Possession

G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.

Andres T. Velarde for petitioner.

Rafael G. Suntay for respondent.

FERNANDO,

In essence there is nothing novel in this petition for review of a decision of the Court of Appeals affirming a lower court
judgment sustaining the right of an owner of a diamond ring, respondent Lourdes G. Suntay, as against the claim of
petitioner Dominador Dizon, who owns and operates a pawnshop. The diamond ring was turned over to a certain Clarita
R. Sison, for sale on commission, along with other pieces of jewelry of respondent Suntay. It was then pledged to
petitioner. Since what was done was violative of the terms of the agency, there was an attempt on her part to recover
possession thereof from petitioner, who refused. She had to file an action then for its recovery. She was successful, as
noted above, both in the lower court and thereafter in the Court of Appeals. She prevailed as she had in her favor the
protection accorded by Article 559 of the Civil
Code.1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been exercised against
giving due course to such petition for review. The vigorous plea however, grounded on estoppel, by his counsel, Atty.
Andres T. Velarde, persuaded us to act otherwise. After a careful perusal of the respective contentions of the parties, we
fail to perceive any sufficient justification for a departure from the literal language of the applicable codal provision as
uniformly interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing. We
affirm.

The statement of the case as well as the controlling facts may be found in the Court of Appeals decision penned by
Justice Perez. Thus: "Plaintiff is the owner of a three-carat diamond ring valued at P5,500.00. On June 13, 1962, the
plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for
sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt ... . The
plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had
frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before their transaction of
June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00, and when
it was sold, Clarita R. Sison gave the price to the plaintiff. After the lapse of a considerable time without Clarita R. Sison
having returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring
but the latter could not comply with the demands because, without the knowledge of the plaintiff, on June 15, 1962 or
three days after the ring above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by
Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendant's
pawnshop for P2,600.00 ... ."2 Then came this portion of the decision under review: "Since the plaintiff insistently
demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket ...
which is the receipt of the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that
Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently
thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant asking for the
delivery to the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt serial-B No. 65606,
dated June 15, 1962 ... . Since the defendant refused to return the ring, the plaintiff filed the present action with the
Court of First Instance of Manila for the recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff
asked for the provisional remedy of replevin by the delivery of the ring to her, upon her filing the requisite bond,
pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the
1
latter was able to take possession of the ring during the pendency of the action upon her filing the requisite bond."3 It
was then noted that the lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to
the possession of the ring in question. Petitioner Dizon, as defendant, sought to have the judgment reversed by the
Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the decision of the lower
court.

In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the applicable law being
what it is, this petition for review cannot prosper. To repeat, the decision of the Court of Appeals stands.

1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of
Appeals.4 Thus: "The controlling provision is Article 559 of the Civil Code. It reads thus: '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 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.' Respondent Angelina D. Guevara, having been
unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia
who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of
the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price . As
authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was
good faith in the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice
it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is
based on his being dispossessed without his consent. The common law principle that were one of two innocent persons
must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced
confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision
of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must
prevail in this jurisdiction." "5

2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have
caused petitioner to invoke the principle of estoppel. There is clearly a misapprehension. Such a contention is devoid of
any persuasive force.

Estoppel as known to the Rules of Court6 and prior to that to the Court of Civil Procedure,7 has its roots in equity. Good
faith is its basis.8 It is a response to the demands of moral right and natural justice.9 For estoppel to exist though, it is
indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is
equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been
so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be
done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The
principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back
on one's word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa pointed out in
the first case, a 1905 decision, Rodriguez v. Martinez, 10 a party should not be permitted "to go against his own acts to
the prejudice of [another]. Such a holding would be contrary to the most rudimentary principles of justice and law." 11
He is not, in the language of Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own
acts or deny rights which [he had] previously recognized." 13 Some of the later cases are to the effect that an
unqualified and unconditional acceptance of an agreement forecloses a claim for interest not therein provided. 14
Equally so the circumstance that about a month after the date of the conveyance, one of the parties informed the other
of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous
misrepresentation had already estopped him from disavowing the contract. 15 It is easily understandable why, under
the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an act or omission,
as a result of which a position had been assumed by petitioner, who if such elements were not lacking, could not
thereafter in law be prejudiced by his belief in what had been misrepresented to him. 16 As was put by Justice Labrador,
"a person claimed to be estopped must have knowledge of the fact that his voluntary acts would deprive him of some
2
rights because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this pronouncement not
so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based
on moral right and natural justice, finds applicability wherever and whenever the special circumstances of a case so
demand." 18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the
promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business
where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering a
jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting
opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should
be recognized. The law for this sound reason accords the latter protection. So it has always been since Varela v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership and the origin
of the jewels misappropriated been unquestionably proven but also that the accused, acting fraudulently and in bad
faith, disposed of them and pledged them contrary to agreement, with no right of ownership, and to the prejudice of
the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance with the provisions of
article 464, the owner has an absolute right to recover the jewels from the possession of whosoever holds them, ... ." 20
There have been many other decisions to the same effect since then. At least nine may be cited. 21 Nor could any other
outcome be expected, considering the civil code provisions both in the former Spanish legislation 22 and in the present
Code. 23 Petitioner ought to have been on his guard before accepting the pledge in question. Evidently there was no
such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It would be to stretch the
concept of estoppel to the breaking point if his contention were to prevail. Moreover, there should have been a
realization on his part that courts are not likely to be impressed with a cry of distress emanating from one who is in a
business authorized to impose a higher rate of interest precisely due to the greater risk assumed by him. A predicament
of this nature then does not suffice to call for less than undeviating adherence to the literal terms of a codal provision.
Moreover, while the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking
advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty.
From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against petitioner.

G.R. No. 177637 July 26, 2010

DR. DIOSCORO CARBONILLA, Petitioner,

vs.
MARCELO ABIERA and MARICRIS ABIERA PAREDES, SUBSTITUTED BY HER HEIRS, Respondents.

DECISION

NACHURA, J.:

Assailed in this petition for review are the Decision1 of the Court of Appeals (CA) dated September 18, 2006 and the
Resolution dated April 17, 2007, which dismissed petitioner’s complaint for ejectment against respondents.

The case arose from the following antecedents:

Petitioner, Dr. Dioscoro Carbonilla, filed a complaint for ejectment against respondents, Marcelo Abiera and Maricris
Abiera Paredes, with the Municipal Trial Court in Cities (MTCC), Maasin City. The complaint alleged that petitioner is the
registered owner of a parcel of land, located in Barangay Canturing, Maasin City, identified as Lot No. 1781-B-P-3-B-2-B
PSD-08-8452-D, Maasin Cadastre. The land is purportedly covered by a certificate of title, and declared for assessment
and taxation purposes in petitioner’s name. Petitioner further claimed that he is also the owner of the residential
building standing on the land, which building he acquired through a Deed of Extrajudicial Settlement of Estate
3
(Residential Building) with Waiver and Quitclaim of Ownership. He maintained that the building was being occupied by
respondents by mere tolerance of the previous owners. Petitioner asserted that he intends to use the property as his
residence, thus, he sent a demand letter to respondents asking them to leave the premises within 15 days from receipt
of the letter, but they failed and refused to do so. Conciliation efforts with the Barangay proved futile.2

To corroborate his claim, petitioner presented copies of Transfer Certificate of Title (TCT) No. T-3784; Deed of
Extrajudicial Settlement of Estate (Residential Building) with Waiver and Quitclaim of Ownership dated November 10,
2002, executed by the heirs of Jovita Yanto Garciano; Tax Declaration (TD) with ARP No. 07020-000019; and Demand
Letter dated November 20, 2002. TCT No. T-3784 shows that the land was originally registered on January 30, 1968 in
the name of Diosdado Carbonilla, petitioner’s father, under Original Certificate of Title No. 185.

