NATIONAL HOUSING AUTHORITY v.
MANILA SEEDLING b) As MSBFI possessed the excess by tolerance of petitioner,
BANK FOUNDATION, INC
FACTS
1) NHA is the owner of a 120-hectare piece of government
property in Diliman reserved for the establishment of the
National Government Center.
- By virtue of Proc No. 1670, President Marcos reserved
a 7-hectare area thereof and granted respondent
usufructuary rights over it.
2) MSBFI occupied a total of 16 hectares, thereby exceeding
the 7-hectare area it was allowed to occupy. It leased the
excess to private tenants.
3) Pres. Aquino issued Memorandum Order No. 12710
revoking the reserved status of the remaining 50 hectares
of the 120-hectare property.
- Petitioner was expressly authorized to commercialize
the area and sell it to the public through bidding.
- Pres. Ramos subsequently issued EO 5811 creating
an inter-agency Executive Committee composed of
NHA and other government agencies to oversee the
comprehensive development of the remaining 50
hectares, therein referred to as the North Triangle
Property.
4) As MSBFI occupied a prime portion of the North Triangle
Property, the Executive Committee proposed the transfer of
respondent to areas more suitable to its operations.
5) MSBFI filed before the RTC a Complaint for injunction with
prayer for the issuance of a writ of preliminary injunction
against petitioner. They sought the protection of its
occupancy and possession of the property reserved for it
under Proc No. 1670. In its Answer with Compulsory
Counterclaim, NHA prayed that respondent be ordered to
vacate the 7-hectare area and the excess, and to pay rent
therefor on top of exemplary damages, attorney's fees, and
litigation expenses.
6) RTC issued a writ of preliminary injunction enjoining
petitioner from causing the relocation of respondent. The
trial court eventually issued a summary judgment granting
a final injunction over the 7-hectare area in respondent's
favor. The court, however, reserved the determination of
the counterclaim of petitioner as to the excess. NHA's
motion for reconsideration and MSBFI's motion for partial
reconsideration were both denied in the RTC.
7) Petitioner's certiorari petition was denied by the CA, which
remanded the case to the RTC for further proceedings on
the matter of petitioner's counterclaim. Petitioner no longer
questioned the CA ruling. In the meantime, it recovered
possession of the excess on 1 March 1999.
RTC:
a) Found that MSBFI had leased the excess to various
establishments upon authority given by Minister of Natural
Resources Ernesto Maceda. As he had administrative
control over MSBFI at the time, he gave it that authority to
enable it to earn income to finance its operations,
considering that it no longer received any donation from the
national government since 1986.
b) Found that MSFBI had protected the excess by developing
it and keeping squatter syndicates from taking possession.
For that reason, the expenses it incurred for the
development of the excess were more than sufficient to
compensate petitioner in terms of rent.
CA: affirmed the RTC
a) Respondent cannot be considered an officious manager
under the principle of negotiorum gestio, as the latter had
not established that the excess was either abandoned or
neglected by petitioner.
a demand to vacate was necessary to establish the
reckoning point for the filing of an unlawful detainer action,
as well as for the recovery of rent and damages.
c) Found that the Executive Committee's proposal for the
transfer of respondent was not a demand in contemplation
of the law. Considering that the excess was eventually
surrendered by respondent to petitioner w/o any demand,
there was no basis for the award of rent and damages in
the absence of bad faith.
ISSUE WON NHA is entitled to recover rent, exemplary
damages, attorney's fees, and litigation expenses from MSBFI
RULING
NHA v. CA, this Court upheld the usufructuary right of
respondent over the 7-hectare area granted under Proc No.
1670. However, the Court also emphasized that the rights of
respondent were circumscribed within the limits of the 7-hectare
area allotted to it:
A usufruct gives a right to enjoy the property of another with the
obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides.
- This controversy would not have arisen had MSBFI
respected the limit of the beneficial use given to it.
MSBFIs encroachment of its benefactor's property
gave birth to the confusion that attended this case.
- To put this matter entirely to rest, it is not enough to
remind NHA to respect MSBFIs choice of the location
of its 7-hectare area. MSBFIs for its part, must vacate
the area that is not part of its usufruct. MSBFIs rights
begin and end within the 7-hectare portion of its
usufruct. This Court agrees with the trial court that
MSBFI has abused the privilege given it under Proc No.
