6/4/14 2:33 PM Corporations; liability of corporate officers. As a general rule, the officer cannot be held personally liable with the corporation, whether civilly or otherwise, for the consequences his acts, if acted for and in behalf of the corporation, within the scope of his authority and in good faith. Rodolfo Laborte, et al. v. Pagsanjan Tourism Consumers Cooperative, et al., G.R. No. 183860, January 15, 2014.

Banks; degree of diligence. Being a banking institution, DBP owed it to Guaria Corporation to exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system. Development Bank of the Philippines (DBP) v. Guaria Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014.commercial law-january 20146/4/14 2:33 PM

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January 2014 Philippine Supreme Court Decisions on CivilLaw

Bad faith cannot be presumed; it is a question of fact that must be proven by clear and convincing evidence. It is worth stressing at this point that bad faith cannot be presumed. It is a question of fact that must be proven by clear and convincing evidence. [T]he burden of proving bad faith rests on the one alleging it. Sadly, spouses Vilbar failed to adduce the necessary evidence. Thus, this Court finds no error on the part of the CA when it did not find bad faith on the part of Gorospe, Sr. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Banks; exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. Being a banking institution, DBP owed it to Guaria Corporation to exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system, for, according to Philippine National Bank v. Pike: The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks. Development Bank of the Philippines (DBP) v. Guaria Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014

Common carrier; cargoes while being unloaded generally remain under the custody of the carrier. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. As hereinbefore found by the RTC and affirmed by the CA based on the evidence presented, the goods were damaged even before they were turned over to ATI. Such damage was even compounded by the negligent acts of petitioner and ATI which both mishandled the goods during the discharging operations. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

Common carrier; extraordinary diligence.Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

Contracts; breach of contract; petitioner is guilty of breach of contract when it unjustifiably refused to release respondents deposit despite demand; liable for damages. In cases of breach of contract, moral damages may be recovered only if the defendant acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations.In this case, a review of the circumstances surrounding the issuance of the Hold Out order reveals that petitioner issued the Hold Out order in bad faith. First of all, the order was issued without any legal basis. Second, petitioner did not inform respondents of the reason for the Hold Out. Third, the order was issued prior to the filing of the criminal complaint. Records show that the Hold Out order was issued on July 31, 2003, while the criminal complaint was filed only on September 3, 2003. All these taken together lead us to conclude that petitioner acted in bad faith when it breached its contract with respondents. As we see it then, respondents are entitled to moral damages. Metropolitan Bank & Trust Company v. Ana Grace Rosales and Yo Yuk To, G.R. No. 183204, January 13, 2014.

Contracts; buyer in good faith. It is settled that a party dealing with a registered land does not have to inquire beyond the Certificate of Title in determining the true owner thereof, and in guarding or protecting his interest, for all that he has to look into and rely on are the entries in the Certificate of Title.Inarguably, Opinion acted in good faith in dealing with the registered owners of the properties. He relied on the titles presented to him, which were confirmed by the Registry of Deeds to be authentic, issued in accordance with the law, and without any liens or encumbrances. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Contracts; Doctrine of in pari delicto; exception. According to Article 1412 (1) of the Civil Code, the guilty parties to an illegal contract cannot recover from one another and are not entitled to an affirmative relief because they are in pari delicto or in equal fault. The doctrine of in pari delicto is a universal doctrine that holds that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other.Nonetheless, the application of the doctrine of in pari delicto is not always rigid. An accepted exception arises when its application contravenes well-established public policy. In this jurisdiction, public policy has been defined as that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good. Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600, January 15, 2014.

Contracts; Hold-out clause; applies only if there is a valid and existing obligation arising from any of the sources of obligation enumerated in Article 1157. Considering that respondent Rosales is not liable under any of the five sources of obligation, there was no legal basis for petitioner to issue the Hold Out order.The Hold Out clause applies only if there is a valid and existing obligation arising from any of the sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by petitioner against respondent Rosales, this is not enough reason for petitioner to issue a Hold Out order as the case is still pending and no final judgment of conviction has been rendered against respondent Rosales. In fact, it is significant to note that at the time petitioner issued the Hold Out order, the criminal complaint had not yet been filed. Thus, considering that respondent Rosales is not liable under any of the five sources of obligation, there was no legal basis for petitioner to issue the Hold Out order. Metropolitan Bank & Trust Company v. Ana Grace Rosales and Yo Yuk To, G.R. No. 183204, January 13, 2014.

Contracts; Mortgage; nature of mortgage. It is true that loans are often secured by a mortgage constituted on real or personal property to protect the creditors interest in case of the default of the debtor. By its nature, however, a mortgage remains an accessory contract dependent on the principal obligation, such that enforcement of the mortgage contract will depend on whether or not there has been a violation of the principal obligation. While a creditor and a debtor could regulate the order in which they should comply with their reciprocal obligations, it is presupposed that in a loan the lender should perform its obligation the release of the full loan amount before it could demand that the borrower repay the loaned amount. Development Bank of the Philippines (DBP) v. Guaria Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014.

