CASE DIGEST

LABOR LAW

G.R. No. 219569

August 17, 2016
HSY MARKETING LTD. CO., V VIRGILIO 0. VILLASTIQUE
Labor Law; Employment-Employee Relationship. It is worth noting that
respondent claimed in his Position Paper before the LA that he was hired
by petitioner and was required to report for work at its store in Cagayan de
Oro City. This was confirmed by petitioner in its own Position Paper,
declaring respondent to be "a field driver for the Cagayan de Oro Branch of
HSY MARKETING LTD., CO. Clearly, petitioner should be bound by such
admission and must not be allowed to continue to deny any employeremployee relationship with respondent. The Court had already exposed the
practice of setting up "distributors" or "dealers" which are, in reality,
dummy companies that allow the mother company to avoid employeremployee relations and, consequently, shield the latter from liability from
employee claims in case of illegal dismissal, closure, unfair labor practices,
and the like.
Same; Same;Separation Pay.Properly speaking, liability for the payment of
separation pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. As a relief granted in lieu of
reinstatement, it goes without saying that an award of separation pay is
inconsistent with a finding that there was no illegal dismissal. This is
because an employee who had not been dismissed, much less illegally
dismissed, cannot be reinstated. Moreover, as there is no reinstatement to
speak of, respondent cannot invoke the doctrine of strained relations68 to
support his prayer for the award of separation pay.
Same; same; Service Incentive Leave Pay.Service incentive leave is a right
which accrues to every employee who has served 'within 12 months,
whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or
that provided in the employment contracts, is less than 12 months, in which
case said period shall be considered as one (1) year.
PERLAS-BERNABE, J,;
FACTS: On 'January 3, 2003, petitioner hired respondent as a field driver
for Fabulous Jeans & Shirt & General Merchandise which is tasked to

deliver ready-to-wear items and/or general merchandise for a daily

compensation of P370.00. On January 10, 2011, respondent figured in an
accident when the service vehicle he was driving in Iligan City bumped a
pedestrian. Fabulous Jeans shouldered the hospitalization and medical
expenses of the pedestrian in the amount of P64,157.15, which respondent
was asked to reimburse, but to no avail. On February 24, 2011, respondent
was allegedly required to sign a resignation letter, which he refused to do. A
couple of days later, he tried to collect his salary for that week but was told
that it was withheld because of his refusal to resign. Convinced that he was
already terminated on February 26, 2011,he lost no time in filing a
complaint for illegal dismissal with money claims against petitioner,
Fabulous Jeans, and its owner before the NLRC.
The Labor Arbiter dismissed the charge of illegal dismissal. Thus,
Aggrived, petitioner appealed to the NLRC which affirm the finding of the
LA. The petitioner moved for reconsideration but denied. Thus elevated the
case to the Court of Appeals. But likewise sustain the decision of the lower
court. Hence this petition.
ISSUES:
1. Whether or not an employment relationship existed between the
parties in this case?
2. Whether or not respondent voluntarily resign from work and
petitioner dismiss him from employment, and consequently, awarded
respondent separation pay?
3. Whether or not respondent is regular employee and thus, awarded
him service incentive leave pay?
HELD:
1. POSITIVE. Fabulous Jeans joined petitioner as respondentappellant, it was argued that the LA should have dismissed the charges
against petitioner instead, considering that respondent was employed as a
field driver for Fabulous Jeans, and that there was no employer-employee
relationship between him and petitioner. In fact, it is even worth noting
that respondent claimed in his Position Paper before the LA that he was
hired by petitioner and was required to report for work at its store in
Cagayan de Oro City. This was confirmed by petitioner in its own Position
Paper, declaring respondent to be "a field driver for the Cagayan de Oro
Branch of (petitioner) HSY MARKETING LTD., CO., (NOVO JEANS &
SHIRT)."Clearly, petitioner should be bound by such admission and must not
be allowed to continue to deny any employer-employee relationship with
respondent. The Court had already exposed the practice of setting up
"distributors" or "dealers" which are, in reality, dummy companies that
allow the mother company to avoid employer-employee relations and,

consequently, shield the latter from liability from employee claims in case of
illegal dismissal, closure, unfair labor practices, and the like.
2. NEGATIVE. The Court likewise upholds the unanimous conclusion
of the lower tribunals that respondent had not been dismissed at all. Other
than the latter's unsubstantiated allegation of having been verbally
terminated from his work, no substantial evidence was presented to show
that he was indeed dismissed or was prevented from returning to his work.
Hence, since there is no dismissal or abandonment to speak of, the
appropriate course of action is to reinstate the employee without, however,
the payment of back wages. Properly speaking, liability for the payment of
separation pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. As a relief granted in lieu of
reinstatement, it goes without saying that an award of separation pay is
inconsistent with a finding that there was no illegal dismissal. This is
because an employee, who had not been dismissed, much less illegally
dismissed, cannot be reinstated. Moreover, as there is no reinstatement to
speak of, respondent cannot invoke the doctrine of strained relations to
support his prayer for the award of separation pay.
3. POSITIVE. The Court nonetheless sustains the award of service
incentive leave pay in favor of respondent; in accordance with the finding of
the CA that respondent was a regular employee of petitioner and is,
therefore, entitled to such benefit. The Court has already held that company
drivers who are under the control and supervision of management officers like respondent herein - are regular employees entitled to benefits including
service incentive leave pay. "Service incentive leave is a right which accrues
to every employee who has served 'within 12 months, whether continuous
or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in
the establishment as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case said period
shall be considered as one (1) year.' It is also commutable to its money
equivalent if not used or exhausted at the end of the year. In other words,
an employee who has served for one (1) year is entitled to it. He may use it
as leave days or he may collect its monetary value."

