april to june 2009 volume xi, issue no. 42philja.judiciary.gov.ph/files/bulletin/bul42.pdf ·...

PHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSApril-June 2009April-June 2009April-June 2009April-June 2009April-June 2009April-JunApril-JunApril-JunApril-JunApril-Juneeeee 2009 2009 2009 2009 2009 PHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSApril-June 2009April-June 2009April-June 2009April-June 2009April-June 2009April-JunApril-JunApril-JunApril-JunApril-Juneeeee 2009 2009 2009 2009 2009

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April to June 2009 Volume XI, Issue No. 42

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SUPREME COURT

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BATAS AT BAYAN

PHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWS PHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA BulletinPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWS2

PHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSApril-June 2009April-June 2009April-June 2009April-June 2009April-June 2009April-JunApril-JunApril-JunApril-JunApril-Juneeeee 2009 2009 2009 2009 2009 PHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSPHILJA NEWSApril-June 2009April-June 2009April-June 2009April-June 2009April-June 2009April-JunApril-JunApril-JunApril-JunApril-Juneeeee 2009 2009 2009 2009 2009 3


15th Orientation Seminar-Workshop for Newly

Appointed Clerks of CourtDate conducted: June 2 to 5, 2009Venue: Montebello Vista Hotel, CebuParticipants: 28 newly appointed clerks of court

REGIONAL TRIAL COURTS

REGION VIAtty. Jenny Mae A. CapacioRTC Br. 10, San Jose, AntiqueAtty. Ryan C. CawalingRTC Br. 6, Kalibo, AklanAtty. Edelyn L. CelesteRTC Br. 58, San Carlos City, Negros OccidentalAtty. Aemos Jonathan A. GaluegoRTC Br. 67, Guimbal, IloiloAtty. Maria Concepcion E. RiveraRTC Br. 63, La Carlota City, Negros OccidentalAtty. Rodney C. ZaragozaRTC Br. 65, Buenavista, Guimaras

REGION VIIAtty. Giovanni J. AntonioRTC Br. 40, Dumaguete City, Negros OrientalAtty. Talan L. BongancisoRTC Br. 43, Tanjay City, Negros OrientalAtty. Ma. Wengel Lou S. DimaligRTC Br. 44, Dumaguete City, Negros OrientalAtty. Wilson A. MagaleRTC Br. 27, Lapu-Lapu CityAtty. Joanna Ruth T. UtzurrumRTC Br. 30, Dumaguete City, Negros OrientalAtty. Buena Kristine O. UyRTC Br. 52, Talibon, Bohol

REGION VIIIAtty. Leonardo A. Sarmiento, IIIRTC Br. 20, Catarman, Northern Samar

MUNICIPAL TRIAL COURTS IN CITIES

REGION VIMr. Michael James P. TempladoMTCC San Carlos City, Negros Occidental

REGION VIIMr. Mansueto P. BiraoMTCC Toledo City, CebuMs. Cheryl C. BulalagjeMTCC Danao City, CebuMs. Carmel A. CuizonMTCC Canlaon City, Negros OrientalMs. Gia V. Dela CernaMTCC Br. 7, Cebu City, Cebu

MUNICIPAL TRIAL COURTS

REGION VIMr. Reynaldo A. AbonadorMTC Binalbagan, Negros Occidental

REGION VIIMs. Bibiana P. VillagomezMTC Barili, Cebu

REGION VIIIMr. Adolfo D. Bacayo, Jr.MTC Basey, SamarMs. Rey-Antonio A. PadogaMTC Carigara, LeyteMs. Maria Irene R. LegaspiMTC Palompon, Leyte

MUNICIPAL CIRCUIT TRIAL COURTS

REGION VIMs. Mae J. Aventura8th MCTC, Pototan-Mina, IloiloMs. Vilma F. Noble5th MCTC, Sigma-Sapian-Jamindan, CapizMs. Gemma F. Tumbagahan7th MCTC, Ibajay, Aklan

REGION VIIMs. Josephine Z. Lerio11th MCTC, Malabuyoc-Ginatilan-Alegria, Cebu

REGION VIIIMs. Vivian M. Montanes2nd MCTC, Malitbog-Tomas Oppus, Southern Leyte

Third Regional Multi-Sectoral Stake Holders Seminar-

Workshop in Improving Access to Justice in FamilyCourts (Luzon)Development Partners: CGRJ; Sub-committee on Trainingand Capacity Building; PJADate conducted: June 5, 2009Venue: College of St. Benilde Hotel, ManilaParticipants: 168 comprising judges, clerks of court,court social workers, interpreters, PAO Lawyers,prosecutors, PNP law enforcers, representatives fromother government agencies, and civil society

Launching of Justice on Wheels, Mobile Court-

Annexed Mediation, and Information DisseminationThrough a Dialogue among Barangay Officials ofLegazpi City with the Chief Justice and other CourtOfficialsDevelopment Partners: Committee on Justice on Wheels;City of LegaspiDate conducted: June 13, 2009Venue: Ibalong Conference Hall, Legazpi CityParticipants: 174 comprising officials and otherrepresentatives of the local government of LegazpiCity.

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Declaration of nullity of marriage under Article 36 ofthe Family Code; psychological incapacity as a groundtherefor

In Santos v. Court of Appeals the Court declared thatpsychological incapacity must be characterized by (a)gravity, (b) juridical antecedence, and (c) incurability.It should refer to “no less than a mental, not physical,incapacity that causes a party to be truly incognitiveof the basic marital covenants that concomitantlymust be assumed and discharged by the parties to themarriage.” The intendment of the law has been toconfine the meaning of “psychological incapacity” tothe most serious cases of personality disorders clearlydemonstrative of an utter insensitivity or inability togive meaning and significance to the marriage.

