G.R. No.

122191 October 8, 1998

SAUDI
ARABIAN
AIRLINES,

On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors requested her to see Mr. Ali
Meniewy, Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she
saw him, he brought her to the police station where the police took her
passport and questioned her about the Jakarta incident. Miniewy simply stood
by as the police put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the police return
her passport and allowed her to catch the afternoon flight out of Jeddah.
One year and a half later or on lune 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila, plaintiff
was not allowed to board the plane and instead ordered to take a later flight
to Jeddah to see Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did,
a certain Khalid of the SAUDIA office brought her to a Saudi court where she
was asked to sign a document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June 27, 1993.
Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report
to Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila
manager, Aslam Saleemi, that the investigation was routinary and that it
posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi
court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi
judge interrogated plaintiff through an interpreter about the Jakarta incident.
After one hour of interrogation, they let her go. At the airport, however, just
as her plane was about to take off, a SAUDIA officer told her that the airline
had forbidden her to take flight. At the Inflight Service Office where she was
told to go, the secretary of Mr. Yahya Saddick took away her passport and told
her to remain in Jeddah, at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the
same court where the judge, to her astonishment and shock, rendered a
decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi
court had tried her, together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco,
dancing and listening to the music in violation of Islamic laws; and (3)
socializing with the male crew, in contravention of Islamic tradition. 10
Facing conviction, private respondent sought the help of her
employer, petitioner SAUDIA. Unfortunately, she was denied any assistance.
She then asked the Philippine Embassy in Jeddah to help her while her case is
on appeal. Meanwhile, to pay for her upkeep, she worked on the domestic
flight of SAUDIA, while Thamer and Allah continued to serve in the
international flights. 11

petitioner,

vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON.
RODOLFO A. ORTIZ, in his capacity as Presiding Judge of Branch 89,
Regional Trial Court of Quezon City, respondents.
QUISUMBING,

J.:

This petition for certiorari pursuant to Rule 45 of the Rules of Court

1
seeks
to
annul
and
set
aside
the
Resolution
2
dated September 27, 1995 and the Decision dated April 10, 1996 of the
3
4
Court
of
Appeals
in
CA-G.R.
SP
No.
36533,
5
6
7
and the Orders dated August 29, 1994 and February 2, 1995 that were
issued
by
the
trial
court
in
Civil
Case
No.
Q-9318394. 8
The pertinent antecedent facts which gave rise to the instant
petition, as stated in the questioned Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight
Attendant for its airlines based in Jeddah, Saudi Arabia. . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff
went to a disco dance with fellow crew members Thamer Al-Gazzawi and
Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when
they returned to their hotels, they agreed to have breakfast together at the
room of Thamer. When they were in te (sic) room, Allah left on some pretext.
Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a
roomboy and several security personnel heard her cries for help and rescued
her. Later, the Indonesian police came and arrested Thamer and Allah AlGazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA
officials interrogated her about the Jakarta incident. They then requested her
to go back to Jakarta to help arrange the release of Thamer and Allah. In
Jakarta, SAUDIA Legal Officer Sirah Akkad and base manager Baharini
negotiated with the police for the immediate release of the detained crew
members but did not succeed because plaintiff refused to cooperate. She was
afraid that she might be tricked into something she did not want because of
her inability to understand the local dialect. She also declined to sign a blank
paper and a document written in the local dialect. Eventually, SAUDIA allowed
plaintiff to return to Jeddah but barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi
Arabian government, the Indonesian authorities agreed to deport Thamer
and Allah after two weeks of detention. Eventually, they were again put in
service by defendant SAUDI (sic). In September 1990, defendant SAUDIA
transferred plaintiff to Manila.