G.R. NO. 192297

AUG. 3, 2016

SUPRA MULTI-SERVICES, INC., JESUS TAMBUNTING, JR., AND RITA

CLAIRE T. DABU, VS. LANIE M. LABITIGAN
Labor Code; What constitutes valid dismissal. Labor Code allows an
employer to terminate the services of an employee for loss of trust and
confidence. There are two (2) requisites for a valid dismissal on the ground
of loss of trust and confidence. The first requisite for dismissal on the
ground of loss of trust and confidence is that the employee concerned must
be one holding a position of trust and confidence. Settled is the rule that in
order to determine whether an employee holds a position of trust and

confidence, what should be considered is not the job title but the actual
work that the employee performs. The second requisite is that there must
be an act that would justify the loss of trust and confidence.
Same; Same ; When does separation pay applicable. Labor Code provides
under Art 279 that an illegally dismissed employee shall be entitled to
reinstatement, backwages inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Based on this
provision, an illegally dismissed employee shall be entitled to reinstatement
and full backwages. In the event that reinstatement is no longer possible,
then payment of separation pay may be ordered in its stead. Significantly,
the Supreme Court has qualified and/or limited the application of Article
279 of the Labor Code on the award of backwages. The Supreme Court also
pointed out several cases wherein the award of backwages was limited to a
certain number of years, or no award was given at all. Thus, award of
backwages was limited to only one year considering the mitigating
circumstance of good faith attributed to the employer.
LEONARDO-DE CASTRO, J.:
FACTS:
Petitioner SMSI is a domestic corporation engaged in furnishing its
clients with manpower. Tambunting and Dabu are the President and VicePresident for Administration of the said corporation. Respondent Labitigan
was hired as a rank and file employee of petitioner SMSI. When
respondent's employment was terminated, she was holding the position of
Accounting Supervisor with a monthly salary of P13,000.00.
Respondent filed before the Labor Arbiter a complaint for illegal
dismissal against petitioners, seeking reinstatement and payment of
backwages, overtime pay, holiday pay, premium pay for holiday and rest day,
separation pay, unused leave pay, damages, and attorney's fees. In support
of her complaint, respondent alleged that she was a simple rank and file
employee who was elevated to the position of a supervisor but still
performed only clerical work and did not exercise any discretion on how to
run the financial affairs of the company. Respondent admitted to being
responsible for preparing the payroll of the employees of petitioner SMSI.
During the course of respondent's employment, an order providing an
Emergency Cost of Living Allowance (ECOLA) in the amount of P30.00 per
day to private sector workers and employees in the NCR earning minimum
wage. Respondent, likewise, granted herself ECOLA. Petitioner Tambunting
himself approved and signed the payroll, and any unauthorized padding or
undeserved compensation in the payroll could not have escaped him.

However, a Notice of Personnel Action was issued to respondent noting an

error in granting proportionate ECOLA and cancelling respondent's daily
allowance. Respondent claimed that she immediately took exception to the
Notice and sought audience with petitioner Tambunting, who promised to
look into the matter.
Respondent reproached petitioners for being cruel and malicious in
suddenly issuing a memo which gave respondent the time to explain and
answer why there shall be no administrative action taken against her for the
insubordination and dishonesty that she has committed. Respondent
pointed out that petitioners' malice became even more evident when she
was no longer allowed to enter the premises of petitioner SMSI. Petitioners
hurriedly issued another memo which placed the respondent on preventive
suspension while under investigation for insubordination and dishonesty.
Respondent attended the administrative hearing. During the hearing,
petitioner Dabu repeatedly berated and insulted respondent. Petitioners
issued a Notice of Termination which informed respondent that the
respondent is terminated. Petitioners conceded that respondent was initially
hired as a rank and file employee, who eventually became the Accounting
Supervisor of petitioner SMSI.
The Labor Arbiter ruledin respondents favor. Thus petitioner filed
before the National Labor Relation Commission. In its resolution, it
overturn the decision of LA. Respondent sought recourse from the CA which
upheld the decision of NLRC that the requisites for valid dismissal were
present in this case. Hence this petition.
ISSUES:
1. Whether or not there was a valid dismissal.
2. Whether or not there was a valid separation pay to respondent.