Contracts; mortgagee in good faith. Assuming arguendo that the Gorospes titles to the subject properties happened to be fraudulent, public policy considers Opinion to still have acquired legal title as a mortgagee in good faith. As held in Cavite Development Bank v. Spouses Lim:There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy. This is the doctrine of the mortgagee in good faith based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Sales; proof capacity of seller; difference when there is a special power of attorney and when there is none.The strength of the buyers inquiry on the sellers capacity or legal authority to sell depends on the proof of capacity of the seller. If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If no such special power of attorney is provided or there is one but there appears to be flaws in its notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

Contracts; Principle of quantum merit; when allowed. Case law instructs that under this principle (quantum meruit), a contractor is allowed to recover the reasonable value of the thing or services rendered despite the lack of a written contract, in order to avoid unjust enrichment. Quantum meruit means that, in an action for work and labor, payment shall be made in such amount as the plaintiff reasonably deserves. The measure of recovery should relate to the reasonable value of the services performed because the principle aims to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain any benefit without paying for it. Rivelisa Realty, Inc., represented by Ricardo P. Venturina v. First Sta. Clara Builders Corporation, represented by Ramon A. Pangilinan, as President, G.R. No. 189618. January 15, 2014.

Contracts; rescission; proper when there is non-performance of obligation.Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. Fil-Estate Properties, Inc. and Fil-Estate Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014.

Contracts; void contract; effects. Under Article 1409 (1) of the Civil Code, a contract whose cause, object or purpose is contrary to law is a void or inexistent contract. As such, a void contract cannot produce a valid one. To the same effect is Article 1422 of the Civil Code, which declares that a contract, which is the direct result of a previous illegal contract, is also void and inexistent. Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600, January 15, 2014.

Damages; moral damages; when awarded.[S]uffice it to say that the dispute over the subject property had caused respondent serious anxiety, mental anguish and sleepless nights, thereby justifying the aforesaid award. Likewise, since respondent was constrained to engage the services of counsel to file this suit and defend his interests, the awards of attorneys fees and litigation expenses are also sustained. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

Damages; moral damages; when awarded. Every person is entitled to the physical integrity of his body. Although we have long advocated the view that any physical injury, like the loss or diminution of the use of any part of ones body, is not equatable to a pecuniary loss, and is not susceptible of exact monetary estimation, civil damages should be assessed once that integrity has been violated. The assessment is but an imperfect estimation of the true value of ones body. The usual practice is to award moral damages for the physical injuries sustained. Dr. Encarnacion C. Lumantas v. Hanz Calapiz, represented by his parents, Hilario Calapiz, Jr. and Helita Calapiz, G.R. No. 163753. January 15, 2014.

Foreclosure; premature foreclosure; order of restoration of possession and payment of reasonable rentals. Having found and pronounced that the extrajudicial foreclosure by DBP was premature, and that the ensuing foreclosure sale was void and ineffectual, the Court affirms the order for the restoration of possession to Guarifia Corporation and the payment of reasonable rentals for the use of the resort. The CA properly held that the premature and invalid foreclosure had unjustly dispossessed Guarifia Corporation of its properties. Consequently, the restoration of possession and the payment of reasonable rentals were in accordance with Article 561 of the Civil Code, which expressly states that one who recovers, according to law, possession unjustly lost shall be deemed for all purposes which may redound to his benefit to have enjoyed it without interruption. Development Bank of the Philippines (DBP) v. Guaria Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014.

Foreclosure; purchaser in foreclosure sale may take possession of the property even before the expiration of the redemption period. A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give possession of it to the person entitled under the judgment. It may be issued in case of an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118.Under said provision, the writ of possession may be issued to the purchaser in a foreclosure sale either within the one-year redemption period upon the filing of a bond, or after the lapse of the redemption period, without need of a bond.We have consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. No discretion is left to the trial court. Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135. Such question cannot be raised to oppose the issuance of the writ, since the proceeding is ex parte. The recourse is available even before the expiration of the redemption period provided by law and the Rules of Court. LZK Holdings and Development Corporation v. Planters Development Bank, G.R. No. 187973, January 20, 2014.

Interest; legal interest; interest rate pegged at 6% regardless of the source of obligation. The resulting modification of the award of legal interest is, also, in line with our recent ruling in Nacar v. Gallery Frames, embodying the amendment introduced by the Bangko Sentral ng Pilipinas Monetary Board in BSP-MB Circular No. 799 which pegged the interest rate at 6% regardless of the source of obligation. Fil-Estate Properties, Inc. and Fil-Estate Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014.

Interest; legal interest; proper rate. In Eastern Shipping, it was observed that the commencement of when the legal interest should start to run varies depending on the factual circumstances obtaining in each case. As a rule of thumb, it was suggested that where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained).During the pendency of this case, however, the Monetary Board issued Resolution No. 796 dated May 16, 2013, stating that in the absence of express stipulation between the parties, the rate of interest in loan or forbearance of any money, goods or credits and the rate allowed in judgments shall be 6% per annum. Said Resolution is embodied in Bangko Sentral ng Pilipinas Circular No. 799, Series of2013, which took effect on July 1, 2013. Hence, the 12% annual interest mentioned above shall apply only up to June 30, 2013. Thereafter, or starting July 1, 2013, the applicable rate of interest for both the debited amount and undocumented withdrawals shall be 6% per annum compounded annually, until fully paid. Land Bank of the Philippines v. Emmanuel C. Oate, G.R. No. 192371, January 15, 2014.

Interest; legal interest; rate. The legal interest rate to be imposed from February 11, 1993, the time of the extrajudicial demand by respondent, should be 6% per annum in the absence of any stipulation in writing in accordance with Article 2209 of the Civil Code, which provides:Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. First United Constructors Corporation, et al. v. Bayanihan Automotive Corporation, G.R. No. 164985, January 15, 2014.