In their defense, respondents vehemently denied petitioner’s allegation that they possessed the building by mere
tolerance of the previous owners. Instead, they asserted that they occupied the building as owners, having inherited the
same from Alfredo Abiera and Teodorica Capistrano, respondent Marcelo’s parents and respondent Maricris’
grandparents. They maintained that they have been in possession of the building since 1960, but it has not been
declared for taxation purposes. As for the subject land, respondents claimed that they inherited the same from
Francisco Plasabas, grandfather of Alfredo Abiera. They pointed out that the land had, in fact, been declared for taxation
purposes in the name of Francisco Plasabas under TD No. 4676, before the Second World War. This TD was later
cancelled by TD No. 8735 in 1948, TD No. 14363 in 1958, and TD No. 16182 in 1963. Respondents averred that the
building was previously a garage-like structure but, in 1977, Alfredo Abiera and Teodorica Capistrano repaired and
remodeled it, for which reason, they obtained a building permit on April 11, 1977 from the then Municipality of Maasin .
Finally, respondents contended that the case should be dismissed for failure to implead as defendants respondent
Marcelo’s siblings, who are co-heirs of the subject properties.3 Respondents presented copies of the two TDs in the
name of Francisco Plasabas and the Building Permit dated April 11, 1977.

The MTCC decided the case in favor of respondents. It opined that petitioner’s claim of ownership over the subject
parcel of land was not successfully rebutted by respondents; hence, petitioner’s ownership of the same was deemed
established.4 However, with respect to the building, the court declared respondents as having the better right to its
material possession in light of petitioner’s failure to refute respondents’ claim that their predecessors had been in prior
possession of the building since 1960 and that they have continued such possession up to the present.5 In so ruling, the
court applied Art. 5466 of the Civil Code which allows the possessor in good faith to retain the property until he is
reimbursed for necessary expenses. Thus, in its decision dated March 15, 2004, the MTCC pronounced:

WHEREFORE, foregoing premises considered and the collated evidences at hand [have] preponderantly established,
JUDGMENT is hereby rendered in favor of the defendants DECLARING the defendants to have the better rights of
(material) possession to the assailed building and deemed as possessors in good faith and are legally entitled to its
possession and occupancy.

The plaintiff judicially affirmed as the land owner is enjoined to respect the rights of the defendants pursuant to the
provisions of Art. 546, Chapter III, New Civil Code of the Philippines[, w]ithout prejudice to the provisions of Arts. 547
and 548, New Civil Code of the Philippines. No pronouncement as to costs as defendants’ predecessors-in-interest are
deemed possessors and builders in good faith.

SO ORDERED.7

Petitioner elevated the case to the Regional Trial Court (RTC). On July 12, 2004, the RTC reversed the MTCC decision. The
RTC agreed with the MTCC that the land is owned by petitioner. The two courts differed, however, in their conclusion
with respect to the building. The RTC placed the burden upon respondents to prove their claim that they built it prior to
petitioner’s acquisition of the land, which burden, the court found, respondents failed to discharge. The RTC held that,
either way—whether the building was constructed before or after petitioner acquired ownership of the land—
petitioner, as owner of the land, would have every right to evict respondents from the land. As theorized by the RTC, if
4
the building was erected before petitioner or his predecessors acquired ownership of the land, then Article 4458 of the
Civil Code would apply. Thus, petitioner, as owner of the land, would be deemed the owner of the building standing
thereon, considering that, when ownership of the land was transferred to him, there was no reservation by the original
owner that the building was not included in the transfer. On the other hand, if the building was constructed after
petitioner became the owner of the land, it is with more reason that petitioner has the right to evict respondents from
the land. The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, judgment is hereby rendered

1. Reversing the decision of the court a quo;

2. Ordering defendants to immediately vacate the residential house/building subject of this litigation;

3. Ordering defendants to pay attorney’s fee in the amount of ₱30,000.00; and

4. To pay the cost of the suit.

SO ORDERED.9

Respondents then filed a petition for review with the CA. Finding no evidence to prove that respondents’ possession of
the building was by mere tolerance, the CA reversed the RTC decision and ordered the dismissal of petitioner’s
complaint. Because of this, the CA, following this Court’s ruling in Ten Forty Realty and Development Corporation v.
Cruz, categorized the complaint as one for forcible entry. It then proceeded to declare that the action had prescribed
since the one-year period for filing the forcible entry case had already lapsed. The dispositive portion of the CA Decision
dated September 18, 2006 reads:

WHEREFORE, premises considered, the assailed decision promulgated on July 12, 2004 of Branch 25 of the Regional Trial
Court (RTC), Maasin City, Southern Leyte in Civil Case No. R-3382 is hereby declared NULL and VOID for failure of the
plaintiff (herein respondent) to prove that the case at bar is for unlawful detainer or forcible entry. Accordingly, the
instant case is hereby DISMISSED.

xxxx

SO ORDERED.10

Petitioner sought reconsideration of the Decision, but the CA denied petitioner’s motion for lack of merit.11 Hence,
petitioner came to this Court through a petition for review on certiorari.

On September 3, 2007, respondents’ counsel informed this Court that respondent, Maricris Abiera Paredes, died on June
25, 2006 of asphyxia due to hanging, and moved that the latter’s heirs be allowed to substitute for the deceased.12 In
the Resolution13 dated November 14, 2007, the Court granted the motion.

Petitioner argues that he has sufficiently established his ownership of the subject properties; consequently, he asserts
the right to recover possession thereof.

The petition has no merit.

To set the record straight, while petitioner may have proven his ownership of the land, as there can be no other piece of
evidence more worthy of credence than a Torrens certificate of title, he failed to present any evidence to substantiate
his claim of ownership or right to the possession of the building. Like the CA, we cannot accept the Deed of Extrajudicial
Settlement of Estate (Residential Building) with Waiver and Quitclaim of Ownership executed by the Garcianos as proof
5
that petitioner acquired ownership of the building. There is no showing that the Garcianos were the owners of the
building or that they had any proprietary right over it. Ranged against respondents’ proof of possession of the building
since 1977, petitioner’s evidence pales in comparison and leaves us totally unconvinced.

Without a doubt, the registered owner of real property is entitled to its possession. However, the owner cannot simply
wrest possession thereof from whoever is in actual occupation of the property. To recover possession, he must resort to
the proper judicial remedy and, once he chooses what action to file, he is required to satisfy the conditions necessary for
such action to prosper.

In the present case, petitioner opted to file an ejectment case against respondents. Ejectment cases—forcible entry and
unlawful detainer—are summary proceedings designed to provide expeditious means to protect actual possession or
the right to possession of the property involved.14 The only question that the courts resolve in ejectment proceedings
is: who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a party’s title to the property is questionable.15 For this reason, an
ejectment case will not necessarily be decided in favor of one who has presented proof of ownership of the subject
property. Key jurisdictional facts constitutive of the particular ejectment case filed must be averred in the complaint and
sufficiently proven.

The statements in the complaint that respondents’ possession of the building was by mere tolerance of petitioner clearly
make out a case for unlawful detainer. Unlawful detainer involves the person’s withholding from another of the
possession of the real property to which the latter is entitled, after the expiration or termination of the former’s right to
hold possession under the contract, either expressed or implied.16

A requisite for a valid cause of action in an unlawful detainer case is that possession must be originally lawful, and such
possession must have turned unlawful only upon the expiration of the right to possess.17 It must be shown that the
possession was initially lawful; hence, the basis of such lawful possession must be established. If, as in this case, the
claim is that such possession is by mere tolerance of the plaintiff, the acts of tolerance must be proved.