1670. The direct corollary of enforcing MSBFIs rights
within the 7-hectare area is the negation of any of
MSBFIs acts beyond it.
Since MSBFI had no right to act beyond the confines of the 7-
hectare area granted to it, and since it was fully aware of this
fact, its encroachment of 9 additional hectares of petitioner's
property rendered it a possessor in bad faith as to the excess.
While respondent may have been allowed by then Minister of
Natural Resources Ernesto Maceda to lease the excess to
various establishments, such authority did not come from NHA,
who is the owner. At any rate, even if NHA tolerated the
encroachment by MSBFIs, that fact does not change MSBFIs
status as a possessor in bad faith. We have ruled that a
person whose occupation of realty is by sheer tolerance of the
owner is not a possessor in good faith. Having done so, it is
bound to pay the corresponding amounts to petitioner.
MSBFI, however, shall be entitled to a refund of the necessary
expenses it incurred. Necessary expenses are those made for
the preservation of the land occupied, or those without which the
land would deteriorate or be lost. These may also include
expenditures that augment the income of the land or those that
are incurred for its cultivation, production, and upkeep.
Both the CA and the RTC found that respondent had exerted
efforts and expended money to develop the excess and protect
it from squatter syndicates. These expenses would naturally fall
under those defined as necessary expenses for which
respondent, even as a possessor in bad faith, is entitled to be
reimbursed.
These necessary expenses have not been itemized by
respondent. On the other hand, we are not inclined to adopt the
allegation of petitioner as to the amount of rental it could have
received from the lease of the excess based on a professional
appraisal. There is a need to remand the case to the RTC for
the conduct of trial for the purpose of determining the amounts
the parties are entitled to as laid out in this Decision.
Finally, we are constrained to deny petitioner's prayer for the
award of exemplary damages. While respondent was a
possessor in bad faith, there is no evidence that it acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
The award of attorney's fees and litigation expenses to petitioner
is also improper. It was not forced to litigate because of the
unfounded claims of respondent. Rather, it was the latter that
initiated the instant proceedings by filing the complaint for
injunction before the RTC. Respondent felt that its rights over
the seven-hectare area granted under Proclamation No. 1670
were being threatened by petitioner through the proposal for
transfer.
RODOLFO EUSEBIO, Petitioners, v. IAC and ROHIMUST
SANTOS, Respondents.
FACTS:
1) The controversy in this case is between two co-owners of a
parcel of land situated at Blumentritt Extension, corner Don
Manuel Street, La Loma, Quezon City, RODOLFO, as one
of the two, had filed suit in 1981 against ROHIMUST, the
other co-owner, before CFI of Quezon City (now RTC) for
determination of their participations in the co-ownership,
and for actual partition of the LOT.
RTC: Ordering the partition of that parcel of land
a) 611.30 sq. m. which shall be given to plaintiff, Rodolfo Y.
Eusebio;
b) 200 sq. m. which shall be given to defendant, Rohimust
Santos.
We have found indications in the evidence that there are houses
constructed on the LOT which may be legally owned in common,
or which one party might claim to have been constructed by him
separately from the co-ownership. Addresses of both parties are
at No. 4 Don Manuel, and it can be presumed they live
separately within the LOT. In his brief submitted to the Appellate
Tribunal, ROHIMUST, in part, had said: The said lot is located
at the corner of Don Manuel and Blumentritt Extension
consisting of 811.30 square meters. There is an old house built
and is still standing in the middle of the land. The house was
constructed by his late grandfather Philip Zinsineth.
As the manner of dividing the LOT has yet to be determined, and
it could not then be known which buildings have to be cut by a
dividing line, the RTC simply provided for the demolition of any
building or part thereof, claimed by either party, which would be
within the area assigned to the other party. No mention of
compensation was made, and it is our opinion the omission
shows the Trial Court intended that no compensation shall be
payable.
IAC: Initially affirmed the judgment of the Trial Court in toto.
However, on Motion for Reconsideration filed by ROHIMUST, it
rendered a Resolution amending its previous affirmance,
holding that ROHIMUST "has the legal right to retain the
house together with its improvements and the possession
thereof until full payment of the value thereof." It is that
modification which RODOLFO, in the instant Petition for Review,
has alleged to be erroneous and which should be set aside.