Interest; legal interest; when awarded. Many years have gone by since Hanz suffered the injury. Interest of 6% per annum should then be imposed on the award as a sincere means of adjusting the value of the award to a level that is not only reasonable but just and commensurate. Unless we make the adjustment in the permissible manner by prescribing legal interest on the award, his sufferings would be unduly compounded. For that purpose, the reckoning of interest should be from the filing of the criminal information on April 1 7, 1997, the making of the judicial demand for the liability of the petitioner. Dr. Encarnacion C. Lumantas v. Hanz Calapiz, represented by his parents, Hilario Calapiz, Jr. and Helita Calapiz, G.R. No. 163753. January 15, 2014.

Obligations; default; borrower would not be in default without demand to pay. Considering that it had yet to release the entire proceeds of the loan, DBP could not yet make an effective demand for payment upon Guaria Corporation to perform its obligation under the loan. According to Development Bank of the Philippines v. Licuanan, it would only be when a demand to pay had been made and was subsequently refused that a borrower could be considered in default, and the lender could obtain the right to collect the debt or to foreclose the mortgage. Development Bank of the Philippines (DBP) v. Guaria Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014.

Obligations; extinguishment of obligations; compensation; requisites. Compensation is defined as a mode of extinguishing obligations whereby two persons in their capacity as principals are mutual debtors and creditors of each other with respect to equally liquidated and demandable obligations to which no retention or controversy has been timely commenced and communicated by third parties. The requisites therefor are provided under Article 1279 of the Civil Code which reads as follows:Art. 1279. In order that compensation may be proper, it is necessary:(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;(3) That the two debts be due;(4) That they be liquidated and demandable;(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.The rule on legalcompensation is stated in Article 1290 of the Civil Code which provides that [w]hen all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation. Union Bank of the Philippines v. Development Bank of the Philippines, G.R. No. 191555, January 20, 2014.

Obligations; legal compensation; requisites. Legal compensation takes place when the requirements set forth in Article 1278 and Article 1279 of the Civil Code are present, to wit:Article 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other.Article 1279. In order that compensation may be proper, it is necessary:(1) That each of the obligors be bound principally, and that he be at the same time a principal creditor of the other;(2) That both debts consists in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated;(3) That the two debts be due;(4) That they be liquidated and demandable;(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor.First United Constructors Corporation, et al. v. Bayanihan Automotive Corporation, G.R. No. 164985, January 15, 2014.

Property; builder in good faith; concept of.To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he builds, i.e. , that he be a possessor in concept of owner, and that he be unaware that there exists in his title or mode of acquisition any flaw which invalidates it.Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

Property; ownership; accession; accessory follows the principal; exception. While it is a hornbook doctrine that the accessory follows the principal,that is, the ownership of the property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially,such rule is not without exception. In cases where there is a clear and convincing evidence to prove that the principal and the accessory are not owned by one and the same person or entity, the presumption shall not be applied and the actual ownership shall be upheld. In a number of cases, we recognized the separate ownership of the land from the building and brushed aside the rule that accessory follows the principal. Magdalena T. Villasi v. Filomena Garcia, substituted by his heirs, namely, Ermelinda H. Garcia, et al., G.R. No. 190106, January 15, 2014.

Quasi-contracts; Unjust enrichment. Unjust enrichment exists, according to Hulst v. PR Builders, Inc., when a person unjustly retains a benefit at the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience. The prevention of unjust enrichment is a recognized public policy of the State, for Article 22 of the Civil Code explicitly provides that [e]very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600, January 15, 2014.

Sales; Article 1599 of the Civil Code; recoupment; definition of; when entitled. Recoupment (reconvencion) is the act of rebating or recouping a part of a claim upon which one is sued by means of a legal or equitable right resulting from a counterclaim arising out of the same transaction. It is the setting up of a demand arising from the same transaction as the plaintiffs claim, to abate or reduce that claim.The legal basis for recoupment by the buyer is the first paragraph of Article 1599 of the Civil Code, viz:Article 1599. Where there is a breach of warranty by the seller, the buyer may, at his election:(1) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;x x x xFirst United Constructors Corporation, et al. v. Bayanihan Automotive Corporation, G.R. No. 164985, January 15, 2014.

Sales; sale of a piece of land or any interest therein is through an agent; authority of the agent shall be in writing; otherwise, the sale shall be void. The due execution and authenticity of the subject SPA are of great significance in determining the validity of the sale entered into by Victorino and Ramon since the latter only claims to be the agent of the purported seller (i.e., respondent). Article 1874 of the Civil Code provides that [w]hen a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. In other words, if the subject SPA was not proven to be duly executed and authentic, then it cannot be said that the foregoing requirement had been complied with; hence, the sale would be void. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

SPECIAL LAWSSection 23 of Presidential Decree No. 957; non-forfeiture of payments. Section 23 of Presidential Decree No. 957, the rule governing the sale of condominiums, which provides: No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. Fil-Estate Properties, Inc. and Fil-Estate Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014.

Section 6 of Presidential Decree No. 1594; right of assignment and subcontract. There is no question that every contractor is prohibited from subcontracting with or assigning to another person any contract or project that he has with the DPWH unless the DPWH Secretary has approved the subcontracting or assignment. This is pursuant to Section 6 of Presidential Decree No. 1594, which provides that [T]he contractor shall not assign, transfer, pledge, subcontract or make any other disposition of the contract or any part or interest therein except with the approval of the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be. Approval of the subcontract shall not relieve the main contractor from any liability or obligation under his contract with the Government nor shall it create any contractual relation between the subcontractor and the Government.Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600, January 15, 2014.