Petitioner failed to prove that respondents’ possession was based on his alleged tolerance. He did not offer any evidence
or even only an affidavit of the Garcianos attesting that they tolerated respondents’ entry to and occupation of the
subject properties. A bare allegation of tolerance will not suffice. Plaintiff must, at least, show overt acts indicative of his
or his predecessor’s permission to occupy the subject property. Thus, we must agree with the CA when it said:

A careful scrutiny of the records revealed that herein respondent miserably failed to prove his claim that petitioners’
possession of the subject building was by mere tolerance as alleged in the complaint. Tolerance must be [present] right
from the start of possession sought to be recovered to be within the purview of unlawful detainer. Mere tolerance
always carries with it "permission" and not merely silence or inaction for silence or inaction is negligence, not
tolerance.18

In addition, plaintiff must also show that the supposed acts of tolerance have been present right from the very start of
the possession—from entry to the property. Otherwise, if the possession was unlawful from the start, an action for
unlawful detainer would be an improper remedy.19 Notably, no mention was made in the complaint of how entry by
respondents was effected or how and when dispossession started. Neither was there any evidence showing such
details.1avvphi1

In any event, petitioner has some other recourse. He may pursue recovering possession of his property by filing an
accion publiciana, which is a plenary action intended to recover the better right to possess; or an accion
reivindicatoria, a suit to recover ownership of real property. We stress, however, that the pronouncement in this case
as to the ownership of the land should be regarded as merely provisional and, therefore, would not bar or prejudice an
action between the same parties involving title to the land.20

6
WHEREFORE, premises considered, the petition is DENIED. The CA Decision dated September 18, 2006 and Resolution
dated April 17, 2007 are AFFIRMED.

SO ORDERED.

G.R. No. 198356, April 20, 2015

ESPERANZA SUPAPO AND THE HEIRS OF ROMEO SUPAPO, NAMELY: ESPERANZA, REX EDWARD, RONALD TROY, ROMEO,
JR., SHEILA LORENCE, ALL SURNAMED SUPAPO, AND SHERYL FORTUNE SUPAPO-SANDIGAN, Petitioners, v. SPOUSES
ROBERTO AND SUSAN DE JESUS, MACARIO BERNARDO, AND THOSE PERSONS CLAIMING RIGHTS UNDER THEM,
Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 filed by petitioners Esperanza Supapo and Romeo Supapo2 (Spouses
Supapo) to assail the February 25, 2011 decision3 and August 25, 2011 resolution4 of the Court of Appeals (CA) in CA-
G.R. SP No. 111674.

Factual Antecedents

The Spouses Supapo filed a complaint5 for accion publiciana against Roberto and Susan de Jesus (Spouses de Jesus),
Macario Bernardo (Macario), and persons claiming rights under them (collectively, the respondents), with the
Metropolitan Trial Court (MeTC) of Caloocan City.

The complaint sought to compel the respondents to vacate a piece of land located in Novaliches, Quezon City, described
as Lot 40, Block 5 (subject lot). The subject lot is covered by Transfer Certificate of Title (TCT) No. C-284416 registered
and titled under the Spouses Supapo's names. The land has an assessed value of thirty-nine thousand nine hundred
eighty pesos (39,980.00) as shown in the Declaration of Real Property Value (tax declaration) issued by the Office of the
City Assessor of Caloocan.7

The Spouses Supapo did not reside on the subject lot. They also did not employ an overseer but they made sure to visit
at least twice a year.8 During one of their visits in 1992, they saw two (2) houses built on the subject lot. The houses
were built without their knowledge and permission. They later learned that the Spouses de Jesus occupied one house
while Macario occupied the other one.9

The Spouses Supapo demanded from the respondents the immediate surrender of the subject lot by bringing the
dispute before the appropriate Lupong Tagapamayapa. The Lupon issued a Katibayan Upang Makadulog sa Hukuman
(certificate to file action) for failure of the parties to settle amicably.10

The Spouses Supapo then filed a criminal case11 against the respondents for violation of Presidential Decree No. 772 or
the Anti-Squatting Law.12 The trial court convicted the respondents. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, this Court finds accused ROBERTO DE JESUS, SUSAN DE JESUS and MACARIO
BERNARDO, GUILTY beyond reasonable doubt for Violation of Presidential Decree No. 772, and each accused is hereby
ordered to pay a fine of ONE THOUSAND PESOS (P1,000.00), and to vacate the subject premises.

SO ORDERED.13 (Emphasis supplied.)

7
The respondents appealed their conviction to the CA.14 While the appeal was pending, Congress enacted Republic Act
(RA) No. 8368, otherwise known as "An Act Repealing Presidential Decree No. 772," which resulted to the dismissal of
the criminal case.15

On April 30, 1999, the CA's dismissal of the criminal case became final.16

Notwithstanding the dismissal, the Spouses Supapo moved for the execution of the respondents' civil liability, praying
that the latter vacate the subject lot. The Regional Trial Court (RTC) granted the motion and issued the writ of execution.
The respondents moved for the quashal of the writ but the RTC denied the same. The RTC also denied the respondents'
motion for reconsideration.

The respondents thus filed with the CA a petition for certiorari to challenge the RTC's orders denying the quashal of the
writ and the respondent's motion for reconsideration.17 The CA granted the petition and held that with the repeal of
the Anti-Squatting Law, the respondents' criminal and civil liabilities were extinguished.18 The dispositive portion of the
decision reads:

WHEREFORE, premises considered, the petition for certiorari with prayer for injunction is GRANTED. The orders dated
June 5, 2003 and July 24, 2003 of Branch 131 of the Regional Trial Court of Caloocan City in Criminal Case No. C-45610
are REVERSED and SET ASIDE. Said court is hereby permanently ENJOINED from further executing or implementing its
decision dated March 18, 1996.

SO ORDERED.

The CA, however, underscored that the repeal of the Anti-Squatting Law does not mean that people now have unbridled
license to illegally occupy lands they do not own, and that it was not intended to compromise the property rights of
legitimate landowners.19 In cases of violation of their property rights, the CA noted that recourse may be had in court
by filing the proper action for recovery of possession.

The Spouses Supapo thus filed the complaint for action publiciana.20

After filing their Answer,21 the respondents moved to set their affirmative defenses for preliminary hearing22 and
argued that: (1) there is another action pending between the same parties; (2) the complaint for accion publiciana is
barred by statute of limitations; and (3) the Spouses Supapo's cause of action is barred by prior judgment.

The MeTC Ruling23

The MeTC denied the motion to set the affirmative defenses for preliminary hearing. It ruled that the arguments
advanced by the respondents are evidentiary in nature, which at best can be utilized in the course of the trial. The MeTC
likewise denied the respondents' motion for reconsideration.

From the MeTC's ruling, the respondents filed a petition for certiorari with the RTC.24

The RTC Ruling25

The RTC granted the petition for certiorari on two grounds, viz.: (i) the action has prescribed; and (ii) accion publiciana
falls within the exclusive jurisdiction of the RTC.

It held that in cases where the only issue involved is possession, the MeTC has jurisdiction if the action for forcible entry
or unlawful detainer is filed within one (1) year from the time to demand to vacate was made. Otherwise, the complaint
for recovery of possession should be filed before the RTC.

8
The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED.

The Orders dated October 24, 2008 and February 23, 2009 are hereby declared NULL and VOID.

The Public Respondent is hereby directed to DISMISS Civil Case No. 08-29245 for lack of jurisdiction.

SO ORDERED.26

In their motion for reconsideration,27 the Spouses Supapo emphasized that the court's jurisdiction over an action
involving title to or possession of land is determined by its assessed value; that the RTC does not have an exclusive
jurisdiction on all complaints for accion publiciana; and that the assessed value of the subject lot falls within MeTC's
jurisdiction.

The RTC denied the petitioners' motion for reconsideration.

It held that although the MeTC had jurisdiction based on the assessed value of the subject lot, the Spouses Supapos'
cause of action had already prescribed, the action having been filed beyond the ten (l0)-year prescriptive period under
Article 555 of the Civil Code.28 As it was not proven when the actual demand to vacate was made, the RTC ruled that
the reckoning period by which the ejectment suit should have been filed is counted from the time the certificate to file
action was issued. The certificate to file action was issued on November 25, 1992, while the complaint for accion
publiciana was filed only on March 7, 2008, or more than ten (10) years thereafter.

Dissatisfied with the RTC ruling, the Spouses Supapo appealed to the CA.29

The CA Ruling30

The CA dismissed the appeal and held that the complaint for accion publiciana should have been lodged before the RTC
and that the period to file the action had prescribed.

The dispositive portion of the CA decision reads:

WHEREFORE, the appeal is DENIED. The Decision dated June 30, 2009 and Order dated October 19, 2009 are AFFIRMED.