HELD:
1. AFFIRMATIVE. Under Article 282(c) of the Labor Code, as amended, an
employer may terminate an employment for, among other just causes, fraud
or willful breach by the employee of the trust reposed in him/her by his/her
employer or duly authorized representative. More so, in the case of
supervisors or personnel occupying positions of responsibility, loss of trust
justifies termination. Loss of confidence as a just cause for termination of
employment is premised from the fact that an employee concerned holds a
position of trust and confidence.
It is apparent that respondent took advantage of her position as
Accounting Supervisor in granting herself ECOLA even when she was not

entitled to the same and after already being ordered to stop doing so, which
constituted breach of trust. Willful breach of trust is one of the just causes
under Article 282( c) of the Labor Code, as amended, for the employer to
terminate the services of an employee.
2. NEGATIVE. A company has the right to dismiss its employees as a
measure of protection, more so in the case of supervisors or personnel
occupying positions of responsibility. Together with petitioners' compliance
with procedural due process, there is no other logical conclusion than that
respondent's dismissal was valid. In view of the valid dismissal from service
of respondent, then she is not entitled to back wages, as well as separation
pay in lieu of reinstatement. The award of separation pay is inconsistent
with a finding that there was no illegal dismissal, for under Article 279 of
the Labor Code, as amended, and as held in a catena of cases, the employee
who is dismissed without just cause and without due process is entitled to
backwages and reinstatement or payment of separation pay in lieu thereof.

G.R. No. 213835

June 20, 2016
CAGAYAN ELECTRIC POWER & LIGHT COMPANY, INC. (CEPAUCO)
AND CEPALCO ENERGY SERVICES CORPORATION (CESCO),
FORMERLY
CEPALCO
ENERGY
SERVICES
&
TRADING
CORPORATION (CESTCO), VS. CEPALCO EMPLOYEE'S LABOR
UNION-ASSOCIATED LABOR UNIONS-TRADE UNION CONGRESS OF
THE PHILIPPINES (TU CP)
Labor Law; Unfair Labor Practices; It shall be unlawful for an employer to
commit any of the following unfair labor practice to contract out services or
functions being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to selforganization.
Same; Same; Labor-only Contracting. Under Article 106 of the Labor Code,
as amended, labor-only contracting is an arrangement where the
contractor, who does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others, supplies
workers to an employer and the workers recruited are performing activities
which are directly related to the principal business of such employer. Laboronly contracting is considered as a form of ULP when the same is devised
by the employer to "interfere with, restrain or coerce employees in the
exercise of their rights to self-organization."
PERLAS-BERNABE, J,;
FACTS: On February 19, 2007, CEPALCO and CESCO (petitioners) entered
into a Contract for Meter Reading Work 8 where CESCO undertook to
perform CEPALCO's meter-reading activities. As a result, several employees

and union members of CEPALCO were relieved, assigned in floating

positions, and replaced with CESCO workers prompting respondent to file
a complaint 10 for ULP against petitioners.
Respondent alleged that when CEPALCO engaged CESCO to perform
its meter-reading activities, its intention was to evade its responsibilities
under the Collective Bargaining Agreement (CBA) and labor laws, and that
it would ultimately result in the dissipation of respondent's membership in
CEPALC0. Thus, respondent claimed that CEPALCO's act of contracting out
services, which used to be part of the functions of the regular union
members, is violative of Article 259 of the Labor Code, as amended,
governing ULP of employers.
It further averred that for engaging in labor-only contracting, the
workers placed by CESCO must be deemed regular rank-and-file employees
of CEP ALCO, and that the Contract for Meter Reading Work be declared
null and void. Pending resolution of CA-G.R. SP No. 03169-MIN, or on
January 5, 2010, CEPALCO and CESCO entered into another Contract of
Service, this time for the warehousing works of CEPALCO. Respondent filed
another complaint for ULP against petitioners, docketed as NLRC Case No.
RAB-10-12-00602-2009, similarly decrying that CEPALCO was engaged in
labor-only contracting and, thus, committed ULP.
Labor Arbiter (LA) dismissed the complaint for lack of merit. On
appeal by respondent, the National Labor Relations Commission (NLRC)
affirmed the LA's ruling in toto, finding that the evidence proffered by
respondent proved inadequate in establishing that the service contract
amounted to the interference of the right of the union members to selforganization and collective bargaining. In an appeal to CA, it partially
granted respondent's certiorari petition and reversed and set aside the
assailed NLRC issuances.