Family law; conjugal property; all property of the marriage is presumed to be conjugal, unless it is shown that it is owned exclusively by the husband or the wife. There is a presumption that all property of the marriage is conjugal, unless it is shown that it is owned exclusively by the husband or the wife; this presumption is not overcome by the fact that the property is registered in the name of the husband or the wife alone; and the consent of both spouses is required before a conjugal property may be mortgaged. However, we find it iniquitous to apply the foregoing presumption especially since the nature of the mortgaged property was never raised as an issue before the RTC, the CA, and even before this Court. In fact, petitioner never alleged in his Complaint that the said property was conjugal in nature. Hence, respondent had no opportunity to rebut the said presumption. Francisco Lim v. Equitable PCI Bank, now known as Banco De Oro Unibank, Inc., G.R. No. 183918. January 15, 2014.

Family law; exclusive property of spouse; when the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse.Article 160 of the Civil Code provides as follows: All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.The presumption applies to property acquired during the lifetime of the husband and wife. In this case, it appears on the face of the title that the properties were acquired by Donata Montemayor when she was already a widow. When the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse. And this presumption under Article 160 of the Civil Code cannot prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved. Francisco Lim v. Equitable PCI Bank, now known as Banco De Oro Unibank, Inc., G.R. No. 183918. January 15, 2014.

Torrens system; certificate of title; a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein.[A] certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Having no certificate of title issued in their names, spouses Vilbar have no indefeasible and incontrovertible title over Lot 20 to support their claim. Further, it is an established rule that registration is the operative act which gives validity to the transfer or creates a lien upon the land. Any buyer or mortgagee of realty covered by a Torrens certificate of title x x x is charged with notice only of such burdens and claims as are annotated on the title. Failing to annotate the deed for the eventual transfer of title over Lot 20 in their names, the spouses Vilbar cannot claim a greater right over Opinion, who acquired the property with clean title in good faith and registered the same in his name by going through the legally required procedure. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Torrens system; Torrens title; a person dealing with a registered land has a right to rely upon the face of the Torrens certificate of title; exceptions.The well-known rule in this jurisdiction is that a person dealing with a registered land has a right to rely upon the face of the torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.A torrens title concludes all controversy over ownership of the land covered by a final decree of registration. Once the title is registered the owner may rest assured without the necessity of stepping into the portals of the court or sitting in the mirador de su casa to avoid the possibility of losing his land. Francisco Lim v. Equitable PCI Bank, now known as Banco De Oro Unibank, Inc., G.R. No. 183918. January 15, 2014.

Torrens title; a person dealing with a registered land has a right to rely upon the face of the Torrens certificate of title; exception in the case of a person who buys from a person who is not the registered owner.The general rule is that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto.However,a higher degree of prudence is required from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. In such a case, the buyer is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor. The buyer also has the duty to ascertain the identity of the person with whom he is dealing with and the latters legal authority to convey the property. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

Torrens system;even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value.It is well-settled that even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.

Torrens system; levy on attachment, duly registered, takes preference over a prior unregistered sale.[T]he settled rule that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the [properties] involved [were] duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

December 2013 Philippine Supreme Court Decisions on LaborLawAppeal; NLRC; accredited bonding company; revocation of authority is prospective in application. The respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked its accreditation on February 16, 2003. This subsequent revocation should not prejudice the respondents who relied in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine Journalists, Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding companys revocation of authority is prospective in application. Nonetheless, the respondents should post a new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure, which states that [a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated or the award satisfied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that [i]n case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award in the judgment appealed from. Contrary to the respondents claim, the issue of the appeal bonds validity may be raised for the first time on appeal since its proper filing is a jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay or evade the employees just and lawful claims. It is intended to assure the workers that they will receive the money judgment in their favor if the employers appeal is dismissed.Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules require the verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended to give assurance that the matters alleged in the pleading are true and correct and not of mere speculation. Also, a supplemental appeal is merely an addendum to the verified memorandum on appeal that was earlier filed in the case; hence, the requirement for verification has been substantially complied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on certiorari, the Supreme Court (SC) reviewed the Court of Appeals (CA) decision of a Rule 65 petition for certiorari. The Supreme Courts power of review in such case is limited to legal errors that the CA might have committed in issuing its assailed decision, in contrast with the review for jurisdictional errors which it undertakes in an original certiorari (Rule 65) action filed with it. The SC examines the CA decision based on how it determined the presence or absence of grave abuse of discretion in the manner by which the NLRC rendered its decision and not on the basis of whether the NLRC decision on the merits of the case was correct. Moreover, the Courts power in a Rule 45 petition limits it to a review of questions of law raised against the assailed CA decision. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.

Attorneys fees; when entitled. An employee is entitled to an award of attorneys fees equivalent to ten percent (10%) of the amount of the wages in actions for unlawful withholding of wages pursuant to Article 111 of the Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Backwages; when entitled. In termination cases, the burden of proving just and valid cause for dismissing an employee from his employment rests upon the employer. The employers failure to discharge this burden in the instant case arising from their non-submission of evidence at the proceedings before the labor arbiter resulted in the finding that the dismissal is unjustified. Thus, the employees are entitled to the payment of backwages. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. To excuse respondents from complying with the terms of their waivers, any one of the following grounds must exist: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law. The Court concluded that the instant case falls under the first situation.As the ground for termination of employment was illegal, the quitclaims are deemed illegal because the employees consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. The circumstances show that petitioners misrepresentation led its employees, specifically respondents herein, to believe that the company was suffering losses which necessitated the implementation of the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and quitclaim. The amounts already received by respondents as consideration for signing the releases and quitclaims, however, should be deducted from their respective monetary awards. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.