The LOT was part of a subdivision owned by J.M. Tuazon & Co.,
Inc, represented by Gregorio Araneta, Inc (GA, Inc.). As early as
1924, it was occupied by Philip Zinsineth as a lessee, and he
had constructed a house and garage thereon. After his death,
his "leasehold rights" were inherited by his two daughters, Mary,
the mother of ROHIMUST, and Isabel, the deceased mother of
RODOLFOs wife.
2) On April 15, 1974, the parties concerned agreed that the
leasehold rights will be placed in the name of
RODOLFO to the extent of 383 sq. m., and in the name of
FERNANDO J. Santos, Jr., a son of Mary, to the extent of
428.30 sq. m.
3) On that same date, a contract to sell the LOT on installment
was executed by GA, Inc. in favor of RODOLFO.
FERNANDO was not included in the contract because GA,
Inc. wanted to deal only with one person. However,
RODOLFO and FERNANDO signed an affidavit reading in
part as follows:
"That actually the property was bought by us jointly and
the monthly installments shall be paid by us pro-rata to
the area which we are presently occupying.
"That it is our understanding that as soon as the property is
fully paid for by us, the same shall be subdivided so as to
have two transfer certificates of title issued to us for our
corresponding portions;
4) By August 5, 1976, installment payments under the
Contract to Sell had not been kept up to date. RODOLFO
and FERNANDO then made an agreement as follow:
"That all overdue monthly installment arising from the
monthly share of Fernando J. Santos, Jr. will be advanced
by Rodolfo Y. Eusebio and the corresponding payment
will be charged an interest rate of 1% per month:
"That the said parcel of land is to be fully paid 48 months
from May 15, 1974. On the said due date of full payment,
each party will have to pay its corresponding full share of
payment. Each party will be given a grace period of 5
months to settle its corresponding share of payment with
the corresponding share thereon, and if after this date one
party fails to pay its corresponding share, the said parcel of
land will be subdivided according to the amount of payment
by each party"
5) In 1978, full payment was made to GA, Inc., and TCT No.
244154 of the Registry of Deeds of Metro Manila was
issued solely in the name of RODOLFO. For the full
payment of the amount paid to GA, Inc., FERNANDO was
not able to contribute his full share. In 1980, FERNANDO
transferred his rights to ROHIMUST who is his brother.
6) In the case instituted by RODOLFO against ROHIMUST,
Trial Court found that, as a result of RODOLFOs payments
made to GA, Inc. on behalf of FERNANDO, his share in
the LOT had to be increased from 383 sq. m. to 611.30
sq. m., with the participation of ROHIMUST being
decreased to 200 sq. m. That adjudication is now final.
ISSUE: The legal issue to be resolved in this instance is the
correctness of the Appellate Tribunals Resolution that:
It is undisputed that defendant-appellants house was erected
on the land in question at the time that said portion was under
his claim of ownership. They were therefore in possession
thereof unquestionably in good faith. And, par. 2 of Article 546
of the Civil Code reads:
"Useful expenses shall be refunded only to the
possessor in good faith with the same right of retention,
the person who has defeated him in the possession
having the option of refunding the amount of the
expenses or of paying the increase in value which the
thing may have acquired by reason thereof.
RULING:
The IAC was in error in invoking Article 546 which prescribes the
rights of the possessor in good faith as regards useful expenses.
Article 546 presupposes, but does not establish, possession in
good faith, the requisites of which are laid down in Article 526,
thus:
"ART. 526. He is deemed a possessor in good faith
who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
"He is deemed a possessor in bad faith who possesses
in any case contrary to the foregoing.
"Mistake upon a doubtful or difficult question of law
may be the basis of good faith."
It may be mentioned that, prior to April 15, 1974, the possession
of the parties was in the concept of lessees of the LOT, which
was not possession in good faith for purposes of Article 546.
Conceding, for the sake of avoiding immaterial complications,
that the parties became co-owners after April 15, 1974, when
the contract to sell was executed, neither co-owner can claim
possession in himself of any particular identified part of the LOT.
As stated in Cabello v. Cabello, "the possession held by a
co-heir of the undivided estate is understood to be enjoyed
in the name of the rest of the heirs." An undivided estate is
co-ownership by the heirs. The ownership of the physically
undivided thing pertains to more than one person, thus
defined as "the right of common dominion which two or
more persons have in a spiritual part of a thing which is not
physically divided."