Because she was wrongfully convicted, the Prince of Makkah

dismissed the case against her and allowed her to leave Saudi Arabia. Shortly
before her return to Manila, 12 she was terminated from the service by
SAUDIA, without her being informed of the cause.
On November 23, 1993, Morada filed a Complaint 13 for damages
against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14
which raised the following grounds, to wit: (1) that the Complaint states no
cause of action against Saudia; (2) that defendant Al-Balawi is not a real party
in interest; (3) that the claim or demand set forth in the Complaint has been
waived, abandoned or otherwise extinguished; and (4) that the trial court has
no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to
Dismiss) 15. Saudia filed a reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein
Al-Balawi was dropped as party defendant. On August 11, 1994, Saudia filed
its Manifestation and Motion to Dismiss Amended Complaint 18.
The trial court issued an Order 19 dated August 29, 1994 denying
the Motion to Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to
Dismiss, SAUDIA filed
on September 20, 1994, its Motion
for Reconsideration 21 of the Order dated August 29, 1994. It alleged that the
trial court has no jurisdiction to hear and try the case on the basis of Article
21 of the Civil Code, since the proper law applicable is the law of the Kingdom
of Saudi Arabia.
On October 14, 1994, Morada filed her Opposition 22 (To Defendant's
Motion for Reconsideration).
In the Reply 23 filed with the trial court on October 24, 1994,
SAUDIA alleged that since its Motion for Reconsideration raised lack of
jurisdiction as its cause of action, the Omnibus Motion Rule does not apply,
even if that ground is raised for the first time on appeal. Additionally,
SAUDIA alleged that the Philippines does not have any substantial
interest
in
the prosecution of the instant case, and hence, without
jurisdiction to adjudicate the same.

the applicable Philippine law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of substance which might cause
the reversal or modification of the order sought to be reconsidered, the
motion for reconsideration of the defendant, is DENIED.
Consequently, on February 20, 1995, SAUDIA filed its Petition for
Certiorari and Prohibition with Prayer for Issuance of Writ of Preliminary
Injunction and/or Temporary Restraining Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with
27
Temporary
Restraining
Order
dated
February
23,
1995, prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution 28 promulgated on September 27, 1995, now
assailed, the appellate court denied SAUDIA's Petition for the Issuance of a
Writ of Preliminary Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is
hereby DENIED, after considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing
that herein petitioner is not clearly entitled thereto (Unciano Paramedical
College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second
Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the
instant Petition 29 for Review with Prayer for Temporary Restraining Order
dated October 13, 1995.
However, during the pendency of the instant Petition, respondent
Court of Appeals rendered the Decision 30 dated April 10, 1996, now also
assailed. It ruled that the Philippines is an appropriate forum
considering that the Amended Complaint's basis for recovery of
damages is Article 21 of the Civil Code, and thus, clearly within the
jurisdiction of respondent Court. It further held that certiorari is not the
proper remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner
should have proceeded to trial, and in case of an adverse ruling, find recourse
in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review
with Prayer for Temporary Restraining Order 31 dated April 30, 1996, given due
course by this Court. After both parties submitted their Memoranda, 32 the
instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
I

Respondent Judge subsequently issued another Order 24 dated

February 2, 1995, denying SAUDIA's Motion for Reconsideration. The
pertinent portion of the assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi
Arabian Airlines filed, thru counsel, on September 20, 1994, and the
Opposition thereto of the plaintiff filed, thru counsel, on October 14, 1994, as
well as the Reply therewith of defendant Saudi Arabian Airlines filed, thru
counsel, on October 24, 1994, considering that a perusal of the plaintiffs
Amended
Complaint,
which
is
one
for
the
recovery
of
actual, moral and exemplary damages plus attorney's fees, upon the basis of

As stated by private respondent in her Amended Complaint 38 dated

June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign
airlines
corporation
doing
business
in
the Philippines. It may be served with summons and other court processes at
Travel
Wide
Associated
Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village,
Makati, Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi
Arabian
government,
the
Indonesian
authorities agreed to deport Thamer and Allah after two weeks of detention.
Eventually,
they
were
again put in service by defendant SAUDIA. In September 1990, defendant
SAUDIA
transferred
plaintiff
to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta
incident was already behind her, her superiors reauested her to see MR. Ali
Meniewy, Chief Legal Officer of SAUDIA in Jeddah, Saudi Arabia. When she
saw him, he brought her to the police station where the police took her
passport and questioned her about the Jakarta incident. Miniewy simply stood
by as the police put pressure on her to make a statement dropping the case
against Thamer and Allah. Not until she agreed to do so did the police return
her passport and allowed her to catch the afternoon flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi
Arabia, a few minutes before the departure of her flight to Manila, plaintiff
was not allowed to board the plane and instead ordered to take a later flight
to Jeddah to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she
did, a certain Khalid of the SAUDIA office brought her to a Saudi court where
she was asked to sigh a document written in Arabic. They told her that this
was necessary to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June 27, 1993.
Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to
report to Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIA's Manila
manger, Aslam Saleemi, that the investigation was routinary and that it posed
no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same
Saudi
court
on
June
27,
1993.
Nothing happened then but on June 28, 1993, a Saudi judge interrogated
plaintiff
through
an
interpreter
about the Jakarta incident. After one hour of interrogation, they let her go. At
the
airport,
however,
just
as her plane was about to take off, a SAUDIA officer told her that the airline