SO ORDERED

The Spouses Supapo moved31 but failed32 to secure a reconsideration of the CA decision; hence, they came to us
through the present petition.

The Petition

In seeking reversal of the CA's ruling, the Spouses Supapo essentially argue that:

(1)
the MeTC exercises exclusive original jurisdiction over accion publiciana where the assessed value of the property does
not exceed P20,000.00, or P50,000.00 if the property is located in Metro Manila; and that
(2)
prescription had not yet set in because their cause of action is imprescriptible under the Torrens system.

The Respondents' Case33

9
The respondents argue that the complaint for accion publiciana was (1) filed in the wrong court; (2) barred by
prescription; and (3) barred by res judicata.

Issues

The issues for resolution are:

Whether the MeTC properly acquired jurisdiction;

Whether the cause of action has prescribed; and
Whether the complaint for accion publiciana is barred by res judicata.

Our Ruling

The petition is meritorious.

We hold that: (1) the MeTC properly acquired jurisdiction; (2) the cause of action has not prescribed; and (3) the
complaint is not barred by res judicata.

Accion Publiciana and

the Jurisdiction of the
MeTC

Accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty independent 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.34

In the present case, the Spouses Supapo filed an action for the recovery of possession of the subject lot but they based
their better right of possession on a claim of ownership.

This Court has held that the objective of the plaintiffs in accion publiciana is to recover possession only, not ownership.
However, where the parties raise the issue of ownership, the courts may pass upon the issue to determine who between
the parties has the right to possess the property.35

This adjudication is not a final 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.36

Thus, while we will dissect the Spouses Supapo's claim of ownership over the subject property, we will only do so to
determine if they or the respondents should have the right of possession.

Having thus determined that the dispute involves possession over a real property, we now resolve which court has the
jurisdiction to hear the case.

Under Batas Pambansa Bilang 129,37 the jurisdiction of the RTC over actions involving title to or possession of real
property is plenary.38

RA No. 7691,39 however, divested the RTC of a portion of its jurisdiction and granted the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts the exclusive and original jurisdiction to hear actions where the

10
assessed value of the property does not exceed Twenty Thousand Pesos (P20,000.00), or Fifty Thousand Pesos
(P50,000.00), if the property is located in Metro Manila.

Section 1 of RA No. 7691 states:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980," is
hereby amended to read as follows:
Section. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:

(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) x x x. (Emphasis supplied.)

Section 3 of the same law provides:

Section. 3. Section 33 of the same law is hereby amended to read as follows:
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 x x x.
(Emphasis supplied.)

In view of these amendments, jurisdiction over actions involving title to or possession of real property is now
determined by its assessed value.40 The assessed value of real property is its fair market value multiplied by the
assessment level. It is synonymous to taxable value.41

In Quinagoran v. Court of Appeals,42 we explained:

[D]oes the RTC have jurisdiction over all cases of recovery of possession regardless of the value of the property involved?

The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to Dismiss, as affirmed by the
CA — that all cases of recovery of possession or accion publiciana lies with the regional trial courts regardless of the
value of the property — no longer holds true. As tilings now stand, a distinction must be made between those properties
the assessed value of which is below P20,000.00, if outside Metro Manila; and P50,000.00, if within.43 (Emphasis
supplied.)

In this regard, the complaint must allege the assessed value of the real property subject of the complaint or the interest
thereon to determine which court has jurisdiction over the action. This is required because the nature of the action and
the court with original and exclusive jurisdiction over the same is determined by the material allegations of the
complaint, the type of relief prayed for by the plaintiff, and the law in effect when the action is filed, irrespective of
whether the plaintiffs are entitled to some or all of the claims asserted therein.44

In the present case, the Spouses Supapo alleged that the assessed value of the subject lot, located in Metro Manila, is
P39,980.00. This is proven by the tax declaration45 issued by the Office of the City Assessor of Caloocan. The
respondents do not deny the genuineness and authenticity of this tax declaration.

11
Given that the Spouses Supapo duly complied with the jurisdictional requirements, we hold that the MeTC of Caloocan
properly acquired jurisdiction over the complaint for accion publiciana.

The cause of action

has not prescribed

The respondents argue that the complaint for accion publiciana is dismissible for being filed out of time.

They invoke Article 555 of the Civil Code, which states: Art. 555. A possessor may lose his possession:

xxxx

(4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than
one year. But the real right of possession is not lost till after the lapse of ten years. (Emphasis supplied.)

The respondents point out that the Spouses Supapo filed the complaint for accion publiciana on March 7, 2008 or more
than ten (10) years after the certificate to file action was issued on November 25, 1992. The respondents contend that
the Spouses Supapo may no longer recover possession of the subject property, the complaint having been filed beyond
the period provided by law.

Further, while the respondents concede that the Spouses Supapo hold a TCT over the subject property, and assuming a
Torrens title is imprescriptible and indefeasible, they posit that the latter have lost their right to recover possession
because of laches.

On their part, the Spouses Supapo admit that they filed the complaint for accion publiciana more than ten (10) years
after the certificate to file action was issued. Nonetheless, they argue that their cause of action is imprescriptible since
the subject property is registered and titled under the Torrens system.

We rule that the Spouses Supapo's position is legally correct.

At the core of this controversy is a parcel of land registered under the Torrens system. The Spouses Supapo acquired the
TCT on the subject lot in 1979.46 Interestingly, the respondents do not challenge the existence, authenticity and
genuineness of the Supapo's TCT.47

In defense, the respondents rest their entire case on the fact that they have allegedly been in actual, public, peaceful
and uninterrupted possession of the subject property in the concept of an owner since 1992. The respondents contend
that they built their houses on the subject lot in good faith. Having possessed the subject lot for more than ten (10)
years, they claim that they can no longer be disturbed in their possession.48

Under the undisputed facts of this case, we find that the respondents' contentions have no legal basis.

In a long line of cases, we have consistently ruled that lands covered by a title cannot be acquired by prescription or
adverse possession. We have also held that a claim of acquisitive prescription is baseless when the land involved is a
registered land because of Article 112649 of the Civil Code in relation to Act 496 [now, Section 47 of Presidential Decree
(PD) No. 152950].51

The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under the Torrens system. The most essential
insofar as the present case is concerned is Section 47 of PD No. 1529 which states:

Section 47. Registered land not subject to prescriptions. No title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession.
12
In addition to the imprescriptibility, the person who holds a Torrens Title over a land is also entitled to the possession
thereof.52 The right to possess and occupy the land is an attribute and a logical consequence of ownership.53 Corollary
to this rule is the right of the holder of the Torrens Title to eject any person illegally occupying their property. Again, this
right is imprescriptible.54

In Bishop v. CA,55 we held that even if it be supposed that the holders of the Torrens Title were aware of the other
persons' occupation of the property, regardless of the length of that possession, the lawful owners have a right to
demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at
all.56

Even if the defendant attacks the Torrens Title because of a purported sale or transfer of the property, we still rule in
favor of the holder of the Torrens Title if the defendant cannot adduce, in addition to the deed of sale, a duly-registered
certificate of title proving the alleged transfer or sale.

A case in point is Umpoc v. Mercado57 in which we gave greater probative weight to the plaintiffs TCT vis-a-vis the
contested unregistered deed of sale of the defendants. Unlike the defendants in Umpoc, however, the respondents did
not adduce a single evidence to refute the Spouses Supapo's TCT. With more reason therefore that we uphold the
indefeasibility and imprescriptibility of the Spouses Supapo's title.

By respecting the imprescriptibility and indefeasibility of the Spouses Supapo's TCT, this Court merely recognizes the
value of the Torrens System in ensuring the stability of real estate transactions and integrity of land registration.

We reiterate for the record the policy behind the Torrens System, viz.:

The Government has adopted the Torrens system due to its being the most effective measure to guarantee the integrity
of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all, which will not only be unfair to him as the purchaser, but will also
erode public confidence in the system and will force land transactions to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence will be that land conflicts can be even more
abrasive, if not even violent.58

With respect to the respondents' defense59 of laches, suffice it to say that the same is evidentiary in nature and cannot
be established by mere allegations in the pleadings.60 In other words, the party alleging laches must adduce in court
evidence proving such allegation. This Court not being a trier of facts cannot rule on this issue; especially so since the
lower courts did not pass upon the same.