"ART. 543. Each one of the participants of a thing
possessed in common shall be deemed to have exclusively
possessed the part which may be allotted to him upon the
division thereof, for the entire period during which the co-
possession lasted. Interruption in the possession of the
whole or a part of a thing possessed in common shall be to
the prejudice of all the possessors. However, in case of civil
interruption, the Rules of Court shall apply."
- Under the foregoing provision, after the LOT is actually
partitioned, ROHIMUST would be "deemed to have
exclusively possessed" since April 15, 1974, the part
which may be allotted to him upon the division thereof"
consisting of the definite 200 sqm area assigned to
him, together with all buildings and parts of buildings
erected therein (Section 11, Rule 69).
- RODOLFO can have no claim over such buildings or
parts of a building, which improvements ROHIMUST
can keep or demolish without paying any
compensation thereof to RODOLFO.
- For the same reason, if there were buildings or part of
a building, found in the definite 611.30 sqm. area
assigned to RODOLFO, he will be deemed to have
been in exclusive possession thereof since April 15,
1974, and he can keep or demolish these
improvements without paying any compensation
therefor to ROHIMUST.
HEIRS OF MARCELINO CABAL VS. SPS. LORENZO CABAL
AND ROSITA CABAL
FACTS:
1) During his lifetime, Marcelo Cabal was the owner of a parcel
of land situated. Sometime in 1954, Marcelo died, survived
by his wife and his children. It appears that sometime in
1949, five years before he died, Marcelo allowed his son,
Marcelino, to build his house on a portion of the lot. Since
then, Marcelino resided thereon. Later, Marcelinos son
also built his house on the disputed property.
2) In 1964, Marcelos heirs extra-judicially settled among
themselves the lot. In the interim, based on a consolidated
subdivision plan, it was revealed that Marcelino and his son
occupied and built their houses on an area located on the
southernmost portion of another lot and not the adjacent lot
designated to him. The spouses Lorenzo and Rosita Cabal
(respondents) confronted Marcelino on this matter which
resulted to an agreement to a re-survey and swapping of
lots for the purpose of reconstruction of land titles. However,
the agreed resurvey and swapping of lots did not
materialize.
3) Hence, respondents filed a complaint for Recovery of
Possession with Damages against Marcelino. They alleged
that Marcelino introduced improvements in bad faith on
their land with knowledge that the adjacent lot is titled in his
name. Marcelino contends that respondents have no cause
of action against him because he has been in possession
in good faith since 1949 with the respondents knowledge
and acquiescence. He further avers that acquisitive
prescription has set in.
ISSUES:
1) WON the lot where Marcelino built his house was co-owned
by Marcelos children NO.
2) WON Marcelino is a builder in good faith YES.
RULING:
1) NO. It is undisputed that Marcelino built his house on the
disputed property in 1949 with the consent of his father.
Marcelino has been in possession of the disputed lot since
then with the knowledge of his co-heirs, such that even
before his father died in 1954, when the co-ownership was
created, his inheritance or share in the co-ownership was
already particularly designated or physically segregated.
Thus, even before the lot was subdivided, Marcelino
already occupied the disputed portion and even then co-
ownership did not apply over the disputed lot. Elementary
is the rule that there is no co-ownership where the portion
owned is concretely determined and identifiable, though not
technically described, or that said portion is still embraced
in one and the same certificate of title does make said
portion less determinable or identifiable, or distinguishable,
one from the other, nor that dominion over each portion less
exclusive, in their respective owners.
Thus, since Marcelino built a house and has been
occupying the disputed portion since 1949, with the consent
of his father and knowledge of the co-heirs, it would have
been just and equitable to have segregated said portion in
his favor and not one adjacent to it.
2) Marcelino is deemed a builder in good faith at least until the
time he was informed by respondents of his encroachment
on their property. Marcelinos possession of the disputed lot
was based on a mistaken belief that the lot covered by his
title is the same lot on which he has built his house with the
consent of his father. There is no evidence, other than bare
allegation, that Marcelino was aware that he intruded on
 respondents property when he continued to occupy and of the consequences of a crime such as direct assault
possess the disputed lot after partition was effected. because he had previously been convicted thereof.