However, in more recent jurisprudence, we haveobserved that notwithstanding the guidelines laiddown in Molina, there is a need to emphasize otherperspectives as well which should govern thedisposition of petitions for declaration of nullity underArticle 36. Each case must be judged, not on the basisof a priori assumptions, predilections or generalizationsbut according to its own facts. In regard topsychological incapacity as a ground for annulmentof marriage, it is trite to say that no case is on “allfours” with another case. The trial judge must takepains in examining the factual milieu and the appellatecourt must, as much as possible, avoid substitutingits own judgment for that of the trial court. With theadvent of Te v. Te, the Court encourages areexamination of jurisprudential trends on theinterpretation of Article 36 although there has beenno major deviation or paradigm shift from the Molinadoctrine.

After a thorough review of the records of the case,we find that there was sufficient compliance withMolina to warrant the annulment of the parties’marriage under Article 36.

First, petitioner successfully discharged her burdento prove the psychological incapacity of her husband.

The Solicitor General, in discrediting Dr. Villegas’psychiatric report, highlights the lack of personalexamination of Rodolfo by said doctor and the doctor’sreliance on petitioner’s version of events. In Marcos v.Marcos, it was held that there is no requirement thatthe defendant/respondent spouse should be personallyexamined by a physician or psychologist as a conditionsine qua non for the declaration of nullity of marriagebased on psychological incapacity. What matters is

CIVIL LAW

whether the totality of evidence presented is adequateto sustain a finding of psychological incapacity.

It should be noted that, apart from her interviewwith the psychologist, petitioner testified in court onthe facts upon which the psychiatric report wasbased. When a witness testified under oath beforethe lower court and was cross-examined, she therebypresented evidence in the form of testimony.Significantly, petitioner’s narration of facts wascorroborated in material points by the testimony of aclose relative of Rodolfo. Dr. Villegas likewise testifiedin court to elaborate on her report and fully explainthe link between the manifestations of Rodolfo’spsychological incapacity and the psychologicaldisorder itself. It is a settled principle of civilprocedure that the conclusions of the trial courtregarding the credibility of witnesses are entitled togreat respect from the appellate courts because thetrial court had an opportunity to observe thedemeanor of witnesses while giving testimony whichmay indicate their candor or lack thereof. Since thetrial court itself accepted the veracity of petitioner’sfactual premises, there is no cause to dispute theconclusion of psychological incapacity drawntherefrom by petitioner’s expert witness.

Second, the root cause of Rodolfo’s psychologicalincapacity has been medically or clinically identified,alleged in the petition, sufficiently proven by experttestimony, and clearly explained in the trial court’sdecision.

(Leonardo-De Castro, J., Marieta C. Azcueta v. Republicof the Philippines and the Court of Appeals, G.R. No.180668, May 26, 2009.)

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ADMINISTRATIVE LAWSmall scale mining permits provincial governors haveno authority to issue permits

x x x Under Presidential Decree No. 1899,applications of small-scale miners are processed withthe Director of Mines and Geo-Sciences Bureau.Pursuant to Republic Act No. 7076, which took effecton 18 July 1991, approval of the applications formining permits and for mining contracts are vestedin the Provincial/City Mining Regulatory Board.Composed of the DENR representative, arepresentative from the small-scale mining sector, arepresentative from the big-scale mining industry anda representative from an environmental group, thisbody is tasked to approve small-scale mining permitsand contracts.

In the case under consideration, petitioners filedtheir small-scale mining permits on 23 August 1991,making them bound by the procedures provided forunder the applicable and prevailing statute, RepublicAct No. 7076. Instead of processing and obtaining theirpermits from the Provincial Mining Regulatory Board,petitioners were able to get the same from the governorof Davao del Norte. Considering that the governor iswithout legal authority to issue said mining permits,the same permits are null and void.

(Chico-Nazario, J., Leonora P. Calanza, Eva M. Amoren,Gene P. Roño, Sanny C. Calanza, Gregorio C. YnciertoII, and Angel M. Puyo v. Paper Industries Corporationof the Philippines (PICOP), Good Earth Mineral Corp.(GEMCOR), Evaristo Narvaez, Jr., Ricardo G. Santiago,Roberto A. Dormendo and Reydande D. Azucena, G.R.No. 146622, April 24, 2009.)

ELECTION LAWDouble citizenship under R.A. No. 9225; additionalrequirement for those running for public office

Republic Act No. 9225 was enacted to allow re-acquisition and retention of Philippine citizenship for:1) natural-born citizens who have lost their Philippinecitizenship by reason of their naturalization as citizensof a foreign country; and 2) natural-born citizens ofthe Philippines who, after the effectivity of the law,become citizens of a foreign country. The law providesthat they are deemed to have re-acquired or retainedtheir Philippine citizenship upon taking the oath ofallegiance.

Petitioner falls under the first category, being anatural-born citizen who lost his Philippinecitizenship upon his naturalization as an American

citizen. In the instant case, there is no question thatpetitioner re-acquired his Philippine citizenship aftertaking the oath of allegiance on September 6, 2006.However, it must be emphasized that R.A. No. 9225imposes an additional requirement on those who wishto seek elective public office, as follows:

SEC. 5. Civil and Political Rights and Liabilities. –Those who retain or re-acquire PhilippineCitizenship under this Act shall enjoy full civiland political rights and be subject to all attendantliabilities and responsibilities under existing laws

of the Philippines and the following conditions:

x x x x

(2) Those seeking elective public office in thePhilippines shall meet the qualifications forholding such public office as required by theConstitution and existing laws and, at thetime of the filing of the certificate ofcandidacy, make a personal and swornrenunciation of any and all foreigncitizenship before any public officer

authorized to administer an oath.

Contrary to petitioner’s claims, the filing of acertificate of candidacy does not ipso facto amount to arenunciation of his foreign citizenship under R.A. No.9225. Our rulings in the cases of Frivaldo and Mercadoare not applicable to the instant case because R.A. No.9225 provides for more requirements.

(Ynares-Santiago, J., Roseller De Guzman v.Commission on Elections and Angelina DG. Dela Cruz,G.R. No. 180048, June 19, 2009.)