Thus, without solid evidentiary basis, laches cannot be a valid ground to deny the Spouses Supapo's petition.61 On the
contrary, the facts as culled from the records show the clear intent of the Spouses Supapo to exercise their right over
and recover possession of the subject lot, viz.: (1) they brought the dispute to the appropriate Lupon; (2) they initiated
the criminal complaint for squatting; and (3) finally, they filed the action publiciana. To our mind, these acts negate the
allegation of laches.

With these as premises, we cannot but rule that the Spouses Supapo's right to recover possession of the subject lot is
not barred by prescription.

The action is not barred

by prior judgment

13
As a last-ditch effort to save their case, the respondents invoke res judicata. They contend that the decision of the CA in
CA-G.R. SP No. 78649 barred the filing of the action publiciana.

To recall, CA-G.R. SP No. 78649 is the petition for certiorari filed by the respondents to challenge the RTC's issuance of
the writ enforcing their civil liability (i.e., to vacate the subject property) arising from their conviction under the Anti-
Squatting Law. The CA granted the petition and permanently enjoined the execution of the respondents' conviction
because their criminal liability had been extinguished by the repeal of the law under which they were tried and
convicted. It follows that their civil liability arising from the crime had also been erased.

The respondents' reliance on the principle of res judicata is misplaced.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of the Rules of
Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).62

"Bar by prior judgment" means that when a right or fact had already been judicially tried on the merits and determined
by a court of competent jurisdiction, the final judgment or order shall be conclusive upon the parties and those in privity
with them and constitutes an absolute bar to subsequent actions involving the same claim, demand or cause of
action.63

The requisites64 for res judicata under the concept of bar by prior judgment are:

(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and

(4) There must be between the first and second actions, identity of parties, subject matter, and cause of action.

Res judicata is not present in this case.

While requisites one to three may be present, it is obvious that the there is no identity of subject matter, parties and
causes of action between the criminal case prosecuted under the Anti-Squatting Law and the civil action for the recovery
of the subject property.

First, there is no identity of parties. The criminal complaint, although initiated by the Spouses Supapo, was prosecuted in
the name of the people of the Philippines. The accion publiciana, on the other hand, was filed by and in the name of the
Spouses Supapo.

Second, there is no identity of subject matter. The criminal case involves the prosecution of a crime under the Anti-
Squatting Law while the accion publiciana is an action to recover possession of the subject property.

And third, there is no identity of causes of action. The people of the Philippines filed the criminal case to protect and
preserve governmental interests by prosecuting persons who violated the statute. The Spouses Supapo filed the accion
publiciana to protect their proprietary interests over the subject property and recover its possession.

Even casting aside the requirement of identity of causes of action, the defense of res judicata has still no basis.

The concept of "conclusiveness of judgment" does not require that there is identity of causes of action provided that
there is identity of issue and identity of parties.65

14
Under this particular concept of res judicata, any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies,
whether or not the claim, demand, purpose, or subject matter of the two actions is the same.66

As already explained, there is no identity of parties between the criminal complaint under the Anti-Squatting law and the
civil action for accion publiciana. For this reason alone, "collusiveness of judgment" does not apply.

Even if we assume, for the sake of argument, that there is identity of parties, "conclusiveness of judgment" still does not
apply because there is no identity of issues. The issue in the criminal case is whether the respondents (accused therein)
committed the crime alleged in the information, while the only issue in accion publiciana is whether the Spouses Supapo
have a better right than the respondents to possess and occupy the subject property.

For all these reasons, the defense of res judicata is baseless.

Final Note

As a final note, we stress that our ruling in this case is limited only to the issue of determining who between the parties
has a better right to possession. This adjudication is not a final and binding determination of the issue of ownership. As
such, this is not a bar for the parties or even third persons to file an action for the determination of the issue of
ownership.

WHEREFORE, premises considered, we GRANT the petition, and consequently REVERSE and SET ASIDE the February 25,
2011 decision and August 25, 2011 resolution of the Court of Appeals in CA-G.R. SP No. 111674.

SO ORDERED.

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 Certiorari 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:

15
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 ₱50,000.00 moral damages, ₱50,000.00 exemplary damages, ₱30,000.00
attorney's fees, ₱20,000.00 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

16
award of P 1 million moral damages, ₱1 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 ₱38.00 to USD
$1 in 1997.

2) Pay plaintiff attorney's fees in the amount of ₱30,000.00 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;

17
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 pay
ment 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 ₱30,000.00

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
18
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 ₱30,000.00 award of attorney's fees should be increased to
₱100,000.00.

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.
19
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.1âwphi1 It cannot lead to the conclusion that Cabrera stole the chips and then gave them to the two; as 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.

[G.R. No. 86051. September 1, 1992.]

JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and CITIWIDE MOTORS, INC., Respondents.

Ledesma, Saludo & Associates for Petitioner.

Magtanggol C. Gunigundo for Private Respondent.

SYLLABUS

1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE PROPERTY EQUIVALENT TO TITLE. — It is
quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the same
from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for under the first
20
sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3) requisites to make
possession of movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner
voluntarily parted with the possession of the thing; and (c) the possession is in the concept of owner. (TOLENTINO, A.M.,
Civil Code of the Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid., 1009, 2 Salvat
165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be
said to have voluntarily parted with the possession thereof. This is the justification for the exceptions found under the
second sentence of Article 559 of the Civil Code.

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF CONSIDERATION; EFFECT THEREOF. — There was a
perfected unconditional contract of sale between private respondent and the original vendee. The former voluntarily
caused the transfer of the certificate of registration of the vehicle in the name of the first vendee — even if the said
vendee was represented by someone who used a fictitious name — and likewise voluntarily delivered the cars and the
certificate of registration to the vendee’s alleged representative Title thereto was forthwith transferred to the vendee.
The subsequent dishonor of the check because of the alteration merely amounted to a failure of consideration which
does not render the contract of sale void, but merely allows the prejudiced party to sue for specific performance or
rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code.

DECISION

DAVIDE, JR., J.:

Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in C.A.-G.R. CV No. 05955 2
reversing the decision of then Branch XVIII-B (Quezon City) of the then Court of First Instance (now Regional Trial Court)
of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of which reads:chanroblesvirtualawlibrary

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini, 1977 Model vehicle, subject of this
case to the defendant Ledesma. The incidental claim (sic) for damages professed by the plaintiff are dismissed for lack of
merit. On defendant’s counterclaim, Court (sic) makes no pronouncement as to any form of damages, particularly,
moral, exemplary and nominal in view of the fact that Citiwide has a perfect right to litigate its claim, albeit by this
pronouncement, it did not succeed." 3

which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which
reads:jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of P35,000.00 by way of actual damages
recoverable upon plaintiff’s replevin bond. Plaintiff and its surety, the Rizal Surety and Insurance Co., are hereby ordered
jointly and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as damages for the wrongful issue of the
writ of seizure, in line with Rule 57, Sec. 20, incorporated in Rule 60, Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the judgment of this Court on September 5,
1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack of merit. No costs at this
instance." 4

The decision of the trial court is anchored on its findings that (a) the proof on record is not persuasive enough to show
that defendant, petitioner herein, knew that the vehicle in question was the object of a fraud and a swindle 5 and (b)

21
that plaintiff, private respondent herein, did not rebut or contradict Ledesma’s evidence that valuable consideration was
paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as follows:jgc:chanrobles.com.ph

"On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his father, a
certain Rustico T. Consunji, two (2) brand new motor vehicles from plaintiff-appellant Citiwide Motors, Inc., more
particularly described as follows:chanrobles lawlibrary : rednad

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at P42,200.00; and

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to the person who
represented himself as Jojo Consunji, allegedly the son of the purported buyers Rustico T. Consunji, and said person in
turn issued to plaintiff-appellant Manager’s Check No. 066-110-0638 of the Philippine Commercial and Industrial Bank
dated September 28, 1977 for the amount of P101,000.00 as full payment of the value of the two (2) motor vehicles.