Disability benefits; principle of work-aggravation; concept of. Compensability may be established on the basis of the theory of work aggravation if, by substantial evidence, it can be demonstrated that the working conditions aggravated or at least contributed in the advancement of respondents cancer. As held in Rosario v. Denklav Marine, the burden is on the beneficiaries to show a reasonable connection between the causative circumstances in the employment of the deceased employee and his death or permanent totaldisability. In the present case, both parties failed to discharge their respective burdens for petitioners, they failed to prove the non-work-relatedness of the disease; and for respondent, he failed to prove that his work aggravated his condition. Thus, the Court had to resolve the case on some other basis. The Court held that disability should be understood not more on its medical significance, but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. It does not mean absolute helplessness. Evidence of this condition can be found in a certification of fitness/unfitness to work issued by the company-designated physician. In this case, records reveal that the medical report issued by the company-designated oncologist was bereft of any certification that respondent remained fit to work as a seafarer despite his cancer. This is important, according to the Court, since the certification is the document that contains the assessment of his disability which can be questioned in case of disagreement as provided under Section 20 (B) (3) of the POEA-SEC. In the absence of any certification, the law presumes that the employee remains in a state of temporary disability. Should no certification be issued within 240 day maximum period, as in this case, the pertinent disability becomes permanent in nature. Accordingly, the Court affirmed respondents entitlement to permanent total disability benefits awarded to him. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.

Disability benefits; principle of work-relation; concept of. As a general rule, the principle of work-relation requires that the disease in question must be one of those listed as an occupational disease under Sec. 32-A of the POEA-SEC. Nevertheless, should it be not classified as occupational in nature, Section 20 (B) paragraph 4 of the POEA-SEC provides that such diseases are disputably presumed as work-related.In this case, it is undisputed that Nasopharyngeal Carcinoma (NPC) afflicted respondent while on board the petitioners vessel. As a non-occupational disease, it has the disputable presumption of being work-related. This presumption obviously works in the seafarers favor. Hence, unless contrary evidence is presented by the employers, the work-relatedness of the disease must be sustained. The Court held that the petitioners, as employers, failed to disprove the presumption of NPCs work-relatedness. The petitioners primarily relied on the medical report issued by Dr. Co Pefia which, however, failed to make a categorical statement confirming the total absence of work relation. As the doctor opined only a probability, there was no certainty that his condition was not work related. There being no certainty, the Court will lean in favor of the seafarer consistent with the mandate of POEA-SEC to secure the best terms and conditions of employment for Filipino workers. Hence, the presumption of NPCs work-relatedness stays. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.

Illegal dismissal; burden of proof. In termination cases, the burden of proving just and valid cause for dismissing an employee from his employment rests upon the employer. The employers failure to discharge this burden results in the finding that the dismissal is unjustified.Failing to prove just and valid cause for the dismissal, the Court held that the petitioners are entitled to salary differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the general rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment of these money claims. However, the Court decided that they are not entitled to overtime and premium pays. The burden of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the employee because these are not incurred in the normal course of business. In the present case, the petitioners failed to adduce any evidence that would show that they actually rendered service in excess of the regular eight working hours a day, and that they in fact worked on holidays and rest days. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Labor cases; strict adherence to the technical rules of procedure is not required; when liberality allowed. In labor cases, strict adherence to the technical rules of procedure is not required. Time and again, the Court has allowed evidence to be submitted for the first time on appeal with the NLRC in the interest of substantial justice. Thus, it has consistently supported the rule that labor officials should use all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, in the interest of due process. However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven. The reason for these requirements is that the liberal application of the rules before quasi-judicial agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither is the rule on liberal construction a license to disregard the rules of procedure. In the present case, the Court held that the respondents failed to adequately explain their delay in the submission of evidence and prove the allegations sought to be proven. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and confidence is a just cause for dismissal under Article 282(c) of the Labor Code. Article 282(c) provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. However, in order for the employer to properly invoke this ground, the employer must satisfy two conditions. First, the employer must show that the employee concerned holds a position of trust and confidence. Second, the employer must establish the existence of an act justifying the loss of trust and confidence. To be a valid cause for dismissal, the act that betrays the employers trust must be real, i.e., founded on clearly established facts, and the employees breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), the Court repeated the guidelines for the application of loss of confidence as follows: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.As applied to the dismissal of managerial employees, employers as a rule enjoy wider latitude of discretion. They are not required to present proof beyond reasonable doubt as the mere existence of a basis for believing that such employee has breached the trust of the employer would suffice for the dismissal. Thus, as long as the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position, the dismissal on this ground is valid.The Court held that there was sufficient basis to dismiss the respondent for loss of trust and confidence. First, the Court believed that the respondent held a position of trust and confidence because he was a managerial employee of the petitioner. As the Dean of two of the petitioners departments, he was tasked, among others, to assist the school head in all matters affecting the general policies of the entire institution, to direct and advise the students in their programs of study and to approve their subject load and exercise educational leadership among his faculty. These tasks involved the exercise of powers and prerogatives equivalent to managerial actions. Second, the Court ruled that the respondent committed wilful breach of trust sufficient to justify dismissal. The heart of the loss-of-trust charge is the employees betrayal of the employers trust. Damage aggravates the charge but its absence does not mitigate nor negate the employees liability. The respondent betrayed his owed fidelity the moment he engaged in a venture that required him to perform tasks and make calculated decisions which his duty to the petitioner would have equally required him to perform or would have otherwise required him to oppose. The Court was convinced that actual conflict of interest existed when respondent sought to conduct review courses for nursing examination knowing that the petitioner was already offering similar classes. The respondents good intentions were beside the point. Ultimately, the determinant is his deliberate engagement in a venture that would have directly conflicted with the petitioners interests. If respondent merely intended to help the petitioner and its students in increasing their chances of passing the Civil Service Examination, he could have just offered, as part of the BCUs course curriculum, review classes for the Civil Service Examination instead of altogether organizing a review center that obviously will offer the course to everyone minded to enroll. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.

Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly guarantee to every employee or worker tenurial security. What this means is that an employer shall not dismiss an employee except for just or authorized cause and only after due process is observed. Thus, for an employees dismissal to be valid, the employer must meet these basic requirements of: (1) just or authorized cause (which constitutes the substantive aspect of a valid dismissal); and (2) observance of due process (the procedural aspect). Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.

Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-entrenched rule in this jurisdiction is that only questions of law may be entertained by the SC in a petition for review on certiorari under Rule 45. This rule, however, is not absolute and admits certain exceptions, such as when the petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo as Section 5, Rule 133 of the Rules of Court states in express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only if supported by substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.

Probationary employment; concept of; probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a teaching personnel. Probationary employment refers to the trial stage or period during which the employer examines the competency and qualifications of job applicants, and determines whether they are qualified to be extended permanent employment status. Such an arrangement affords an employer the opportunity before the full force of the guarantee of security of tenure comes into play to fully scrutinize and observe the fitness and worth of probationers while on the job and to determine whether they would become proper and efficient employees. It also gives the probationers the chance to prove to the employer that they possess the necessary qualities and qualifications to meet reasonable standards for permanent employment.Mere completion of the three-year probation, even with an above-average performance, does not guarantee that the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a teaching personnel.The Court ruled that the requirement to obtain a masters degree was made known to the petitioner. The contract she signed clearly incorporates the rules, regulations, and employment conditions contained in the SSC Faculty Manual. The Manual provided for a criteria for permanency which includes, among others, the requirement that the faculty member must have completed at least a masters degree. Viewed next to the statements and actions of Manaois i.e., the references to obtaining a masters degree in her application letter, in the subsequent correspondences between her and SSC, and in the letter seeking the extension of a teaching load for the school year 2003-2004; and her submission of certifications from UP and from her thesis adviser the Court found that there is indeed substantial evidence proving that she knew about the necessary academic qualifications to obtain the status of permanency. Jocelyn Herrera-Manaois v. St. Scholasticas College, G.R. No. 188914, December 11, 2013.

Probationary employment; part-time member of the academicpersonnel; requisites to acquire permanence of employment and security of tenure. Pursuant to the 1992 Manual of Regulations for Private Schools, private educational institutions in the tertiary level may extend full-time faculty status only to those who possess, inter alia, a masters degree in the field of study that will be taught. This minimum requirement is neither subject to the prerogative of the school nor to the agreement between the parties. For all intents and purposes, this qualification must be deemed impliedly written in the employment contracts between private educational institutions and prospective faculty members. The issue of whether probationers were informed of this academic requirement before they were engaged as probationary employees is thus no longer material, as those who are seeking to be educators are presumed to know these mandated qualifications. Thus, all those who fail to meet the criteria under the 1992 Manual cannot legally attain the status of permanent full-time faculty members, even if they have completed three years of satisfactory service.Further, the Court stated that in line with academic freedom and constitutional autonomy, an institution of higher learning has the discretion and prerogative to impose standards on its teachers and determine whether these have been met. Upon conclusion of the probation period, the college or university, being the employer, has the sole prerogative to make a decision on whether or not to re-hire the probationer. The probationer cannot automatically assert the acquisition of security of tenure and force the employer to renew the employment contract. In the case at bar, petitioner failed to comply with the stated academic qualifications required for the position of a permanent full-time faculty member. Jocelyn Herrera-Manaois v. St. Scholasticas College, G.R. No. 188914, December 11, 2013.

Question of law; distinguished from a question of fact. A question of law arises when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a question of fact exists when a doubt or difference arises as to the truth or falsehood of facts.In this petition, the petitioner essentially asks the question whether, under the circumstances and the presented evidence, the termination of respondents employment was valid. As framed, therefore, the question before the Court is a proscribed factual issue that it cannot generally consider in this Rule 45 petition, except to the extent necessary to determine whether the CA correctly found the NLRC in grave abuse of its discretion in considering and appreciating this factual issue.Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review the conflicting factual findings of the LA and the CA, on the one hand, and the NLRC, on the other. Such exception applies when, based on the records, the factual findings of the tribunals below are in conflict. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.

Stare decisis; doctrine of. Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even though the parties may be different. Where the facts are essentially different, however, stare decisis does not apply because a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variant is introduced.This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case (Philcea case; G.R. No. 168719, February 22, 2006), involve the same period which is March to April 2004; the issuance of the Memorandum to employees informing them of the implementation of the cost reduction program; the implementation of the voluntary retirement program and retrenchment program, except that this case involves different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation pay by the affected employees. As the respondents here were similarly situated as the union members in the Philcea case, and considering that the questioned dismissal from the service was based on the same grounds under the same circumstances, there is no need to re-litigate the issues presented herein. In short, stare decisis applies and the Court deems it wise to adopt its earlier findings in the Philcea case that there was no valid ground to terminate the services of the employees. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.