LABOR LAWDismissal of employees; burden of proof rests uponemployer to show that dismissal is for a just cause

It is a basic principle that in the dismissal ofemployees, the burden of proof rests upon theemployer to show that the dismissal is for a just causeand failure to do so would necessarily mean that thedismissal is not justified.

Petitioner failed to discharge the burden of proofthat complainant was guilty of abandonment. It didnot adduce any proof to show that petitioner clearlyand unequivocally intended to abandon his job. It hasbeen repeatedly stressed that for abandonment to bea valid cause for dismissal there must be a concurrenceof intention to abandon and some overt act fromwhich it may be inferred that the employee had nomore interest to continue working in his job. An

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employee who forthwith takes steps to protest hislayoff cannot by any logic be said to have abandonedhis work. Otherwise stated, one could not possiblyabandon his work and shortly thereafter vigorouslypursue his complaint for illegal dismissal. In the instantcase, save for the allegation that respondent did notsubmit him to the investigation and the latter’s failureto return to work as instructed in the 8 February 1999letter, petitioner was unable to present any evidencewhich tend to show respondent’s intent to abandonhis work. Neither is the Court convinced that the filingof the illegal dismissal case was respondent’s way toavoid the charge of theft. On the contrary, the filing ofthe complaint a few days after his alleged dismissalsignified respondent’s desire to return to work, a factorwhich further militates against petitioner’s theory ofabandonment.

(Tinga, J., Harborview Restaurant v. Reynaldo Labro,G.R. No. 168273, April 30, 2009.)

CIVIL LAWNovation; its requisites; necessary element ofnovation

Novation is a mode of extinguishing an obligationby changing its objects or principal obligations, bysubstituting a new debtor in place of the old one, orby subrogating a third person to the rights of thecreditor. Article 1292 of the Civil Code expresslyprovides:

ART. 1292. In order that an obligation may beextinguished by another which substitute thesame, it is imperative that it be so declared inunequivocal terms, or that the old and newobligations be in every point incompatible with

each other.

In order for novation to take place, the concurrenceof the following requisites are indispensable:

1. There must be a previous valid obligation;

2. There must be an agreement of the partiesconcerned to a new contract;

3. There must be the extinguishment of the oldcontract; and

4. There must be the validity of the new contract.

Novation is never presumed, and the animusnovandi, whether totally or partially, must appear byexpress agreement of the parties, or by their acts thatare too clear and unmistakable. The extinguishmentof the old obligation by the new one is a necessaryelement of novation, which may be effected eitherexpressly or impliedly. The contracting parties mustincontrovertibly disclose that their object inexecuting the new contract is to extinguish the oldone. Upon the other hand, no specific form is requiredfor an implied novation, and all that is prescribed bylaw would be an incompatibility between the twocontracts.

The test of incompatibility is whether the twoobligations can stand together, each one having itsindependent existence. If they cannot, they areincompatible and the latter obligation novates thefirst. Corollarily, changes that breed incompatibilitymust be essential in nature and not merely accidental.The incompatibility must take place in any of theessential elements of the obligation, such as its object,cause or principal conditions thereof; otherwise, thechange would be merely modificatory in nature andinsufficient to extinguish the original obligation.

(Tinga, J., Transpacific Battery, Corporation andMinchael G. Say v. Security Bank and Trust Co., G.R.Nos. 173565 & 173607, May 8, 2009.)

LABOR LAW (continued)

AGRARIAN LAWTenancy relationships; requisites thereof

In order to establish a tenancy relationship, thefollowing essential requisites must concur:

(1) the parties are the landowner and the tenantor agricultural lessee;

(2) the subject matter of the relationship is anagricultural land;

(3) there is consent between the parties to therelationship;

(4) the purpose of the relationship is to bringabout agricultural production;

(5) there is personal cultivation on the part of thetenant or agricultural lessee; and

(6) the harvest is shared between the landownerand the tenant or agricultural lessee. All theserequisites are necessary to create a tenancyrelationship and the absence of one or morewill not make the alleged tenant a de factotenant.

(Leonardo-De Castro, J., Leonardo Tarona, EugeniaTarona, Nita Tarona, Luis Tarona, Rosalinda Tarona,Apolonia Tarona, Carlos Tarona, Lourdes Tarona andRogelia Tarona v. Court of Appeals (Ninth Division),Gay T. Leaño, Noel T. Leaño, Jedd Anthony LeañoCuison, and Jason Anthony Leaño Cuison, G.R. No.170182, June 18, 2009.)


Double sale of movables and immovables underArticle 1544 of the Civil Code; requirement of goodfaith

x x x x

ART. 1544. If the same thing should have beensold to different vendees, the ownership shall betransferred to the person who may have firstpossession thereof in good faith, if it should bemovable property.

Should it be immovable property, the ownershipshall belong to the person acquiring it who in goodfaith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shallpertain to the person who in good faith was firstin possession; and, in the absence thereof; to theperson who presents the oldest title, provided

there is good faith.

Otherwise stated, where it is an immovableproperty that is the subject of a double sale, ownershipshall be transferred:

(1) to the person acquiring it who in good faithfirst recorded it in the Registry of Property;

(2) in default thereof, to the person who in goodfaith was first in possession; and

(3) in default thereof, to the person who presentsthe oldest title, provided there is good faith.The requirement of the law then is two-fold:acquisition in good faith and registration ingood faith.

In this case there was a first sale by Eugenia Reyesto Agaton Pagaduan and a second sale by EugeniaReyes to the respondents. For a second buyer like therespondents to successfully invoke the secondparagraph, Article 1544 of the Civil Code, it mustpossess good faith from the time of the sale in its favoruntil the registration of the same. Respondents sorelyfailed to meet this requirement of good faith since theyhad actual knowledge of Eugenia’s prior sale of thesouthern portion property to the petitioners, a factantithetical to good faith. This cannot be denied byrespondents since in the same deed of sale that Eugeniasold them the northern portion to the respondents forP1,500, Eugenia also sold the southern portion of theland to Agaton Pagaduan for P500.