However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the ground that it was
tampered with, the correct amount of P101.00 having been raised to P101,000.00 per the bank’s notice of dishonor
(Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal act perpetrated by the
person who misrepresented himself as Jojo Consunji and in the course of the investigation, plaintiff-appellant learned
that the real identity of the wrongdoer/impostor is Armando Suarez who has a long line of criminal cases against him for
estafa using this similar modus operandi.

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which was found abandoned
somewhere in Quezon City.

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by Armando Suarez to third
persona and was in the possession of one Jaime Ledesma at the time plaintiff-appellant instituted this action for replevin
on November 16, 1977.

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in good faith from its
registered owner, one Pedro Neyra, as evidenced by the Land Transportation Commission Registration Certificate No.
RCO1427249.chanrobles.com.ph : virtual law library

After posting the necessary bond in the amount double the value of the subject motor vehicle, plaintiff-appellant was
able to recover possession of the 1977 Isuzu Gemini as evidenced by the Sheriff’s Return dated January 23, 1978." 6

After trial on the merits, the lower court rendered the decision and subsequently issued the Final Order both earlier
adverted to, which plaintiff (private respondent herein) appealed to the respondent Court of Appeals; it submitted the
following assignment of errors:jgc:chanrobles.com.ph

"The trial court erred.

22
IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE CAR;

II

IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD FAITH AND FOR VALUE;

III

IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES, AND
GRANTING DEFENDANT P35,000.00 DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00
DAMAGES FOR ALLEGED WRONGFUL SEIZURE;

IV

IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil Code which
provides:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

Without in any way reversing the findings of the trial court that herein petitioner was a buyer in good faith and for
valuable consideration, the respondent Court ruled that:

"‘Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully
deprived of it, he has a right to recover it not only from the finder, thief or robber, but also from third persons who may
have acquired it in good faith from such finder, thief or robber. The said article establishes two (2) exceptions to the
general rule of irrevendicability (sic), to wit: when the owner (1) has lost the thing, or (2) has been unlawfully deprived
thereof. In these cases, the possessor cannot retain the thing as against the owner who may recover it without paying
any indemnity, except when the possessor acquired it in a public sale.’ (Aznar v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the good faith of the
possessor is not a bar to recovery of the movable unless the possessor acquired it in a public sale of which there is no
pretense in this case. Contrary to the court a assumption, the issue is not primarily the good faith of Ledesma for even if
this were true, this may not be invoked as a valid defense, if it be shown that Citiwide was unlawfully deprived of the
vehicle.

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the phrase unlawfully deprived,
to wit:chanrob1es virtual 1aw library

‘. . . it extends to all cases where there has been no valid transmission of ownership including depositary or lessee who
has sold the same. It is believed that the owner in such a case is undoubtedly unlawfully deprived of his property and
may recover the same from a possessor in good faith.’
23
x x x

In the case at bar, the person who misrepresented himself to be the son of the purported buyer, Rustico T. Consunji,
paid for the two (2) vehicles using a check whose amount has been altered from P101.00 to P101,000.00. There is here a
case of estafa. Plaintiff was unlawfully deprived of the vehicle by false pretenses executed simultaneously with the
commission of fraud (Art. 315 2(a) R.P.C.). Clearly, Citiwide would not have parted with the two (2) vehicles were it not
for the false representation that the check issued in payment thereupon (sic) is in the amount of P101,000.00, the actual
value of the two (2) vehicles." 8

In short, said buyer never acquired title to the property; hence, the Court rejected the claim of herein petitioner that at
least, Armando Suarez had a voidable title to the property.

His motion for reconsideration having been denied in the resolution of the respondent Court of 12 December 1988, 9
petitioner filed this petition alleging therein that:chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"A

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL CODE TO THE INSTANT CASE
DESPITE THE FACT THAT PRIVATE RESPONDENT CITIWIDE MOTORS, INC. WAS NOT UNLAWFULLY DEPRIVED OF THE
SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE TITLE AND POSSESSION OR (sic) THE SAME IN
FAVOR OF ITS IMMEDIATE TRANSFEREE.

THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE EFFECTS OF ARTICLES 1505 AND 1506 OF
THE NEW CIVIL CODE CONSIDERING THAT THE IMMEDIATE TRANSFEREE OF THE PRIVATE RESPONDENT CITIWIDE
MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH TITLE WAS NOT DECLARED VOID BY A
COMPETENT COURT PRIOR TO THE ACQUISITION BY THE PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE PRIVATE
RESPONDENT, BY ITS OWN CONDUCT, IS NOW PRECLUDED FROM ASSAILING THE TITLE AND POSSESSION BY THE
PETITIONER OF THE SAID CAR." 10

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his vendor in good faith and for valuable
consideration. According to the trial court, the private respondent’s evidence was not persuasive enough to establish
that petitioner had knowledge that the car was the object of a fraud and a swindle and that it did not rebut or contradict
petitioner’s evidence of acquisition for valuable consideration. The respondent Court concedes to such findings but
postulates that the issue here is not whether petitioner acquired the vehicle in that concept but rather, whether private
respondent was unlawfully deprived of it so as to make Article 559 of the Civil Code apply.

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the
same from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for under
the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3) requisites to
make possession of movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the
owner voluntarily parted with the possession of the thing; and (c) the possession is in the concept of owner. 11

24
Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have voluntarily
parted with the possession thereof. This is the justification for the exceptions found under the second sentence of
Article 559 of the Civil Code.

The basic issue then in this case is whether private respondent was unlawfully deprived of the cars when it sold the
same to Rustico Consunji, through a person who claimed to be Jojo Consunji, allegedly the latter’s son, but who
nevertheless turned out to be Armando Suarez, on the faith of a Manager’s Check with a face value of P101,000.00,
dishonored for being altered, the correct amount being only P101.00.chanrobles virtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held, that private respondent was
unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private respondent and the original vendee.
The former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first vendee
— even if the said vendee was represented by someone who used a fictitious name — and likewise voluntarily delivered
the cars and the certificate of registration to the vendee’s alleged representative Title thereto was forthwith transferred
to the vendee. The subsequent dishonor of the check because of the alteration merely amounted to a failure of
consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for specific
performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the Revised
Penal Code. This is the rule enunciated in EDCA Publishing and Distributing Corp. v. Santos, 12 the facts of which do not
materially and substantially differ from those obtaining in the instant case. In said case, a person identifying himself as
Professor Jose Cruz, dean of the De la Salle College, placed an order by telephone with petitioner for 406 books, payable
upon delivery. Petitioner agreed, prepared the corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price. Two (2) days later, Cruz sold 120 books to private respondent
Leonor Santos who, after verifying the seller’s ownership from the invoice the former had shown her, paid the purchase
price of P1,700.00. Petitioner became suspicious over a second order placed by Cruz even before his first check had
cleared, hence, it made inquiries with the De la Salle College. The latter informed the petitioner that Cruz was not in its
employ. Further verification revealed that Cruz had no more account or deposit with the bank against which he drew the
check. Petitioner sought the assistance of the police which then set a trap and arrested Cruz. Investigation disclosed his
real name, Tomas de la Peña, and his sale of 120 of the books to Leonor Santos. On the night of the arrest; the
policemen whose assistance the petitioner sought, forced their way into the store of Leonor’ and her husband,
threatened her with prosecution for the buying of stolen property, seized the 120 books without a warrant and
thereafter turned said books over to the petitioner. The Santoses then sued for recovery of the books in the Municipal
Trial Court which decided in their favor; this decision was subsequently affirmed by the Regional Trial Court and
sustained by the Court of Appeals. Hence, the petitioner came to this Court by way of a petition for review wherein it
insists that it was unlawfully deprived of the books because as the check bounced for lack of funds, there was failure of
consideration that nullified the contract of sale between it and the impostor who then acquired no title over the books.
We rejected said claim in this wise:jgc:chanrobles.com.ph

"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:chanrob1es virtual 1aw library