ISSUES:
1. Whether or not CEPALCO's contracting arrangements with CESCO
amount to Unfair Labor Practice?
HELD:
1. NEGATIVE. Under Article 106 of the Labor Code, as amended,
labor-only contracting is an arrangement where the contractor, who does
not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, supplies workers to an
employer and the workers recruited are performing activities which are
directly related to the principal business of such employer. Labor-only
contracting is considered as a form of ULP when the same is devised by the

employer to "interfere with, restrain or coerce employees in the exercise of

their rights to self-organization." The need to determine whether or not the
contracting out of services was intended to defeat the workers' right to selforganization is impelled by the underlying concept of ULP. This is stated in
Article 258 of the Labor Code. Article 259 of the Labor Code, as amended,
which enumerates certain prohibited activities constitutive of ULP, provides
that It shall be unlawful for an employer to commit any of the following
unfair labor practice: xx xx (c) To contract out services or functions being
performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to self-organization.
The foregoing findings notwithstanding, the Court, similar to the CA
and the labor tribunals, finds that CEPALCO's contracting arrangements
with CESCO did not amount to ULP. This is because respondent was not
able to present any evidence to show that such arrangements violated
CEPALCO's workers' right to self-organization, which, as abovementioned,
constitutes the core of ULP.

G.R. No. 201834

June 01, 2016

ANDRES L. DIZON v. NAESS SHIPPING PHILIPPINES, INC. AND

DOLE UK (LTD.)

For
disability to be compensable under Section 20 (B) of the 2000 PO
EA-SEC, two elements must concur: (1) the injury or illness must
be work-related; and (2) the work-related injury or illness must have
existed during the term of the seafarer's employment contract. It is
not sufficient to establish that the seafarer's illness or injury has
Labor Law; Overseas Filipino Workers; Disability Compensation;

rendered him permanently or partially disabled; it must also be

shown that there is a causal connection between the seafarer's
illness or injury and the work for which he had been contracted.
Same:Same:Forfeiture of the Seafarers claim. The seafarer shall submit
himself to a post-employment medical examination by a companydesignated physician within three working days upon his return except
when he is physically incapacitated to do so, in which case a written notice
to the agency with the same period is deemed as compliance. Failure of the
seafarer to comply with the mandatory reporting requirement shall result in
his forfeiture of the right to claim the above benefits.
PERALTA, J.:
FACTS: Since 1976, respondents Naess Shipping Phils. Inc. and DOLE UK
(Ltd.) hired petitioner Andres L. Dizon as cook for its various vessels until
the termination of his contract in 2007. On March 6, 2006, Dizon was hired
as Chief Cook and boarded DOLE COLOMBIA. After completing his contract
in 2007, he went on a vacation, and was called for another employment
contract after a month.
When he underwent pre-employment medical examination in March
2007, he was declared unfit for sea duties due to uncontrolled hypertension
and coronary artery disease as certified by the doctors of the Marine
Medical and Laboratory Clinic (MMLC). Unconvinced with the doctor's
declaration of unfitness, Dizon went to the Seamen's Hospital and submitted
himself for another examination. The result indicated that he was fit for sea
duty. He returned to MMLC and requested for a re-examination, but the
same was denied.
Dizon filed a complaint for payment of total and permanent disability,
among others, before the Labor Arbiter (LA) asserting that his illness is
work-related and his failure to submit to a post-employment medical
examination within the statutory period will result only to the forfeiture of
his sickness allowance but not his disability claim.
Respondents disavowed liability for Dizon's illness maintaining that he
finished and completed his contract on board their vessel Dole Colombia
without any incident, and that his sickness was not work-related. They
rejected the redeployment of Dizon since he was declared unfit for sea duty
in his pre-employment medical examination.
The LA ruled that Dizon is entitled to full disability benefits. The LA
held that it can be logically concluded that Dizon's illness arose during the
period of his employment since less than a month transpired between his
repatriation and the pre-employment medical examination.The LA found

that the respondents failed to adduce evidence

presumption of compensability in favor of the seafarer.

to

overcome

the

On appeal, the NLRC reversed and set aside the decision of LA for
finding that Dizon did not comply with the mandatory post-employment
medical examination within three working days upon arrival.Aggrieved,
Dizon assailed the NLRC's reversal of the LA's decision before the CA
through a petition for certiorari. The CA denied the petition and affirmed
the decision of the NLRC. Dizon elevated the issue to the Supreme Court.
ISSUE:
Whether or not the petitioner is entitled to disability benefits.
HELD:
NEGATIVE. Settled is the rule that the entitlement of seamen on
overseas work to disability benefits is a matter governed, not only by
medical findings, but by law and by contract. The three-day period should
always be complied with to determine whether the injury or illness is workrelated. Section 20(B), paragraph 3 of the 2000 POEA-SEC stated that the
seafarer shall submit himself to a post-employment medical examination by
a company-designated physician within three working days upon his return
except when he is physically incapacitated to do so, in which case a written
notice to the agency with the same period is deemed as compliance. Failure
of the seafarer to comply with the mandatory reporting requirement shall
result in his forfeiture of the right to claim the above benefits. The law
specifically declares that failure to comply with the mandatory reporting
requirement shall result in the seafarer's forfeiture of his right to claim
disability benefits.
SC constrained to deny the instant petition for failing to establish by
substantial evidence his entitlement to disability benefits, having failed to
undergo a post-employment medical examination as required under the law
without valid or justifiable reason, and to establish that his illness was
contracted during the term of his contract and that the same was workrelated. Furthermore, since it was established that Dizon was not entitled to
disability benefits so as to any claim for moral and exemplary damages.