It is to be emphasized that Agaton Pagaduan neverparted with the ownership and possession of thatportion of Lot No. 785 which he had purchased fromEugenia Santos. Hence, the registration of the deed ofsale by respondents was ineffectual and vested upon


them no preferential rights to the property inderogation of the rights of the petitioners.

Respondents had prior knowledge of the sale ofthe questioned portion to Agaton Pagaduan as thesame deed of sale that conveyed the northern portionto them, conveyed the southern portion to AgatonPagaduan. Thus the subsequent issuance of TCT No.T-5425, to the extent that it affects the Pagaduan’sportion, conferred no better right than the registrationwhich was the source of the authority to issue thesaid title. Knowledge gained by respondents of thefirst sale defeats their rights even if they were first toregister the second sale. Knowledge of the first saleblackens this prior registration with bad faith. Goodfaith must concur with the registration. Therefore,because the registration by the respondents was inbad faith, it amounted to no registration at all.

As the respondents gained no rights over the land,it is petitioners who are the rightful owners, havingestablished that their successor-in-interest AgatonPagaduan had purchased the property from EugeniaReyes on November 26, 1961 and in fact tookpossession of the said property. The action to recoverthe immovable is not barred by prescription, as itwas filed a little over 27 years after the title wasregistered in bad faith by the Ocumas as per Article1141 of the Civil Code.

(Tinga, J., Angel M. Pagaduan, Amelia P. Tucci, TeresitaP. Del Monte, Orlita P. Gadin, Perla P. Espiritu, Elisa P.Dunn, Lorna P. Kimble, Edito N. Pagaduan, and Leo N.Pagaduan, petitioners, v. Spouses Estanislao and FePosadas Ocuma, respondents, G.R. No. 176308, May8, 2009.)

Adoption under Republic Act No. 8552; jointadoption by the husband and wife is mandatory

It is undisputed that, at the time the petitions foradoption were filed, petitioner had already remarried.She filed the petitions by herself, without being joinedby her husband Olario. We have no other recoursebut to affirm the trial court’s decision denying thepetitions for adoption. Dura lex sed lex. The law isexplicit. Section 7, Article III of R.A. No. 8552 reads:

SEC. 7. Who May Adopt. – The following mayadopt:

(a) Any Filipino citizen of legal age, inpossession of full civil capacity and legalrights, of good moral character, has not beenconvicted of any crime involving moralturpitude, emotionally and psychologicallycapable of caring for children, at least 16


CIVIL LAW (continued)

years older than the adoptee, and who is in aposition to support and care for his/herchildren in keeping with the means of thefamily. The requirement of 16 year differencebetween the age of the adopter and adopteemay be waived when the adopter is thebiological parent of the adoptee, or is thespouse of the adoptee’s parent;

(b) Any alien possessing the same qualificationsas above stated for Filipino nationals:Provided, That his/her country has diplomaticrelations with the Republic of the Philippines,that he/she has been living in the Philippinesfor at least three continuous years prior tothe filing of the application for adoption andmaintains such residence until the adoptiondecree is entered, that he/she has beencertified by his/her diplomatic or consularoffice or any appropriate governmentagency that he/she has the legal capacity toadopt in his/her country, and that his/hergovernment allows the adoptee to enter his/her country as his/her adopted son/daughter:Provided, further, That the requirements onresidency and certification of the alien’squalification to adopt in his/her country maybe waived for the following:

(i) a former Filipino citizen who seeks toadopt a relative within the fourth degreeof consanguinity or affinity; or

(ii) one who seeks to adopt the legitimateson/daughter of his/her Filipino spouse;or

(iii) one who is married to a Filipino citizenand seeks to adopt jointly with his/herspouse a relative within the fourth degreeof consanguinity or affinity of the Filipinospouses; or

(c) The guardian with respect to the ward afterthe termination of the guardianship and

clearance of his/her financial accountabilities.

Husband and wife shall jointly adopt, exceptin the following cases:

(i) if one spouse seeks to adopt thelegitimate son/daughter of the other; or

(ii) if one spouse seeks to adopt his/her ownillegitimate son/daughter: Provided,however, That the other spouse hassignified his/her consent thereto; or

(iii) if the spouses are legally separated fromeach other.

In case husband and wife jointly adopt, orone spouse adopts the illegitimate son/daughterof the other, joint parental authority shall beexercised by the spouses. (Emphasis supplied)

The use of the word “shall” in the above-quotedprovision means that joint adoption by the husbandand the wife is mandatory. This is in consonance withthe concept of joint parental authority over the childwhich is the ideal situation. As the child to be adoptedis elevated to the level of a legitimate child, it is butnatural to require the spouses to adopt jointly. Therule also insures harmony between the spouses.

The law is clear. There is no room for ambiguity.Petitioner, having remarried at the time the petitionsfor adoption were filed, must jointly adopt. Since thepetitions for adoption were filed only by petitionerherself, without joining her husband, Olario, the trialcourt was correct in denying the petitions for adoptionon this ground.

(Carpio, J., In re: Petition for Adoption of Michelle P.Lim, Monina P. Lim, G.R. No. 168992-93, May 21, 2009.)