Substantial evidence; definition of. The assertions of respondent do not constitute as substantial evidence that a reasonable mind might accept as adequate to support the conclusion that there is a causal relationship between his illness and the working conditions on board the petitioners vessel. Although the Court has recognized as sufficient that work conditions are proven to have contributed even to a small degree, such must, however, be reasonable, and anchored on credible information. The claimant must, therefore, prove a convincing proposition other than by his mere allegations. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.

Termination of employment; authorized causes; retrenchment. The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of petitioners had been thoroughly ruled upon by the Court in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (G.R. No. 168719, February 22, 2006). It discussed the requisites of both retrenchment and redundancy as authorized causes of termination and concluded that petitioners failed to substantiate them. In ascertaining the bases of the termination of employees, it took into consideration petitioners claim of business losses; the purchase of machinery and equipment after the termination, the declaration of cash dividends to stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of full blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners claim that there was a slump in the demand for its products which compelled them to implement the termination programs. In arriving at its conclusions, the Court took note of petitioners net sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion that the retrenchment effected by the company is invalid due to a substantive defect. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.

Termination of employment; ground; closure of business due to serious business losses; notice requirement. Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it must give one (1) months prior written notice to the employee and to the Department of Labor and Employment. In this relation, case law instructs that it is the personal right of the employee to be personally informed of his proposed dismissal as well as the reasons therefor; and such requirement of notice is not a mere technicality or formality which the employer may dispense with. Since the purpose of previous notice is to, among others, give the employee some time to prepare for the eventual loss of his job, the employer has the positive duty to inform each and every employee of their impending termination of employment. To this end, jurisprudence states that an employers act of posting notices to this effect in conspicuous areas in the workplace is not enough. Verily, for something as significant as the involuntary loss of ones employment, nothing less than an individually-addressed notice of dismissal supplied to each worker is proper. The Court held that the Labor Arbiter, NLRC, and Court of Appeals erred in ruling that SPI complied with the notice requirement when it merely posted various copies of its notice of closure in conspicuous places within the business premises. SPI is required to serve individual written notices of termination to its employees. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013

Termination of employment; authorized cause; closure of business due to serious business losses; separation pay. Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses. Closure of business, as an authorized cause for termination of employment, aims to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. In such a case, the employer is generally required to give separation benefits to its employees, unless the closure is due to serious business losses. As explained in the case of Galaxie Steel Workers Union (GSWU-NAFLU-KMU) v. NLRC (G.R. No. 165757, October 17, 2006): The Constitution, while affording full protection to labor, nonetheless, recognizes the right of enterprises to reasonable returns on investments, and to expansion and growth. In line with this protection afforded to business by the fundamental law, Article [297] of the Labor Code clearly makes a policy distinction. It is only in instances of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses that employees whose employment has been terminated as a result are entitled to separation pay. In other words, Article [297] of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. To require an employer to be generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction of the employer.In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that petitioners indeed suffered from serious business losses which resulted in its permanent shutdown and accordingly, held the companys closure to be valid. It is a rule that absent any showing that the findings of fact of the labor tribunals and the appellate court are not supported by evidence on record or the judgment is based on a misapprehension of facts, the Court shall not examine anew the evidence submitted by the parties. Perforce, without any cogent reason to deviate from the findings on the validity of respondents closure, the Court held that it is not obliged to give separation benefits to minority employees pursuant to Article 297 of the Labor Code. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.

Termination of employment due to closure; procedural infirmity; nominal damages as sanction. It is well to stress that while respondent had a valid ground to terminate its employees, i.e., closure of business, its failure to comply with the proper procedure for termination renders it liable to pay the employee nominal damages for such omission. Based on existing jurisprudence, an employer which has a valid cause for dismissing its employee but conducts the dismissal with procedural infirmity is liable to pay the employee nominal damages in the amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of P50,000.00 if the ground for dismissal is an authorized cause. However, case law exhorts that in instances where the payment of such damages becomes impossible, unjust, or too burdensome, modification becomes necessary in order to harmonize the disposition with the prevailing circumstance. In this case, considering that SPI closed down its operations due to serious business losses and that said closure appears to have been done in good faith, the Court as in the case of Industrial Timber Corporation v. Ababon (G.R. No. 164518, March 30, 2006), deems it just to reduce the amount of nominal damages to be awarded to each of the minority employees from P50,000.00 to Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.

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Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a public reparation for dismissing the employee in violation of the Labor Code. The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S Transport Corporation v. Infante (G. R. No.160303, September 13, 2007) stated that the principle of a fair days wage for a fair days labor remains as the basic factor in determining the award thereof. An exception to the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. It is, however, required, for this exception to apply, that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