G.R. No. 188020

JUNE 27, 2016

REN TRANSPORT CORP. and/or REYNALDO PAZCOGUIN III, VS.

NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION),
SAMAHANG MANGGAGA WA SA REN TRANSPORT-ASSOCIATION OF
DEMOCRATIC LABOR ASSOCIATIONS (SMART-ADLO) represented
by its President NESTOR FULMINAR

Labor Law; Duty to bargain: Violation; Violation of the duty to bargain

collectively is an unfair labor practice under Article 258(g) of the Labor
Code. It is during the freedom period - or the last 60 days before the
expiration of the CBA - when another union may challenge the majority
status of the bargaining agent through the filing of a petition for a
certification election. If there is no such petition filed during the freedom
period, then the employer "shall continue to recognize the majority status of
the incumbent bargaining agent where no petition for certification election
is filed."
SERENO, CJ:
FACTS: Samahan ng Manggagawa sa Ren Transport (SMART) is a
registered union, which had a five-year collective bargaining agreement
(CBA) with Ren Transport Corp. (Ren Transpmi).
SMART thereafter
conveyed its willingness to bargain with Ren Transport, to which it sent
bargaining proposals. Ren Transport, however, failed to reply to the
demand.
Majority of the members of SMART had decided to disaffiliate from
their mother federation to form another union, Ren Transport Employees
Association (RTEA) which embodied in the letter wrote before the
Department of Labor and Employment - National Capital Region (DOLENCR).

Thereafter, Ren Transport stopped the remittance to SMART of the

union dues. And on on 19 April 2005, Ren Transpo1i voluntarily recognized
RTEA as the sole and exclusive bargaining agent of the rank-and-file
employees of their company. Thus, SMART filed with the labor arbiter a
complaint for unfair labor practice against Ren Transport.
The labor arbiter rendered a decision 11 finding Ren Transport guilty
of acts of unfair labor practice. Both parties elevated the case to the
National Labor Relations Commission (NLRC). The NLRC issued a
decision13 affirming the labor arbiter's finding of unfair labor practice on
the part of Ren Transport. the CA affirmed the NLRC decision exempt on
the award of moral damages to SMART. Hence, this petition.
ISSUE:
Whether or not Ren Transport committed acts of unfair labor practice.
HELD:
AFFIRMATIVE. Violation of the duty to bargain collectively is an unfair
labor practice under Article 258(g) of the Labor Code. No petition for
certification election challenging the majority status of SMART was filed
during the freedom period, the 60-day period prior to the expiration of the
five-year CBA. Therefore, SMART remained the exclusive bargaining agent
of the rank-and file employees.
And given that SMART continued to be the workers' exclusive
bargaining agent, thus, Ren Transport had the corresponding duty to
bargain collectively with the former. And its refusal to do so constitutes an
unfair labor practice.

COMMERCIAL LAW

G.R. No. 188769

August 3, 2016

JOSEPH OMAR O. ANDAYA v. RURAL BANK OF CABADBARAN,INC.,

DEMOSTHENES P. ORAIZand RICARDO D. GONZALEZ,
Corporation Law; Shares of Stock; Transfer of Shares. It is already settled
jurisprudence that the registration of a transfer of shares of stock is a
ministerial duty on the part of the corporation. Aggrieved parties may then
resort to the remedy of mandamus to compel corporations that wrongfully
or unjustifiably refuse to record the transfer or to issue new certificates of
stock. This remedy is available even upon the instance of a bona fide
transferee who is able to establish a clear legal right to the registration of
the transfer. This legal right inherently flows from the transferee's
established ownership of the stocks.
SERENO, CJ:
FACTS:

Andaya bought from Chute 2,200 shares of stock in the Rural Bank of
Cabadbaran for P220,000. The transaction was evidenced by a notarized
document denominated as Sale of Shares of Stocks. Thereafter, Chute duly
endorsed and delivered the certificates of stock to Andaya and,
subsequently,requested the bank to register the transfer and issue new
stock certificates in favor of the latter. Andaya also separately
communicated with the bank'scorporate secretary, respondent Oraiz,
reiterating Chute's request for the issuance of new stock certificates in
petitioner's favor.
The bank's corporate secretary wrote Chute to inform her that he
could not register the transfer. He explained that under aprevious
stockholders' Resolution, existing stockholders were given priority to buy
the shares of others in the event that the latter offered those shares for sale.
He then asked Chute if she, instead, wished to have her shares offered to
existing stockholders. He told her that if no other stockholder would buy
them, she could then proceed to sell her shares to outsiders.
Citing Section 98 of the Corporation Code, Andaya claimed that the
purported restrictionon the transfer of shares of stock agreed upon during
the 2001 stockholders 'meeting could not deprive him of his right as a
transferee. He pointed out that the restriction did not appear in the bank's
articles of incorporation, by laws, or certificates of stock. The bank
eventually denied the request of Andaya.
Consequently, Andaya instituted an action for mandamus and
damages against the Rural Bank of Cabadbaran; its corporate secretary,
Oraiz; and its legal counsel, Gonzalez. The RTC ruled that petitioner Andaya
was not entitled to the remedy of mandamus, since the transfer of the
subject shares of stock had not yet been recorded in the corporation's stock
and transfer book, and the registered owner had not given him a special
power of attorney to make the transfer. Andaya has filed a Rule 45 petition
directly before this Court, insisting that he has a cause of action to institute
the suit.