Concept of delivery as used in the Law on Sales

In Equatorial Realty Development, Inc. v. Mayfair Theater,Inc., the concept of “delivery” was explained as follows:

Delivery has been described as a composite act,a thing in which both parties must join and theminds of both parties concur. It is an act by whichone party parts with the title to and the possessionof the property, and the other acquires the right toand the possession of the same. In its naturalsense, delivery means something in addition tothe delivery of property or title; it means transferof possession. In the Law on Sales, delivery maybe either actual or constructive, but both forms ofdelivery contemplate “the absolute giving up ofthe control and custody of the property on thepart of the vendor, and the assumption of the same

by the vendee.” (Emphasis supplied)

In light of the foregoing, “delivery” as used inthe Law on Sales refers to the concurrent transfer oftwo things: (1) possession and (2) ownership. This isthe rationale behind the jurisprudential doctrine thatpresumptive delivery via execution of a publicinstrument is negated by the reality that the vendeeactually failed to obtain material possession of theland subject of the sale. In the same vein, if the vendeeis placed in actual possession of the property, but byagreement of the parties ownership of the same isretained by the vendor until the vendee has fully paidthe price, the mere transfer of the possession of theproperty subject of the sale is not the “delivery”contemplated in the Law on Sales or as used in Article1543 of the Civil Code.

In the case at bar, it appears that respondent wasalready placed in possession of the subject properties.However, it is crystal clear that the deeds of absolute


sale were still to be executed by the parties uponpayment of the last installment. This fact shows thatownership of the said properties was withheld bypetitioner. Following case law, it is evident that theparties did not intend to immediately transferownership of the subject properties until full paymentand the execution of the deeds of absolute sale.Consequently, there is no “delivery” to speak of in thiscase since what was transferred was possession onlyand not ownership of the subject properties.

We, therefore, hold that the transfer of possessionof the subject properties on October 10, 1996 torespondent cannot be considered as “delivery” withinthe purview of Article 1543 of the Civil Code. It followsthat since there has been no transfer of ownership ofthe subject properties since the deeds of absolute salehave not yet been executed by the parties, the actionfiled by respondent has not prescribed.

(Puno, C.J., Cebu Winland Development Corporation,petitioner, v. Ong Siao Hua, respondent, G.R. No.173215, May 21, 2009.)

LAND REGISTRATIONAct No. 496 (Land Registration Act) governs recordingof transaction involving registered land i.e., land withTorrens title; Act No. 3344 provided system ofrecording of transactions over unregistered real estate

x x x well-settled is the rule that registration ofinstruments must be done in the proper registry inorder to effect and bind the land. Prior to the PropertyRegistration Decree of 1978, Act No. 496 (or the LandRegistration Act) governed the recording oftransactions involving registered land, i.e., land witha Torrens title. On the other hand, Act No. 3344, asamended, provided for the system of recording oftransactions over unregistered real estate withoutprejudice to a third party with a better right.Accordingly, if a parcel of land covered by a Torrenstitle is sold, but the sale is registered under Act No.3344 and not under the Land Registration Act, the saleis not considered registered and the registration of thedeed does not operate as constructive notice to thewhole world.

Consequently, the fact that petitioner MCIAA wasable to register its Deed of Absolute Sale under ActNo. 3344 is of no moment, as the property subject ofthe sale is indisputably registered land. Section 50 ofAct No. 496 in fact categorically states that it is the actof registration that shall operate to convey and affectthe land; absent any such registration, the instrumentexecuted by the parties remains only as a contract

between them and as evidence of authority to the clerkor register of deeds to make registration, viz:

SEC. 50. An owner of registered land may convey,mortgage, lease, charge, or otherwise deal withthe same as fully as if it had not been registered.He may use forms of deeds, mortgages, leases,or other voluntary instruments like those now inuse and sufficient in law for the purpose intended.But no deed, mortgage, lease, or other voluntaryinstrument, except a will, purporting to convey or affectregistered land, shall take effect as a conveyance orbind the land, but shall operate only as a contractbetween the parties and as evidence of authority to theclerk or register of deeds to make registration. The actof registration shall be the operative act to convey andaffect the land, and in all cases under this Act theregistration shall be made in the office of registerof deeds for the province or provinces or city

where the land lies. (italics supplied)

Hence, respondents may not be characterized asbuyers in bad faith for having bought the propertynotwithstanding the registration of the first Deed ofAbsolute Sale under Act No. 3344. An improperregistration is no registration at all. Likewise, a salethat is not correctly registered is binding onlybetween the seller and the buyer, but it does not affectinnocent third persons.

(Puno, C.J., Mactan-Cebu International AirportAuthority v. Spouses Edito and Merian Tirol andSpouses Alejandro and Miranda Ngo, G.R. No. 171535,June 5, 2009.)

COMMERCIAL LAWDerivative suit; requisites before a derivative suit maybe filed; venue of derivative suits

In the case of Filipinas Port Services, Inc. v. Go, theSupreme Court enumerated the foregoing requisitesbefore a stockholder can file a derivative suit:

a) the party bringing suit should be ashareholder as of the time of the act ortransaction complained of, the number of hisshares not being material;

b) he has tried to exhaust intra-corporateremedies, i.e., has made a demand on theboard of directors for the appropriate reliefbut the latter has failed or refused to heedhis plea; and

c) the cause of action actually devolves on thecorporation, the wrongdoing or harm havingbeen, or being caused to the corporation andnot to the particular stockholder bringing thesuit. (Continued on NEXT page)

CIVIL LAW (continued)


CRIMINAL LAWEssence of estafa under Article 315, paragraph (b) ofthe Revised Penal Code

The essence of estafa under Article 315, par. 1(b) isthe appropriation or conversion of money or propertyreceived to the prejudice of the owner. The words“convert” and “misappropriate” connote an act ofusing or disposing of another’s property as if it wereone’s own, or of devoting it to a purpose or use differentfrom that agreed upon. To misappropriate for one’sown use includes not only conversion to one’spersonal advantage, but also every attempt to disposeof the property of another without right.

The factual milieu of the case at bar is similar toSerona v. Court of Appeals (Serona) where pieces of jewelrywere also transferred to a sub-agent. The SolicitorGeneral, however, contends that the doctrine laiddown in Serona is inapplicable as the agreementbetween complainants and petitioner provide a clear

prohibition against sub-agency.