About two weeks later, Deoven executed a retraction
in Baguio City where he took up his engineering
SUBIC BAY LEGEND RESORTS AND CASINOS, course.
INC., Petitioner, vs. BERNARD C. FERNANDEZ, Respondent.
On July 1, 1997, respondent filed Civil Case No. 237-0-97 for
FACTS: recovery of sum of money with damages against petitioner, on
1) Petitioner Subic Bay Legend Resorts and Casinos, Inc., a the premise that he went to Legenda with his brothers Ludwin
duly organized and existing corporation operating under and Deoven; that he handed over Legenda casino chips worth
Philippine laws, operates the Legenda Hotel and Casino US$6,000.00, which belonged to him, to his brothers for the
located in the Subic Bay Freeport Zone in Zambales. latter to use at the casino; that petitioner accosted his brothers
2) On the other hand, respondent Bernard C. Fernandez is the and unduly and illegally confiscated his casino chips equivalent
plaintiff in Civil Case No. 237-0-97 prosecuted against to US$5,900.00; and that petitioner refused and continues to
petitioner in Olongapo RTC. refuse to return the same to him despite demand. His
Facts of the Civil Case: Complaint8 prayed for the return of the casino chips and an
award of 50,000.00 moral damages, 50,000.00 exemplary
At around 11pm of 6 June 1997, the appellee's brother,
damages, 30,000.00 attorney's fees, 20,000.00 litigation
Ludwin Fernandez, visited the Legenda Hotel and Casino
expenses, and costs.
owned and operated by the appellant SBLRC and located
along the Waterfront Road, Subic Bay Freeport Zone.
Petitioner's Answer with Compulsory Counterclaim9 essentially
- Legenda had strategically installed several CCTV
alleged that right after Ludwin and Deoven's transactions with
cameras as part of security measures required by its
the Legenda cashier were frozen on June 13, 1997, they
business. The monitors revealed that Ludwin changed
voluntarily agreed to proceed to the Legenda security office
$5,000.00 worth of chips into smaller denominations.
upon invitation, where Ludwin voluntarily informed security
- Legenda admitted in its brief that its surveillance staff
officers that it was a certain Michael Cabrera (Cabrera) - a
paid close attention to Ludwin simply because it was
Legenda table inspector at the time - who gave him the casino
"unusual" for a Filipino to play using dollar-
chips for encashment, taught him how to play baccarat and
denominated chips.
thereafter encash the chips, and rewarded him with Pl,000.00
- After Ludwin won $200.00 in a game of baccarat, he
for every $1,000.00 he encashed; that Ludwin pointed to a
redeemed the value of chips worth $7,200.00. A review
picture of Cabrera in a photo album of casino employees shown
of the CCTV recordings showed that the incident was
to him; that Ludwin and Deoven were then brought to the IIO
not the first time Ludwin visited the Casino, as he had
SBMA, where they reiterated their statements made at the
also been there on 5 June 1997.
Legenda security office; that they volunteered to testify against
An operation was launched by Legenda to zero-in on
Cabrera; that respondent himself admitted that it was Cabrera
Ludwin whose picture was furnished its security section.
who gave him the casino chips; that Ludwin and Deoven
Thus, unbeknownst to him, he was already closely watched
voluntarily executed a joint affidavit before the Olongapo City
when he went with another brother, Deoven, to the casino.
Prosecutor's Office, which they subsequently recanted; that
After playing (and losing $100.00) only one round of
respondent had no cause of action since the confiscated casino
baccarat, the siblings had their chips encashed at 2
chips worth US$5,900.00 were stolen from it, and thus it has the
separate windows. Since the cashiers were apprised of a
right to retain them. By way of counterclaim, petitioner sought
supposed irregularity, they "froze" the transaction
an award of P 1 million moral damages, 1 million exemplary
Legenda's internal security officers accosted Ludwin and
damages, and P.5 million attorney's fees and litigation
Deoven and ordered them to return the cash and they expenses.
complied without ado because they were being pulled
away.
Respondent filed his Answer to petitioner's counterclaim.