ISSUE:Whether Andaya, as a transferee of shares of stock, may initiate an

action for mandamus compelling the Rural Bank of Cabadbaran to record
the transfer of shares in its stock and transfer book, as well as issue new
stock certificates in his name.

HELD:
AFFIRMATIVE. It is already settled jurisprudence that the
registration of a transfer of shares of stock is a ministerial duty on the part
of the corporation. Aggrieved parties may then resort to the remedy of
mandamus to compel corporations that wrongfully or unjustifiably refuse to
record the transfer or to issue new certificates of stock. This remedy is
available even upon the instance of a bona fide transferee who is able to
establish a clear legal right to the registration of the transfer. This legal
right inherently flows from the transferee's established ownership of the
stocks.
SC rule that Andaya has been able to establish that he is a bona fide
transferee of the shares of stock of Chute. In proving this fact, he presented
to the RTC the following documents evidencing the sale: a notarized Sale of
Shares of Stocks showing Chute's sale of 2,200 shares of stock to petitioner;
a Documentary Stamp Tax Declaration/Return; a Capital Gains Tax Return;
and stock certificates covering the subject shares duly endorsed by Chute.
The existence, genuineness, and due execution of these documents have
been admitted and remain undisputed. Andaya had the standing to initiate
an action for mandamus to compel the Rural Bank of Cabadbaran to record
the transfer of shares in its stock and transfer book and to issue new stock
certificates in his name. As the transferee of the shares, petitioner stands to
be benefited or injured by the judgment in the instant petition, a judgment
that will either order the bank to recognize the legitimacy of the transfer
and petitioner's status as stockholder or to deny the legitimacy thereof.

G.R. NO. 167082

AUG. 3, 2016

TERESITA I. BUENAVENTURA VS. METROPOLITAN BANK AND

TRUST COMPANY

Mercantile Law; A contract of adhesion; A contract of adhesion is so-called

because its terms are prepared by only one party while the other party
merely affixes his signature signifying his adhesion thereto. Such contract is
just as binding as ordinary contracts.
Same; Liability on Promissory Notes when the same was breached. When
an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for
damages. The provisions under Title XVIII on "Damages" of the Civil Code
govern in determining the measure of recoverable damages.
Same; Same; Award of Interest. When the obligation is breached, and it
consists in the payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from
the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default.
BERSAMIN, J.:
FACTS: Teresita Buenaventura executed Promissory Note payable to
Metropolitan Bank and Trust Company on January 20 and April 17, 1997.
One note was to mature on July 1, 1997, with interest and credit evaluation
and supervision fee, while the other was to mature on April 7, 1998, with
interest and CESF. Both notes provide for penalty of 18% per annum on the
unpaid principal from date of default until full payment of the obligation.
Despite demands, there remained unpaid on both notes as of July 15, 1998,
inclusive of interest and penalty.
Consequently, appellee filed an action against appellant for recovery
of said amounts, interest, penalty and attorney's fees before the RTC of
Makati City. In answer, appellant averred that in 1997, she received from
her nephew, Rene Imperial, three postdated checks drawn against appellee
dated January 5, 1998 and March 31 as partial payments for the purchase of
her properties; that she rediscounted the subject checks with appellee, for
which she was required to execute the promissory notes to secure payment
thereof; and that she is a mere guarantor and cannot be compelled to pay
unless and until appellee shall have exhausted all the properties of Imperial.

The trial court and CA ruled in favor with the Metropolitan Bank and Trust
Co. Hence, this petition.

ISSUES: Whether or not the petitioner is liable under the promissory notes.
HELD: AFFIRMATIVE. The appellant is primarily liable under the subject
checks. She is a principal debtor and not a guarantor. Consequently, the
benefit of excussion may not be interposed as a defense in an action to
enforce appellant's warranty as indorser of the subject checks. Moreover, it
is absurd that appellant, as maker of the PN, may act as guarantor of her
own obligations as an indorser of the subject checks. Thus, Art. 2047 of the
New Civil Code provides that "by guaranty, a person called the guarantor,
binds himself to the creditor to fulfill the obligation of the principal debtor
in case the latter should fail to do so.
Furthermore, the SC stated that it being clear that the promissory
notes were entirely silent about the supposed guaranty in favor of Imperial,
the promissory notes must read literally due to the absence of any
ambiguities about their language and meaning. Thus, the petitioner could
not validly insist on the guaranty. In addition, the disclosure statements and
the statements of loan release undeniably identified her, as the borrower in
the transactions. Under such established circumstances, she was directly
and personally liable for the obligations under the promissory notes.