The conditions set forth in the two trust receipts

signed by petitioner read:

x x x in good condition, to be sold in CASH ONLYwithin _____, days from date of signing thisreceipt. If I could not sell, I shall return all thejewelry within the period mentioned above. If Iwould be able to sell, I shall immediately deliverand account the whole proceeds of the salethereof to the owner of the jewelries (sic) at his/her residence: my compensation or commissionshall be the over-price on the value of eachjewelry quoted above. I am prohibited to sell anyjewelry on credits or by installment, deposit, givefor safekeeping, lend, pledge or give as security orguarantee under any circumstances or manner, anyjewelry to other person or persons, and that I

received the above jewelry in the capacity of agent.

Contrary to the claim of the Solicitor General, theaforementioned conditions do not, in any way,categorically state that petitioner cannot employ asub-agent. A plain reading of the conditions clearlyshows that the restrictions only pertain to the mannerin which petitioner may dispose of the property:

(1) to sell the jewelry on credit;

(2) to sell the jewelry by installment;

(3) to give the jewelry for safekeeping;

(4) to lend the jewelry;

(5) to pledge the jewelry;

(6) to give the jewelry as security; and

Even then, not every suit filed on behalf of thecorporation is a derivative suit. For a derivative suitto prosper, the minority stockholder suing for and onbehalf of the corporation must allege in his complaintthat he is suing on a derivative cause of action on behalfof the corporation and all other stockholders similarlysituated who may wish to join him in the suit.

x x x x

Further, while it is true that the complainingstockholder must satisfactorily show that he hasexhausted all means to redress his grievances withinthe corporation; such remedy is no longer necessarywhere the corporation itself is under the completecontrol of the person against whom the suit is beingfiled. The reason is obvious: a demand upon the boardto institute an action and prosecute the sameeffectively would have been useless and an exercise infutility.

x x x x

Derivative suits are governed by a special set ofrules under A.M. No. 01-2-04-SC otherwise known asthe Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799.Section 1, Rule 1 thereof expressly lists derivative suitsamong the cases covered by it.

As regards the venue of derivative suits, Section5, Rule 1 of A.M. No. 01-2-04-SC states:

SEC. 5. Venue. – All actions covered by these Rulesshall be commenced and tried in the RegionalTrial Court which has jurisdiction over theprincipal office of the corporation, partnership,or association concerned. Where the principaloffice of the corporation, partnership orassociation is registered in the Securities andExchange Commission as Metro Manila, theaction must be filed in the city or municipality

where the head office is located.

Thus, the Court of Appeals did not commit graveabuse of discretion when it found that respondentscorrectly filed the derivative suit before the MakatiRTC where HTSI had its principal office.

(Quisumbing, J., Hi-Yield Realty Incorporated,petitioner, v. Hon. Court of Appeals, Hon. Cesar O.Untalan, in his capacity as Presiding Judge of RTC-Makati, Branch 142, Honorario Torres & Sons, Inc., andRoberto H. Torres, respondents, G.R. No. 168863, June23, 2009.)

COMMERCIAL LAW (continued)


instant case. Accused-appellant thereinundertook to sell two diamond rings in behalf ofthe complainant on commission basis, with theobligation to return the same in a few days if not

sold. However, by reason of the fact that the

rings were delivered also for sale on commissionto sub-agents who failed to account for the ringsor the proceeds of its sale, accused-appellantlikewise failed to make good his obligation to thecomplainant thereby giving rise to the charge ofestafa. In absolving the accused-appellant of the

crime charged, we held:

Where, as in the present case, the agentsto whom personal property wasentrusted for sale, conclusively provesthe inability to return the same is solelydue to malfeasance of a sub-agent towhom the first agent had actuallyentrusted the property in good faith, andfor the same purpose for which it wasreceived; there being no prohibition todo so and the chattel being deliveredto the sub-agent before the ownerdemands its return or before such returnbecomes due, we hold that the first agentcannot be held guilty of estafa by eithermisappropriation or conversion. Theabuse of confidence that is characteristicof this offense is missing under thecircumstances.

Furthermore, in Lim v. Court of Appeals, the Court,citing Nepomuceno and the case of People v. Trinidad, heldthat:

In cases of estafa, the profit or gain must beobtained by the accused personally, through hisown acts, and his mere negligence in permittinganother to take advantage or benefit from theentrusted chattel cannot constitute estafa underArticle 315, paragraph (1) (b), of the Revised PenalCode; unless of course the evidence should disclosethat the agent acted in conspiracy or connivancewith the one who carried out the actualmisappropriation, then the accused would beanswerable for the acts of his co-conspirators. Ifthere is no such evidence, direct orcircumstantial, and if the proof is clear that theaccused herself was the innocent victim of hersub-agent’s faithlessness, her acquittal is inorder.

Petitioner thus cannot be criminally held liablefor estafa. Although it cannot be denied that shereceived the pieces of jewelry from complainants,evidence is wanting in proving that shemisappropriated or converted the amount of the


(7) to give the jewelry as guarantee.

To this Court’s mind, to maintain the position thatthe said conditions also prohibit the employment of asub-agent would be stretching the plain meaning ofthe words too thinly.

Petitioner is thus correct in citing Serona, which isinstructive and may be applied by analogy, to wit:

Petitioner did not ipso facto commit the crime ofestafa through conversion or misappropriationby delivering the jewelry to a sub-agent for saleon commission basis. x x x

It must be pointed out that the law on agency inour jurisdiction allows the appointment by anagent of a substitute or sub-agent in the absenceof an express agreement to the contrary betweenthe agent and the principal. In the case at bar,the appointment of Labrador as petitioner’s sub-agent was not expressly prohibited by Quilatan,as the acknowledgment receipt, Exhibit B, doesnot contain any such limitation. Neither does itappear that petitioner was verbally forbidden byQuilatan from passing on the jewelry to anotherperson before the acknowledgment receipt wasexecuted or at any other time. Thus, it cannot besaid that petitioner’s act of entrusting the jewelryto Labrador is characterized by abuse ofconfidence because such an act was notproscribed and is, in fact, legally sanctioned.

x x x x

In the case at bar, it was established that theinability of petitioner as agent to comply with herduty to return either the pieces of jewelry or theproceeds of its sale to her principal Quilatan wasdue, in turn, to the failure of Labrador to abide byher agreement with petitioner. Notably, Labradortestified that she obligated herself to sell thejewelry in behalf of petitioner also on commissionbasis or to return the same if not sold. In otherwords, the pieces of jewelry were given bypetitioner to Labrador to achieve the very sameend for which they were delivered to her in thefirst place. Consequently, there is no conversionsince the pieces of jewelry were not devoted to apurpose or use different from that agreed upon.