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.chanrobles.com : virtual law library

x x x

25
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 price 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." 13

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the Youngstown Hardware, owned
by private respondent, corrugated galvanized iron sheets and round iron bars for P6,137.70, in payment thereof, he
issued a check drawn against the Security Bank and Trust Co. without informing Ong Shu that he (Soto) had no sufficient
funds in said bank to answer for the same. In the meantime, however, Soto sold the sheets to, among others, petitioner
Chua Hai. In the criminal case filed against Soto, upon motion of the offended party, the respondent Judge ordered
petitioner to return the sheets which were purchased from Soto. Petitioner’s motion for reconsideration having been
denied, he came to this Court alleging grave abuse of discretion and excess of jurisdiction. In answer to the petition, it is
claimed that inter alia, even if the property was acquired in good faith, the owner who has been unlawfully deprived
thereof may recover it from the person in possession of the same unless the property was acquired in good faith at a
public sale. 15 Resolving this specific issue, this Court ruled that Ong Shu was not illegally deprived of the possession of
the property:jgc:chanrobles.com.ph

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such delivery
transferred title or ownership to the purchaser. Says Art. 1496:chanrob1es virtual 1aw library

‘Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of
the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee.’ (C.C.)

The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and
unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the new Civil
Code.chanrobles lawlibrary : rednad

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter through fraud or
deceit, the contract was not thereby rendered void ab initio, but only voidable by reason of the fraud, and Article 1390
expressly provides that:chanrob1es virtual 1aw library

‘ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the
contracting parties:chanrob1es virtual 1aw library

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.’

26
Agreeably to this provision, Article 1506 prescribes:chanrob1es virtual 1aw library

‘ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of
the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice
of the seller’s defect of title.’ (C.C.)

Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that the fraud is established
to its satisfaction), the validity of appellant’s claim to the property in question can not be disputed, and his right to the
possession thereof should be respected." 16

It was therefore erroneous for the respondent Court to declare that the private respondent was illegally deprived of the
car simply because the check in payment therefor was subsequently dishonored; said Court also erred when it divested
the petitioner, a buyer in good faith who paid valuable consideration therefor, of his possession thereof.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September 1988 and its Resolution of 12
December 1988 in C.A.-G.R. CV No. 05955 are hereby SET ASIDE and the Decision of the trial court of 3 September 1979
and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby REINSTATED, with costs against private
respondent Citiwide Motors, Inc.

SO ORDERED.

.R. No. 80294-95 September 21, 1988

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, petitioner,

vs.
COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO AND JUAN VALDEZ, respondents.

Valdez, Ereso, Polido & Associates for petitioner.

Claustro, Claustro, Claustro Law Office collaborating counsel for petitioner.

Jaime G. de Leon for the Heirs of Egmidio Octaviano.

Cotabato Law Office for the Heirs of Juan Valdez.

GANCAYCO, J.:

The principal issue in this case is whether or not a decision of the Court of Appeals promulgated a long time ago can
properly be considered res judicata by respondent Court of Appeals in the present two cases between petitioner and
two private respondents.

Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of the Ninth Division of Respondent
Court of Appeals 1 in CA-G.R. No. 05148 [Civil Case No. 3607 (419)] and CA-G.R. No. 05149 [Civil Case No. 3655 (429)],
both for Recovery of Possession, which affirmed the Decision of the Honorable Nicodemo T. Ferrer, Judge of the
Regional Trial Court of Baguio and Benguet in Civil Case No. 3607 (419) and Civil Case No. 3655 (429), with the
dispositive portion as follows:

WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic Vicar Apostolic of the Mountain Province to
return and surrender Lot 2 of Plan Psu-194357 to the plaintiffs. Heirs of Juan Valdez, and Lot 3 of the same Plan to the
27
other set of plaintiffs, the Heirs of Egmidio Octaviano (Leonardo Valdez, et al.). For lack or insufficiency of evidence, the
plaintiffs' claim or damages is hereby denied. Said defendant is ordered to pay costs. (p. 36, Rollo)

Respondent Court of Appeals, in affirming the trial court's decision, sustained the trial court's conclusions that the
Decision of the Court of Appeals, dated May 4,1977 in CA-G.R. No. 38830-R, in the two cases affirmed by the Supreme
Court, touched on the ownership of lots 2 and 3 in question; that the two lots were possessed by the predecessors-in-
interest of private respondents under claim of ownership in good faith from 1906 to 1951; that petitioner had been in
possession of the same lots as bailee in commodatum up to 1951, when petitioner repudiated the trust and when it
applied for registration in 1962; that petitioner had just been in possession as owner for eleven years, hence there is no
possibility of acquisitive prescription which requires 10 years possession with just title and 30 years of possession
without; that the principle of res judicata on these findings by the Court of Appeals will bar a reopening of these
questions of facts; and that those facts may no longer be altered.

Petitioner's motion for reconsideation of the respondent appellate court's Decision in the two aforementioned cases (CA
G.R. No. CV-05418 and 05419) was denied.

The facts and background of these cases as narrated by the trail court are as follows —

... The documents and records presented reveal that the whole controversy started when the defendant Catholic Vicar
Apostolic of the Mountain Province (VICAR for brevity) filed with the Court of First Instance of Baguio Benguet on
September 5, 1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357, situated at Poblacion
Central, La Trinidad, Benguet, docketed as LRC N-91, said Lots being the sites of the Catholic Church building, convents,
high school building, school gymnasium, school dormitories, social hall, stonewalls, etc. On March 22, 1963 the Heirs of
Juan Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition on Lots Nos. 2 and 3, respectively,
asserting ownership and title thereto. After trial on the merits, the land registration court promulgated its Decision,
dated November 17, 1965, confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the Heirs of Egmidio Octaviano (plaintiffs in the
herein Civil Case No. 3607) appealed the decision of the land registration court to the then Court of Appeals, docketed
as CA-G.R. No. 38830-R. The Court of Appeals rendered its decision, dated May 9, 1977, reversing the decision of the
land registration court and dismissing the VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of
oppositors in the land registration case (and two sets of plaintiffs in the two cases now at bar), the first lot being
presently occupied by the convent and the second by the women's dormitory and the sister's convent.

On May 9, 1977, the Heirs of Octaviano filed a motion for reconsideration praying the Court of Appeals to order the
registration of Lot 3 in the names of the Heirs of Egmidio Octaviano, and on May 17, 1977, the Heirs of Juan Valdez and
Pacita Valdez filed their motion for reconsideration praying that both Lots 2 and 3 be ordered registered in the names of
the Heirs of Juan Valdez and Pacita Valdez. On August 12,1977, the Court of Appeals denied the motion for
reconsideration filed by the Heirs of Juan Valdez on the ground that there was "no sufficient merit to justify
reconsideration one way or the other ...," and likewise denied that of the Heirs of Egmidio Octaviano.

Thereupon, the VICAR filed with the Supreme Court a petition for review on certiorari of the decision of the Court of
Appeals dismissing his (its) application for registration of Lots 2 and 3, docketed as G.R. No. L-46832, entitled 'Catholic
Vicar Apostolic of the Mountain Province vs. Court of Appeals and Heirs of Egmidio Octaviano.'

From the denial by the Court of Appeals of their motion for reconsideration the Heirs of Juan Valdez and Pacita Valdez,
on September 8, 1977, filed with the Supreme Court a petition for review, docketed as G.R. No. L-46872, entitled, Heirs
of Juan Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio Octaviano and Annable O. Valdez.

On January 13, 1978, the Supreme Court denied in a minute resolution both petitions (of VICAR on the one hand and the
Heirs of Juan Valdez and Pacita Valdez on the other) for lack of merit. Upon the finality of both Supreme Court
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resolutions in G.R. No. L-46832 and G.R. No. L- 46872, the Heirs of Octaviano filed with the then Court of First Instance
of Baguio, Branch II, a Motion For Execution of Judgment praying that the Heirs of Octaviano be placed in possession of
Lot 3. The Court, presided over by Hon. Salvador J. Valdez, on December 7, 1978, denied the motion on the ground that
the Court of Appeals decision in CA-G.R. No. 38870 did not grant the Heirs of Octaviano any affirmative relief.