G.R. No. 181369

June 22 2016

TALA REALTY SERVICES CORP., INC., PEDRO B. AGUIRRE,

REMEDIOS A. DUPASQUIER, DOLLY LIM, RUBENCITO M. DEL
MUNDO AND ELIZABETH H. PALMA, vs. BANCO FILIPINO SAVINGS
& MORTGAGE BANK
Commercial Law; Implied trust: Where the parties entered into contracts of
sale and lease back of the disputed property and created an implied trust
"warehousing agreement" for the reconveyance of the property. In the eyes
of the law, this implied trust is inexistent and void for being contrary to law.
ARDELEZA, J.:
FACTS: Banco Filipino filed a complaint, On September 5, 1995 with the
Regional Trial Court (RTC) of Manila against Tala Realty Services
Corporation, Inc. (Tala Realty) and the individual petitioners. This was one
of the 17 reconveyance cases instituted by Banco Filipino against Tala
Realty covering properties located in different parts of the Philippines.
The complaint alleged that the properties were covered by a trust
agreement between Banco Filipino, as trustor-beneficiary, and Tala Realty,
as trustee. The said trust agreement was essentially a sale and lease-back
arrangement wherein Banco Filipino sold various properties to Tala Realty,
including the one located in Sta. Cruz, Manila, while the latter concurrently
leased to Banco Filipino the same property for a period of 20 years,
renewable for another 20 at the option of Banco Filipino.
As gleaned from the records, Banco Filipino admitted that the purpose
of the trust agreement was to "allow more flexibility in the opening of

branches and to enable the bank to acquire new branch," since at that time,
Banco Filipino was concerned about keeping within the 50% capital asset
threshold for banks under the General Banking Act. However, sometime in
August 1992, Tala Realty claimed the property for itself and threatened to
eject Banco Filipino.
The Petitioners moved to dismiss9 the complaint before the regional
Trial court. It ordered the dismissal of the complaint against herein
petitioners except Tala Realty. Aggrieved, Banco Filipino elevated the case
to the Court of Appeals. The CA granted the petition. Hence, this appeal.
ISSUES: Whether or not the trust agreement between Banco Filipino and
Tala Realty is valid.
HELD: NEGATIVE. The SC stated that the trust agreement between
Banco Filipino and Tala Realty is void and cannot be enforced. An implied
trust could not have been formed between the Bank and Tala as this Court
has held that "where the purchase is made in violation of an existing statute
and in evasion of its express provision, no trust can result in favor of the
party who is guilty of the fraud."
Clearly, the Bank was well aware of the limitations on its real estate
holdings under the General Banking Act and that its "warehousing
agreement" with Tala was a scheme to circumvent the limitation. Such the
case, the Bank cannot demand reconveyance of the property based on its
alleged implied trust relationship with Tala. The Bank and Tala are in pari
delicto, thus, no relief should be given to one against the other. The Bank
should not be allowed to dispute the sale of its lands to Tala nor should Tala
be allowed to further collect rent from the Bank.

G.R. No. 211212

June 8, 2016

SUN LIFE OF CANADA(PHILIPPINES), INC., VS. MA. DAISY S.

SIBYA, JESUS MANUEL S. SIBY A Ill, JAIME LUIS S. SIBYA, and The
Estate of the deceased ATTY. JESUS SIBYA, JR.,
Insurance Code; Sec. 241. (1) : No insurance company doing business in
the Philippines shall refuse, without just cause, to pay or settle claims
arising under coverages provided by its policies, nor shall any such
company engage in unfair claim settlement practices.
Same; Actions of both the insurer and the insured: Under the provision, an
insurer is given two years - from the effectivity of a life insurance contract
and while the insured is alive - to discover or prove that the policy is void ab
initio or is mrescindible by reason of the fraudulent concealment or
misrepresentation of the insured or his agent. After the two-year period
lapses, or when the insured dies within the period, the insurer must make