- The two were eventually escorted to private rooms
where they were separately interrogated about the RTC: The evidence preponderates in favor of the plaintiff,
source of the chips they brought. They were held for
judgment is rendered against the defendant
about 7 hrs until the wee hours of the morning, without
food or sleep. They confess that the chips were given
There is no dispute that the subject chips were in the possession
by a certain employee, Michael Cabrera, or they would of the plaintiff. He claims he got hold of them as payment for car
not be released from questioning. The same line of
services he rendered to a Chinese individual. Defendant
questioning confronted them when they were later
however, contends that said chips were stolen from the casino
turned-over for blotter preparation to the Intelligence
and it is the lawful owner of the same.
and Investigation Office of the Subic Bay Metropolitan
Authority (IIO SBMA).
The onus fell on defendant to prove that the casino chips were
- Finally, the brothers succumbed to Legenda's
stolen. The proof adduced however, is wanting. The statements
instruction to execute a joint statement implicating
of Deoven and Ludwin C. Fernandez, confessing to the source
Cabrera as the illegal source of the chips. Due to of the chips were recanted hence, have little probative value.
hunger and fatigue, they did not disown the statement
The testimony of defendant's witnesses narrated defendant's
even when they subscribed the same before the
action responding to the suspicious movements of the
prosecutor in whose office they were [later] brought.
Fernandez brothers based on surveillance tapes. The tapes,
- On the other hand, they signed for basically the same however, do not show how these persons got hold of the chips.
reason a document purporting to show that they were
The alleged source in the person of Mike Cabrera, a table
"released to their brother's custody in good condition."
inspector of the casino, was based on the recanted declarations
At the time, Deoven was about 21 years old, in his 2nd
of the brothers. No criminal charge was shown to have been filed
year of engineering studies and was not familiar with against him nor the plaintiff and his brothers. Neither was there
the so-called "estafa" with which the security personnel
an explanation given as to how those chips came into the
threatened to sue him for; although he was quite aware
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).
CA:
Applying Article 559 of the Civil Code, respondent had the legal
presumption of title to or ownership of the casino chips.
This conclusion springs from respondent's admission during trial
that the chips represented payment by a Chinese customer for
services he rendered to the latter in his car shop. 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.
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
1) WON CA erred in ruling that the recanted statements of
Deoven Fernandez and Ludwin C. Fernandez have [no]
probative value;
2) WON CA 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;
3) WON CA erred in finding that the evidence preponderates
in favor of the herein respondent; [and]
4) The Honorable Court seriously erred in awarding attorney's
fees and costs of suit I favor of the respondent.
PETITIONER:
1) 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;
2) 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.
3) 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
Affidavit that the chips came from Cabrera, and not
responcient;
4) that the subsequent Sworn Statement recanting the Joint
Affidavit should not be given credence, as affidavits of
recantation can easily be secured - which thus makes them
unreliable;
5) that no duress attended the taking of the brothers' Joint
Affidavit, which was prepared by Henry Marzo of the
Intelligence and Investigation Office (IIO) of the Subic Bay
Metropolitan Authority (SBMA).
6) 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.
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;
- that the 30,000.00 award of attorney's fees should be
increased to 100,000.00.
RULING
Petitioner's underlying theory is FALSE
- 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
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. In turn,
the factual findings of the CA carry even more weight when they
are identical to those of the trial court's.
Besides, a question of fact cannot properly be raised in a petition
for review on certiorari. Moreover, if petitioner should stick to its
theory that Cabrera stole the subject casino chips, then its failure
to file a criminal case against the latter -including Ludwin and
Deoven for that matter - up to this point certainly does not help
to convince the Court of its position, especially considering that
the supposed stolen chips represent a fairly large amount of
money. Indeed, for purposes of this proceeding, there
appears to be no evidence on record - other than mere
allegations and suppositions - that Cabrera stole the casino
chips in question; such conclusion came unilaterally from
petitioner, and for it to use the same as foundation to the claim
that Ludwin, Deoven and respondent are dealing in stolen chips
is clearly irregular and unfair.
Thus, there should be no basis to suppose that the casino
chips found in Ludwin's and Deoven's possession were
stolen; petitioner acted arbitrarily in confiscating the same
without basis. Their Joint Affidavit - which was later recanted -
does not even bear such fact; it merely states that the chips
came from Cabrera. If it cannot be proved, in the first place, that
Cabrera stole these chips, then there is no more reason to
suppose that Ludwin and Deoven were dealing in or possessed
stolen goods; unless the independent fact that Cabrera stole the
chips can be proved, it cannot be said that they must be
confiscated when found to be in Ludwin's and Deoven's
possession.