On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a petitioner for certiorari and mandamus,
docketed as CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon. Salvador J. Valdez, Jr. and Vicar. In its
decision dated May 16, 1979, the Court of Appeals dismissed the petition.

It was at that stage that the instant cases were filed. The Heirs of Egmidio Octaviano filed Civil Case No. 3607 (419) on
July 24, 1979, for recovery of possession of Lot 3; and the Heirs of Juan Valdez filed Civil Case No. 3655 (429) on
September 24, 1979, likewise for recovery of possession of Lot 2 (Decision, pp. 199-201, Orig. Rec.).

In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio Octaviano presented one (1) witness, Fructuoso
Valdez, who testified on the alleged ownership of the land in question (Lot 3) by their predecessor-in-interest, Egmidio
Octaviano (Exh. C ); his written demand (Exh. B—B-4 ) to defendant Vicar for the return of the land to them; and the
reasonable rentals for the use of the land at P10,000.00 per month. On the other hand, defendant Vicar presented the
Register of Deeds for the Province of Benguet, Atty. Nicanor Sison, who testified that the land in question is not covered
by any title in the name of Egmidio Octaviano or any of the plaintiffs (Exh. 8). The defendant dispensed with the
testimony of Mons.William Brasseur when the plaintiffs admitted that the witness if called to the witness stand, would
testify that defendant Vicar has been in possession of Lot 3, for seventy-five (75) years continuously and peacefully and
has constructed permanent structures thereon.

In Civil Case No. 3655, the parties admitting that the material facts are not in dispute, submitted the case on the sole
issue of whether or not the decisions of the Court of Appeals and the Supreme Court touching on the ownership of Lot
2, which in effect declared the plaintiffs the owners of the land constitute res judicata.

In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting up the defense of ownership
and/or long and continuous possession of the two lots in question since this is barred by prior judgment of the Court of
Appeals in CA-G.R. No. 038830-R under the principle of res judicata. Plaintiffs contend that the question of possession
and ownership have already been determined by the Court of Appeals (Exh. C, Decision, CA-G.R. No. 038830-R) and
affirmed by the Supreme Court (Exh. 1, Minute Resolution of the Supreme Court). On his part, defendant Vicar maintains
that the principle of res judicata would not prevent them from litigating the issues of long possession and ownership
because the dispositive portion of the prior judgment in CA-G.R. No. 038830-R merely dismissed their application for
registration and titling of lots 2 and 3. Defendant Vicar contends that only the dispositive portion of the decision, and
not its body, is the controlling pronouncement of the Court of Appeals. 2

The alleged errors committed by respondent Court of Appeals according to petitioner are as follows:

1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUT
DOCUMENTARY EVIDENCE PRESENTED;

3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED LOTS 2 AND 3 FROM VALDEZ AND OCTAVIANO WAS AN
IMPLIED ADMISSION THAT THE FORMER OWNERS WERE VALDEZ AND OCTAVIANO;

4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2
AND 3 AT LEAST FROM 1906, AND NOT PETITIONER;

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5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE PATENT APPLICATIONS AND THE PREDECESSORS OF
PRIVATE RESPONDENTS ALREADY HAD FREE PATENT APPLICATIONS SINCE 1906;

6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3 ONLY IN 1951 AND JUST TITLE IS A PRIME NECESSITY
UNDER ARTICLE 1134 IN RELATION TO ART. 1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE PRESCRIPTION OF 10
YEARS;

7. ERROR IN FINDING THAT THE DECISION OF THE COURT OF APPEALS IN CA G.R. NO. 038830 WAS AFFIRMED BY THE
SUPREME COURT;

8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830 TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND
THAT PRIVATE RESPONDENTS AND THEIR PREDECESSORS WERE IN POSSESSION OF LOTS 2 AND 3 UNDER A CLAIM OF
OWNERSHIP IN GOOD FAITH FROM 1906 TO 1951;

9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN
COMMODATUM, A GRATUITOUS LOAN FOR USE;

10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER IN GOOD FAITH WITHOUT RIGHTS OF
RETENTION AND REIMBURSEMENT AND IS BARRED BY THE FINALITY AND CONCLUSIVENESS OF THE DECISION IN CA G.R.
NO. 038830. 3

The petition is bereft of merit.

Petitioner questions the ruling of respondent Court of Appeals in CA-G.R. Nos. 05148 and 05149, when it clearly held
that it was in agreement with the findings of the trial court that the Decision of the Court of Appeals dated May 4,1977
in CA-G.R. No. 38830-R, on the question of ownership of Lots 2 and 3, declared that the said Court of Appeals Decision
CA-G.R. No. 38830-R) did not positively declare private respondents as owners of the land, neither was it declared that
they were not owners of the land, but it held that the predecessors of private respondents were possessors of Lots 2
and 3, with claim of ownership in good faith from 1906 to 1951. Petitioner was in possession as borrower in
commodatum up to 1951, when it repudiated the trust by declaring the properties in its name for taxation purposes.
When petitioner applied for registration of Lots 2 and 3 in 1962, it had been in possession in concept of owner only for
eleven years. Ordinary acquisitive prescription requires possession for ten years, but always with just title. Extraordinary
acquisitive prescription requires 30 years. 4

On the above findings of facts supported by evidence and evaluated by the Court of Appeals in CA-G.R. No. 38830-R,
affirmed by this Court, We see no error in respondent appellate court's ruling that said findings are res judicata between
the parties. They can no longer be altered by presentation of evidence because those issues were resolved with finality a
long time ago. To ignore the principle of res judicata would be to open the door to endless litigations by continuous
determination of issues without end.

An examination of the Court of Appeals Decision dated May 4, 1977, First Division 5 in CA-G.R. No. 38830-R, shows that
it reversed the trial court's Decision 6 finding petitioner to be entitled to register the lands in question under its
ownership, on its evaluation of evidence and conclusion of facts.

The Court of Appeals found that petitioner did not meet the requirement of 30 years possession for acquisitive
prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10 years possession for ordinary acquisitive
prescription because of the absence of just title. The appellate court did not believe the findings of the trial court that
Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was acquired also by purchase from Egmidio Octaviano by
petitioner Vicar because there was absolutely no documentary evidence to support the same and the alleged purchases
were never mentioned in the application for registration.

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By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and Octaviano. Both Valdez and Octaviano
had Free Patent Application for those lots since 1906. The predecessors of private respondents, not petitioner Vicar,
were in possession of the questioned lots since 1906.

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not Lots 2 and 3, because
the buildings standing thereon were only constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3
for taxation purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the Bishop but said Bishop was
appointed only in 1947, the church was constructed only in 1951 and the new convent only 2 years before the trial in
1963.

When petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the lot from Fructuoso
Valdez. Lots 2 and 3 were surveyed by request of petitioner Vicar only in 1962.

Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the
church and the convent were destroyed. They never asked for the return of the house, but when they allowed its free
use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter
of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the
property subject matter of commodatum. The adverse claim of petitioner came only in 1951 when it declared the lots
for taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary
acquisitive prescription because of the absence of just title.

The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under claim of
ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum; and that the adverse claim
and repudiation of trust came only in 1951.

We find no reason to disregard or reverse the ruling of the Court of Appeals in CA-G.R. No. 38830-R. Its findings of fact
have become incontestible. This Court declined to review said decision, thereby in effect, affirming it. It has become final
and executory a long time ago.

Respondent appellate court did not commit any reversible error, much less grave abuse of discretion, when it held that
the Decision of the Court of Appeals in CA-G.R. No. 38830-R is governing, under the principle of res judicata, hence the
rule, in the present cases CA-G.R. No. 05148 and CA-G.R. No. 05149. The facts as supported by evidence established in
that decision may no longer be altered.

WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED for lack of merit, the Decision dated Aug. 31,
1987 in CA-G.R. Nos. 05148 and 05149, by respondent Court of Appeals is AFFIRMED, with costs against petitioner.

SO ORDERED.

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