good on the policy, even though the policy was obtained by fraud,
concealment, or misrepresentation
REYES, J.:
FACTS: On January 10, 2001, Atty. Jesus Sibya, Jr. (Atty. Jesus Jr.) applied
for life insurance with Sun Life. In his Application for Insurance, he
indicated that he had sought advice for kidney problems. The Sun Life
approved Atty. Jesus Jr.'s application and issued Insurance Policy. It
indicated the respondents as beneficiaries and entitles them to a death
benefit of Pl,000,000.00 should Atty. Jesus Jr. dies on or before February 5,
2021, or a sum of money if Atty. Jesus Jr. is still living on the endowment
date
As a result of a gunshot wound in San Joaquin, Iloilo, Atty. Jesus Jr.
died. Ma. Daisy filed a Claimant's Statement with Sun Life to seek the death
benefits indicated in his insurance policy. However, Sun Life denied the
claim on the ground that the details on Atty. Jesus Jr. 's medical history were
not disclosed in his application. The respondents reiterated their claim
against Sun Life thru a letter dated September 17, 2001. Sun Life refused to
heed the respondents' requests and thus, filed a Complaint for Rescission
before the RTC and prayed for judicial confirmation of Atty. Jesus Jr.s
rescission of insurance policy.
RTC issued its Decision dismissing the complaint for lack of merit.
Aggrieved, Sun Life elevated the case to the CA. On appeal, the CA issued
its Decision. affirming the RTC decision in ordering Sun Life to pay death
benefits and damages in favor of the respondents. Hence, this appeal.
ISSUES: Whether or not there was concealment or misrepresentation when
Atty. Jesus Jr. submitted his insurance application with Sun Life.
HELD: NEGATIVE. Under the provision, an insurer is given two years from the effectivity of a life insurance contract and while the insured is alive
- to discover or prove that the policy is void ab initio or is mrescindible by
reason of the fraudulent concealment or misrepresentation of the insured or
his agent. After the two-year period lapses, or when the insured dies within
the period, the insurer must make good on the policy, even though the
policy was obtained by fraud, concealment, or misrepresentation.
Upon the death of Atty. Jesus Jr., or a mere three months from the
issuance of the policy, Sun Life loses its right to rescind the policy. Thus,
the death of the insured within the two-year period will render the right of
the insurer to rescind the policy nugatory. As such, the incontestability
period will now set in.
Furthermore, Atty. Jesus Jr. admitted in his

application his medical treatment for kidney ailment. Moreover, he executed

an authorization in favor of Sun Life to conduct investigation in reference
with his medical history. In the present case, Sun Life failed to clearly and
satisfactorily establish its allegations, and is therefore liable to pay the
proceeds of the insurance.

G.R. No. 174838

June 1, 2016

STRONGHOLD INSURANCE CO., INC., v PAMANA ISLAND RESORT

HOTEL AND MARINA CLUB, INC.,
Mercantile Law; Insurance; Applicable Rate of Interest.. Given the
provisions of the Insurance Code, which is a special law, the applicable rate
of interest shall be that imposed in a loan or forbearance of money as
imposed by the Bangko Sentral ng Pilipinas (BSP), even irrespective of the
nature of Strongholds liability. In the past years, this rate was at 12% per
annum. However, in light of Circular No. 799 issued by the BSP on June 21,
2013 decreasing interest on loans or forbearance of money, the CAs
declared rate of 12% per annum shall be reduced to 6% per annum from the
time of the circulars effectivity on July 1, 2013,
REYES, J.:
FACTS:
On January 27, 1992, a fire in the project burned down cottages being
built by Flowtech, resulting in losses to Pamana. An action for sum of money
filed by Pamana Island Resort Hotel and Marina Club, Inc. (Pamana) and
Flowtech Construction Corporation (Flowtech) against Stronghold on the
basis of a Contractor's All Risk Bond of Php9,047,960.14 obtained by
Flowtech in relation to the construction of Pamana's project in Pamana
Island, Subic Bay.
The RTC declared Stronghold liable for the claim and ordered the
payment of interest at double the applicable rate, following Section 243 of
the Insurance Code. Stronghold's appeal seeking the reversal of the RTC
judgment was denied by the CA and thereafter, by the SC.
A Writ of Execution was issued thereafter, but Stronghold filed an
Urgent Motion to Suspend Execution and to Rationalize Enforcement of the
Decision, arguing that the interest penalty being demanded from it through
the Sheriff was unconscionable and iniquitous.
Pamana opposed the
petition, averring that the decision had become final and executory.
On November 22, 2005, the RTC ruled in favour of Strongold, and
modified the amount. Interest was substantially reduced following the
courts pronouncement that its computation should be reckoned from the
date of promulgation of judgment until its finality and not from the date of
demand until full payment as enunciated in the Decision dated October 14,
1999.The CA, on Pamanas appeal, reversed the RTC ruling, explaining that
the RTC Decision dated October 14, 1999 had become final and executory,

and thus immutable and unalterable. Stronghold appealed to the Supreme

Court.

ISSUE: Whether or not the applicable interest shall be computed pursuant

to Section 243 of the Insurance Code at double the rate of six percent (12%)
per annum.
HELD: NEGATIVE. The Court agrees with the CA that given the provisions
of the Insurance Code, which is a special law, the applicable rate of interest
shall be that imposed in a loan or forbearance of money as imposed by the
Bangko Sentral ng Pilipinas (BSP), even irrespective of the nature of
Strongholds liability. In the past years, this rate was at 12% per annum.
However, in light of Circular No. 799 issued by the BSP on June 21, 2013
decreasing interest on loans or forbearance of money, the CAs declared rate
of 12% per annum shall be reduced to 6% per annum from the time of the
circulars effectivity on July 1, 2013.