Similarly, it cannot be said that petitionermisappropriated the jewelry or delivered themto Labrador “without right.” Aside from the factthat no condition or limitation was imposed onthe mode or manner by which petitioner was toeffect the sale, it is also consistent with usualpractice for the seller to necessarily part withthe valuables in order to find a buyer and allowinspection of the items for sale.

In People v. Nepomuceno, the accused-appellantwas acquitted of estafa on facts similar to the

CRIMINAL LAW (continued)


REMEDIAL LAWSettlement of boundary dispute; RTC has no originaljurisdiction over boundary disputes

x x x. In settling boundary disputes, Section 118of the 1991 Local Government Code provides:

SEC. 118. Jurisdictional Responsibility for Settlementof Boundary Dispute. – Boundary disputes betweenand among local government units shall, as muchas possible, be settled amicably. To this end:

(a) Boundary disputes involving two or morebarangays in the same city or municipalityshall be referred for settlement to thesangguniang panlungsod or sangguniangbayan concerned.

(b) Boundary disputes involving two or moremunicipalities within the same provinceshall be referred for settlement to thesangguniang panlalawigan concerned.

(c) Boundary disputes involvingmunicipalities or component cities ofdifferent provinces shall be jointlyreferred for settlement to the sangguniansof the provinces concerned.

(d) Boundary disputes involving acomponent city or municipality on the onehand and a highly urbanized city on theother, or two or more highly urbanizedcities, shall be jointly referred forsettlement to the respective sanggunians ofthe parties.

CRIMINAL LAW (continued)

pieces of jewelry for her own personal use. Likewise,the prosecution failed to present evidence to show thatpetitioner had conspired or connived with Bisquera.The mere fact that petitioner failed to return the piecesof jewelry upon demand is not proof of conspiracy,nor is it proof of misappropriation or conversion.

(Peralta, J., Wilma Tabanlag v. People of the Philippines,G.R. No. 165411, June 18, 2009.)

Probable Cause; determination of probable cause;executive and judicial determination

There are two kinds of determination of probablecause: executive and judicial. The executivedetermination of probable cause is one made duringpreliminary investigation. It is a function thatproperly pertains to the public prosecutor who isgiven a broad discretion to determine whetherprobable cause exists and to charge those whom hebelieves to have committed the crime as defined bylaw and thus should be held for trial. Otherwisestated, such official has the quasi-judicial authorityto determine whether or not a criminal case must befiled in court. Whether or not that function has beencorrectly discharged by the public prosecutor, i.e.,whether or not he has made a correct ascertainmentof the existence of probable cause in a case, is a matterthat the trial court itself does not and may not becompelled to pass upon.

The judicial determination of probable cause, onthe other hand, is one made by the judge to ascertainwhether a warrant of arrest should be issued againstthe accused. The judge must satisfy himself that basedon the evidence submitted, there is necessity forplacing the accused under custody in order not tofrustrate the ends of justice. If the judge finds noprobable cause, the judge cannot be forced to issue thearrest warrant.

Corollary to the principle that a judge cannot becompelled to issue a warrant of arrest if he or shedeems that there is no probable cause for doing so, thejudge in turn should not override the publicprosecutor’s determination of probable cause to holdan accused for trial on the ground that the evidencepresented to substantiate the issuance of an arrestwarrant was insufficient. It must be stressed that inour criminal justice system, the public prosecutorexercises a wide latitude of discretion in determiningwhether a criminal case should be filed in court, andthat courts must respect the exercise of such discretionwhen the information filed against the person charged

is valid on its face, and that no manifest error or graveabuse of discretion can be imputed to the publicprosecutor.

Thus, absent a finding that an information isinvalid on its face or that the prosecutor committedmanifest error or grave abuse of discretion, a judge’sdetermination of probable cause is limited only to thejudicial kind or for the purpose of deciding whetherthe arrest warrants should be issued against theaccused.

(Quisumbing, J., People of the Philippines v. Jessie B.Castillo and Felicito R. Mejia, G.R. No. 171188, June19, 2009.)



(e) In the event the sanggunian fails to effect anamicable settlement within 60 days fromthe date the dispute was referred thereto,it shall issue a certification to that effect.Thereafter, the dispute shall be formallytried by the sanggunian concerned whichshall decide the issue within 60 days fromthe date of the certification referred toabove.

Under paragraph (c) of Section 118, the settlementof a boundary dispute involving municipalities orcomponent cities of different provinces shall be jointlyreferred for settlement to the respective sangguniansor the provincial boards of the different provincesinvolved. Section 119 of the Local Government Codegives a dissatisfied party an avenue to question thedecision of the sanggunian to the RTC havingjurisdiction over the area, viz:

SEC. 119. Appeal. – Within the time and mannerprescribed by the Rules of Court, any party mayelevate the decision of the sanggunian concernedto the proper Regional Trial Court having

jurisdiction over the area in dispute x x x.

Article 17, Rule III of the Rules and RegulationsImplementing The Local Government Code of 1991outlines the procedures governing boundary disputes,which succinctly includes the filing of the properpetition, and in case of failure to amicably settle, aformal trial will be conducted and a decision will berendered thereafter. An aggrieved party can appealthe decision of the sanggunian to the appropriate RTC.Said rules and regulations state:

ART. 17. Procedures for Settling Boundary Disputes.– The following procedures shall govern thesettlement of boundary disputes:

(a) Filing of petition – The sanggunian concernedmay initiate action by filing a petition, in theform of a resolution, with the sanggunianhaving jurisdiction over the dispute.

