
v. Spouses Gomez, 736 Phil. 460, 482 [2014].)
34. "We have consistently held that an award of attorney's fees under Article 2208 demands
factual, legal, and equitable justi cation to avoid speculation and conjecture
surrounding the grant thereof." (Philippine National Construction Corporation v. APAC
Marketing Corporation, 710 Phil. 389, 396 [2013].)
35. See Bacalso v. Aca-ac , G.R. No. 172919, January 13, 2016, citing Spouses Pascual v.
Spouses Coronel, 554 Phil. 351, 360 (2007).
36. As a rule, only questions of law may be raised in a petition for review under Rule 45 of the
Rules of Court. In many instances, however, this Court has laid down exceptions to
this general rule, as follows: (1) when the factual ndings of the CA and the trial
court are contradictory; (2) when the conclusion is a nding grounded entirely on
speculation, surmises or conjectures; (3) when the inference made by the CA from its
ndings of fact is manifestly mistaken, absurd or impossible; (4) when there is grave
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abuse of discretion in the appreciation of facts; (5) when the appellate court, in
making its ndings, went beyond the issues of the case, and such ndings are
contrary to the admissions of both appellant and appellee; (6) when the judgment of
the CA is premised on misapprehension of facts; (7) when the CA failed to notice
certain relevant facts which, if properly considered, would justify a different
conclusion; (8) when the ndings of fact are themselves con icting; (9) when the
ndings of fact are conclusions without citation of the speci c evidence on which
they are based; and (10) when the ndings of fact of the CA are premised on the
absence of evidence but such ndings are contradicted by the evidence on record.
(Treñas v. People, 680 Phil. 368, 378 [2012].)
37. Mendoza v. Spouses Gomez, supra note 33, at 480.
38. The Metropolitan Bank and Trust Company v. Rosales , 724 Phil. 66, 79 (2014); citations
omitted.
39. See Article 2208 of the Civil Code.
40. See Nacar v. Gallery Frames, 716 Phil. 267, 278-283 (2013).
41. Rollo (G.R. No. 223269), p. 194.

42. Id. at 82.


43. See id. at 73.
44. Id. at 142-143.
45. See id. at 33-37.

46. See Communities Cagayan, Inc. v. Spouses Nanol, 698 Phil. 648, 656-667 (2012).
47. See International Container Terminal Services, Inc. v. FGU Insurance Corporation , 604 Phil.
380, 381-382 (2009). See also Rivera v. Spouses Chua , G.R. No. 184458, January 14,
2015, 746 SCRA 1, 23-28.

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