Dismissal; burden of proof on employer. The burden is on the employer to prove that the termination was for valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal justifications to dismiss an employee. The unflinching rule in illegal dismissal cases is that the employer bears the burden of proof. One of CCBPIs policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for their sales/collections and obtain clearance from the company Cashier before they are allowed to leave company premises at the end of their shift and report for work the next day. If there is a shortage/failure to account, the concerned Salesmen/Account Specialist is not allowed to leave the company premises until he settles the same. In addition, shortages are deducted from the employees salaries. If CCBPI expects to proceed with its case against petitioner, it should have negated this policy, for its existence and application are inextricably tied to CCBPIs accusations against petitioner. In the first place, as petitioners employer, upon it lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner continued to work until June 2004, this meant that he committed no infraction, going by this company policy; it could also mean that any infraction or shortage/non-remittance incurred by petitioner has been duly settled. Respondents decision to ignore this issue generates the belief that petitioner is telling the truth, and that the alleged infractions are fabricated, or have been forgiven. Coupled with Macatangays statement which remains equally unrefuted that the charges against petitioner are a scheme by local CCBPI management to cover up problems in the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made to account. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014. Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid; but as admitted by her, she has not paid for the said delivered products. The reason for petitioners issuance of said official receipt to Asanza is the latters concurrent promise that she would immediately issue the check covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014 Grave abuse of discretion; concept of. Having established through substantial evidence that respondents injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in upholding LAs decision to dismiss respondents complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014 Illegal strike and illegal acts during the strike; distinction between union members and union officers in determining when they lose their employment status. The Supreme Court stressed that the law makes a distinction between union members and union officers. A union member who merely participates in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status. In contrast, a union officer may be terminated from employment for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service. NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members was declared illegal. The union leaders who conducted the illegal strike despite knowledge that NAMA-MCCH-NFL is not a duly registered labor union were declared to have been validly terminated by petitioner. However, as to the respondents who were mere union members, it was not shown that they committed any illegal act during the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively supported the concerted protest activities, signed the collective reply of union members manifesting that they launched the mass actions to protest managements refusal to negotiate a new CBA, refused to appear in the investigations scheduled by petitioner because it was the unions stand that they would only attend these investigations as a group, and failed to heed petitioners final directive for them to desist from further taking part in the illegal strike. The CA, on the other hand, found that respondents participation in the strike was limited to the wearing of armbands. Since an ordinary striking worker cannot be dismissed for such mere participation in the illegal strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in awarding respondents full back wages and ordering their reinstatement despite the prevailing circumstances. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014 Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does not fall under any of the first two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not mention another employment arrangement contractual or fixed term employment (or employment for a term) which, if not for the fixed term, should fall under the category of regular employment in view of the nature of the employees engagement, which is to perform an activity usually necessary or desirable in the employers business. In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time, recognized and resolved the anomaly created by a narrow and literal interpretation of Article 280 of the Labor Code that appears to restrict the employees right to freely stipulate with his employer on the duration of his engagement. In this case, the Court upheld the validity of the fixed-term employment agreed upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in Article 280 should be construed to refer to the substantive evil that the Code itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where [the] fixed period of employment was agreed upon knowingly and voluntarily by the parties x x x absent any x x x circumstances vitiating [the employees] consent, or where [the facts satisfactorily show] that the employer and [the] employee dealt with each other on more or less equal terms[.] The indispensability or desirability of the activity performed by the employee will not preclude the parties from entering into an otherwise valid fixed term employment agreement; a definite period of employment does not essentially contradict the nature of the employees duties as necessary and desirable to the usual business or trade of the employer. Nevertheless, where the circumstances evidently show that the employer imposed the period precisely to preclude the employee from acquiring tenurial security, the law and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals, etc. In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed regular. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be performed by the employee. The nature of the employment does not depend solely on the will or word of the employer or on the procedure for hiring and the manner of designating the employee. Rather, the nature of the employment depends on the nature of the activities to be performed by the employee, taking into account the nature of the employers business, the duration and scope of work to be done, and, in some cases, even the length of time of the performance and its continued existence. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Labor law; kinds of employment; project employment; requisites; length of time not controlling. A project employment, on the other hand, contemplates on arrangement whereby the employment has been fixed for a specific project or undertaking whose completion or termination has been determined at the time of the engagement of the employee[.] Two requirements, therefore, clearly need to be satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of the project at the time of the employees engagement. The services of the project employees are legally and automatically terminated upon the end or completion of the project as the employees services are coterminous with the project. Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time of the asserted project employees engagement is not controlling as the employment may, in fact, last for more than a year, depending on the needs or circumstances of the project. Nevertheless, this length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as a badge of regular employment when the activities performed by the purported project employee are necessary and indispensable to the usual business or trade of the employer. In this latter case, the law will regard the arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular employment refers to that arrangement whereby the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer[.] Under this definition, the primary standard that determines regular employment is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer; the emphasis is on the necessity or desirability of the employees activity. Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of the employer, the law regards the employee as regular. By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual employment arrangement when the casual employees engagement is made to last for at least one year, whether the service is continuous or broken. The controlling test in this arrangement is the length of time during which the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Labor law; kinds of employment; seasonal employment; requisites. Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is seasonal in nature or lasting for the duration of the season. As with project employment, although the seasonal employment arrangement involves work that is seasonal or periodic in nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular status. To exclude the asserted seasonal employee from those classified as regular employees, the employer must show that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season. Hence, when the seasonal workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated as seasonal workers, if these workers are called to work from time to time and are only temporarily laid off during the off-season, the law does not consider them separated from the service during the off-season period. The law simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014. Overseas employment; 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. With respect to the applicable rules, it is doctrinal 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 material statutory provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of the Department of Labor and Employment, and the parties Collective Bargaining Agreement bind the seaman and his employer to each other. In the foregoing light, the Court observes that respondent executed his contract of employment on July 17, 2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25, 2000. However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the determination of respondents entitlement to the disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondents employment contract was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014 Payment of separation pay as alternative relief for union members who were dismissed for having participated in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for uni