(b) Contents of petition – The petition shall statethe grounds, reasons or justificationstherefore.

(c) Documents attached to petition – The petitionshall be accompanied by:

1. Duly authenticated copy of the lawor statute creating the LGU or anyother document showing proof ofcreation of the LGU;

2. Provincial, city, municipal, or barangaymap, as the case may be, dulycertified by the LMB.

3. Technical description of theboundaries of the LGUs concerned;

4. Written certification of the provincial,city, or municipal assessor, as thecase may be, as to territorialjurisdiction over the disputed areaaccording to records in custody;

5. Written declarations or swornstatements of the people residing inthe disputed area; and

6. Such other documents or informationas may be required by the sanggunian

hearing the dispute.

(d) Answer of adverse party – Upon receipt bythe sanggunian concerned of the petitiontogether with the required documents, theLGU or LGUs complained against shall befurnished copies thereof and shall be given15 working days within which to file theiranswers.

(e) Hearing – Within five working days afterreceipt of the answer of the adverse party,the sanggunian shall hear the case and allowthe parties concerned to present theirrespective evidences.

(f) Joint hearing – When two or moresanggunians jointly hear a case, they may siten banc or designate their respectiverepresentatives.Where representatives aredesignated, there shall be an equal numberof representatives from each sanggunian.They shall elect from among themselves apresiding officer and a secretary. In case ofdisagreement, selection shall be by drawinglot.

(g) Failure to settle – In the event the sanggunianfails to amicably settle the dispute within 60days from the date such dispute wasreferred thereto, it shall issue a certificationto the effect and copies thereof shall befurnished the parties concerned.

(h) Decision – Within 60 days from the date thecertification was issued, the dispute shall beformally tried and decided by the sanggunianconcerned. Copies of the decision shall,within 15 days from the promulgationthereof, be furnished the parties concerned,DILG, local assessor, COMELEC, NSO, andother NGAs concerned.

(i) Appeal – Within the time and mannerprescribed by the Rules of Court, any partymay elevate the decision of the sanggunianconcerned to the proper Regional Trial Courthaving jurisdiction over the dispute by filingtherewith the appropriate pleading, stating

REMEDIAL LAW (continued)

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III. Procedure

1. After receipt of the memorandum on appealfiled by the appellant and the lapse of theperiod for filing appellee’s brief, the RTC Judgehaving territorial jurisdiction over the FirstLevel Court that rendered the decision onappeal, shall issue an order calling the partiesto appear before him for judicial disputeresolution (JDR) of their case on appeal.

1.1 The order shall require the parties toattend in person or, in the case ofcorporate litigants, through a dulyauthorized representative who must be aranking corporate officer, authorized byBoard Resolution to stipulate on admittedfacts and enter in to a bindingcompromise agreement without need tofurther submit the same for approval bythe Board of Directors.

2. On the date set in the order, the judge shallexert all efforts to resolve the dispute throughmediation, conciliation and early neutralevaluation under the Revised Guidelines forthe Implementation of an Enhanced Pre-TrialProceedings issued as A.M. No. 04-1-12-SC-PHILJA as last amended by Resolution dated13 November 2007. Any settlement shall bein writing, signed by the parties and adoptedby the judge as the court’s judgment upon acompromise.

3. Upon failure of JDR efforts, the judge shall turnover the case on appeal to a new judge selectedby raffle to render a decision on the merits,observing strict confidentiality of the JDRproceedings, unless the parties have filed ajoint motion requesting that, despiteconfidential information that may have beendivulged during the JDR proceedings, thesame judge shall continue to render judgmenton their dispute on appeal.

4. In cases where the RTC judge affirms onappeal the order of the First Level Courtdismissing the case for lack of jurisdiction, theappeals judge, instead of trying the case onthe merits as provided for under the firstparagraph of Section 5, Rule 40 of the Rules ofCourt, shall order the parties to appear beforehim/her for JDR and follow the procedureunder the first three paragraphs above.

5. In cases where the First Level Court haddecided the case on the merit without

jurisdiction, the RTC judge shall not dismissthe case but instead proceed to JDR inaccordance with the foregoing procedure.

IV. Sanctions

A party who fails to appear for judicial disputeresolution may be imposed the appropriatesanctions provided for in the Rules of Court andother issuances of the Supreme Court, includingrequiring the absent party to reimburse theappearing party his costs, including attorney’sfees for that day, up to treble such costs, payableon or before the date of the re-scheduled setting.Sanctions may be imposed by the court uponmotion of the appearing party or on the court’sown initiative.

V. Duration of JDR proceedings

The JDR Judge on appeal shall have a periodof not exceeding 60 days to complete the JDRproceedings. Such period shall be computed fromthe date when the parties first appeared for theinitial conference as stated in the order to appear.An extended period of another 30 days may begranted by the court upon joint motion filed byboth parties on the ground that settlement is likelyto be concluded.

VI. Settlement

If full settlement of the dispute on appeal isreached, the parties, assisted by their respectivecounsel, shall draft the compromise agreementwhich shall be submitted to the court for ajudgment upon compromise. Where compliancewith the terms of the compromise is forthwithmade, the parties shall instead submit a mutualsatisfaction of claims and counterclaims or awithdrawal of the appeal. In this case, the courtshall enter an order dismissing the appeal.

If partial settlement is reached, the partiesshall, with the assistance of counsel, submit theterms thereof for the court’s approval andrendition of a judgment upon partialcompromise. The court shall proceed to act in themanner of failed JDR efforts under paragraph 3,Section III Procedure, above.

Issued this 2nd day of March 2009.

(Sgd.) REYNATO S. PUNO Chief Justice

A.O. No. 28-2009 (continued)

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