It is not even necessary to resolve whether Ludwin's and
Deoven's Joint Affidavit was obtained by duress or otherwise;
the document is irrelevant to petitioner's cause, as it does not
suggest at all that Cabrera stole the subject casino chips. At
most, it only shows that Cabrera gave Ludwin and Deoven
casino chips, if this fact is true at all - since such statement has
since been recanted.
The fact that Ludwin and Deoven appear to be indecisive as to
who gave them the casino chips does not help petitioner at all. It
cannot lead to the conclusion that Cabrera stole the chips and
then gave them to the two; as 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, 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, 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.
BPI FAMILY BANK, Petitioner, vs AMADO FRANCO and
COURT OF APPEALS, Respondents
FACTS:
1) On August 15, 1989, Tevesteco opened a savings and
current account with BPI-FB. Soon thereafter, FMIC also
opened a time deposit account with the same branch of
BPI-FB
2) On August 31, 1989, Franco opened three accounts,
namely, a current, savings, and time deposit, with BPI-
FB. The total amount of P2,000,000.00 used to open these
accounts is traceable to a check issued by Tevesteco
allegedly in consideration of Francos introduction of Eladio
Teves, to Jaime Sebastian, who was then BPI-FB SFDMs
Branch Manager. In turn, the funding for the P2,000,000.00
check was part of the P80,000,000.00 debited by BPI-FB
from FMICs time deposit account and credited to
Tevestecos current account pursuant to an Authority to
Debit purportedly signed by FMICs officers.
3) It appears, however, that the signatures of FMICs officers
on the Authority to Debit were forged. BPI-FB, debited
Francos savings and current accounts for the amounts
remaining therein. In the meantime, two checks drawn by
Franco against his BPI-FB current account were
dishonored and stamped with a notation account under
garnishment. Apparently, Francos current account was
garnished by virtue of an Order of
4) Notably, the dishonored checks were issued by Franco and
presented for payment at BPI-FB prior to Francos receipt
of notice that his accounts were under garnishment. It was
only on May 15, 1990, that Franco was impleaded in the
Makati case. Immediately, upon receipt of such copy,
Franco filed a Motion to Discharge Attachment. On May 17,
1990, Franco pre-terminated his time deposit account.
5) BPI-FB deducted the amount of P63,189.00 from the
remaining balance of the time deposit account representing
advance interest paid to him. Consequently, in light of BPI-
FBs refusal to heed Francos demands to unfreeze his
accounts and release his deposits therein, Franco filed on
June 4, 1990 with the Manila RTC the subject suit.
ISSUE: WON Respondent had better right to the deposits in the
subject accounts which are part of the proceeds of a forged
Authority to Debit
RULING: NO
There is no doubt that BPI-FB owns the deposited monies
in the accounts of Franco, but not as a legal consequence
of its unauthorized transfer of FMICs deposits to
Tevestecos account. BPI-FB conveniently forgets that the
deposit of money in banks is governed by the Civil Code
provisions on simple loan or mutuum. As there is a debtor-
creditor relationship between a bank and its depositor, BPI-
FB ultimately acquired ownership of Francos deposits, but
such ownership is coupled with a corresponding obligation
to pay him an equal amount on demand. Although BPI-FB
owns the deposits in Francos accounts, it cannot prevent
him from demanding payment of BPI-FBs obligation by
drawing checks against his current account, or asking for
the release of the funds in his savings account. Thus, when
Franco issued checks drawn against his current account,
he had every right as creditor to expect that those checks
would be honored by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral right to
freeze the accounts of Franco based on its mere suspicion
that the funds therein were proceeds of the multi-million
peso scam Franco was allegedly involved in. To grant BPI-
FB, or any bank for that matter, the right to take whatever
 action it pleases on deposits which it supposes are derived
from shady transactions, would open the floodgates of
public distrust in the banking industry.

Ineluctably, BPI-FB, as the trustee in the fiduciary

relationship, is duty bound to know the signatures of its
customers. Having failed to detect the forgery in the
Authority to Debit and in the process inadvertently facilitate
the FMIC-Tevesteco transfer, BPI-FB cannot now shift
liability thereon to Franco and the other payees of checks
issued by Tevesteco, or prevent withdrawals from their
respective accounts without the appropriate court writ or a
favorable final judgment.