The trial court has no jurisdiction to hear and try Civil Case No. Q93-18394 based on Article 21 of the New Civil Code since the proper law
applicable is the law of the Kingdom of Saudi Arabia inasmuch as this case
involves what is known in private international law as a "conflicts problem".
Otherwise, the Republic of the Philippines will sit in judgment of the acts done
by another sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence of leave of court
is now moot and academic when this Honorable Court required
the
respondents to comment on petitioner's April 30, 1996 Supplemental
Petition For Review With Prayer For A Temporary Restraining Order Within Ten
(10) Days From Notice Thereof. Further, the Revised Rules of Court should be
construed with liberality pursuant to Section 2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in
CA-G.R. SP NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz,
et al." and filed its April 30, 1996 Supplemental Petition For Review With
Prayer For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or
within the 15-day reglementary period as provided for under Section 1, Rule
45 of the Revised Rules of Court. Therefore, the decision in CA-G.R. SP NO.
36533 has not yet become final and executory and this Honorable Court can
take cognizance of this case. 33
From the foregoing factual and procedural antecedents, the
following issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO
HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED "MILAGROS P. MORADA
V. SAUDI ARABIAN AIRLINES".
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING
THAT IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that
must
be
settled
at
the
outset.
It
maintains
that
private respondent's claim for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. It alleges that the existence of a foreign element
qualifies the instant case for the application of the law of the Kingdom of
Saudi. On the other hand, private respondent contends that since her
Amended Complaint is based on Articles 19 35 and 21 36 of the Civil Code, then
the instant case is properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case, there is no
dispute that the interplay of events occurred in two states, the Philippines and
Saudi Arabia.

had
forbidden
her
to
take
that flight. At the Inflight Service Office where she was told to go, the
secretary
of
Mr.
Yahya
Saddick
took away her passport and told her to remain in Jeddah, at the crew
quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to
the same court where the judge, to her astonishment and shock, rendered a
decision, translated to her in English, sentencing her to five months
imprisonment and to 286 lashes. Only then did she realize that the Saudi
court had tried her, together with Thamer and Allah, for what happened in
Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco,
dancing, and listening to the music in violation of Islamic laws; (3) socializing
with the male crew, in contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff
sought
the
help
of
the
Philippines
Embassy in Jeddah. The latter helped her pursue an appeal from the decision
of
the
court.
To
pay
for
her upkeep, she worked on the domestic flights of defendant SAUDIA while,
ironically, Thamer and
Allah freely served the international flights. 39
Where the factual antecedents satisfactorily establish the existence
of a foreign element, we agree with petitioner that the problem herein could
present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by
the
diverse
laws
of
two
or
more
states
is
said
to
contain a "foreign element". The presence of a foreign element is inevitable
since social and economic affairs of
individuals and associations are rarely confined to the geographic
limits of their birth or conception. 40

We thus find private respondent's assertion that the case is purely

domestic, imprecise. A conflicts problem presents itself here, and the
question of jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended
Complaint, 44 and the Comment thereon, we note that she aptly predicated
her cause of action on Articles 19 and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due and observe
honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy shall
compensate the latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this
Court held that:
The aforecited provisions on human relations were intended to
expand the concept of torts in this jurisdiction by granting adequate legal
remedy for the untold number of moral wrongs which is impossible for
human foresight to specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21
gives
flesh
to
its
provisions.
Thus,
we
agree
with
private respondent's assertion that violations of Articles 19 and 21 are
actionable, with judicially enforceable
remedies in the municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the
light of the Rules of Court on jurisdiction 47 we find that the Regional Trial
Court (RTC) of Quezon City possesses jurisdiction over the subject matter of
the suit. 48 Its authority to try and hear the case is provided for under Section
1 of Republic Act No. 7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as
the "Judiciary Reorganization Act of 1980", is hereby amended to read as
follows:
Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall
exercise exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses, and cots or
the value of the property in controversy exceeds One hundred thousand
pesos (P100,000.00) or, in such other cases in Metro Manila, where the
demand, exclusive of the above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx

The forms in which this foreign element may appear are many. 41
The
foreign
element
may
simply
consist
in
the
fact
that one of the parties to a contract is an alien or has a foreign domicile, or
that a contract between nationals of one State
involves properties situated in another State. In other cases, the
foreign element may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that
private
respondent
Morada
is
a
resident
Philippine
national, and that petitioner SAUDIA is a resident foreign corporation. Also, by
virtue
of
the
employment
of
Morada
with the petitioner Saudia as a flight stewardess, events did transpire during
her
many
occasions
of
travel
across
national borders, particularly from Manila, Philippines to Jeddah, Saudi
Arabia, and vice versa, that caused a "conflicts" situation to arise.

And following Section 2 (b), Rule 4 of the Revised Rules of Court

the venue, Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now Regional Trial
Court]
(a) xxx xxx xxx
(b) Personal actions. All other actions may be commenced and
tried where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiff resides, at the election of the
plaintiff.
Pragmatic considerations, including the convenience of the parties,
also
weigh
heavily
in
favor
of
the
RTC
Quezon
City assuming jurisdiction. Paramount is the private interest of the litigant.
Enforceability
of
a
judgment
if
one
is
obtained is quite obvious. Relative advantages and obstacles to a fair trial are
equally
important.
Plaintiff
may
not,
by choice of an inconvenient forum, "vex", "harass", or "oppress" the
defendant,
e.g.
by
inflicting
upon
him
needless
expense or disturbance. But unless the balance is strongly in favor of the
defendant, the plaintiffs choice of forum
should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it
best to hear the case in the Philippines. Had it refused to take cognizance of
the case, it would be forcing plaintiff (private respondent now) to seek
remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she no
longer maintains substantial connections. That would have caused a
fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either of the parties. The
choice of forum of the plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons
of
the
parties
herein.
By
filing
her
Complaint
and Amended Complaint with the trial court, private respondent has voluntary
submitted herself to the jurisdiction ofthe court.
The records show that petitioner SAUDIA has filed several motions
50
praying for the dismissal of Morada's Amended Complaint. SAUDIA also
filed an Answer In Ex Abundante Cautelam dated February 20, 1995. What is
very patent and explicit from the motions filed, is that SAUDIA prayed for
other reliefs under the premises. Undeniably, petitioner SAUDIA has
effectively submitted to the trial court's jurisdiction by praying for the
dismissal of the Amended Complaint on grounds other than lack of
jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
We observe that the motion to dismiss filed on April 14, 1962, aside
from disputing the lower court's jurisdiction over defendant's person, prayed
for dismissal of the complaint on the ground that plaintiff's cause of action

has prescribed. By interposing such second ground in its motion to dismiss,

Ker and Co., Ltd. availed of an affirmative defense on the basis of
which it prayed the court to resolve controversy in its favor. For the court
to validly decide the said plea of defendant Ker & Co., Ltd., it necessarily had
to acquire jurisdiction upon the latter's person, who, being the
proponent of the affirmative defense, should be deemed to have abandoned
its special appearance and voluntarily submitted itself to the jurisdiction of
the court.
Similarly, the case of De Midgely vs. Ferandos, held that;
When the appearance is by motion for the purpose of objecting to
the
jurisdiction
of
the
court
over
the
person, it must be for the sole and separate purpose of objecting to the
jurisdiction
of
the
court.
If
his
motion is for any other purpose than to object to the jurisdiction of the court
over
his
person,
he
thereby
submits himself to the jurisdiction of the court. A special appearance by
motion
made
for
the
purpose
of
objecting to the jurisdiction of the court over the person will be held to be a
general
appearance,
if
the
party in said motion should, for example, ask for a dismissal of the action
upon the further ground that
the court had no jurisdiction over the subject matter. 52
Clearly, petitioner had submitted to the jurisdiction of the Regional
Trial Court of Quezon City. Thus, we find that the trial court has jurisdiction
over the case and that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law
problems
seek
to
answer
two
important
questions:
(1)
What legal system should control a given situation where some of the
significant facts occurred in two or more
states; and (2) to what extent should the chosen legal system
regulate the situation. 53
Several theories have been propounded in order to identify the
legal
system
that
should
ultimately
control.
Although
ideally, all choice-of-law theories should intrinsically advance both notions of
justice
and
predictability,
they
do
not
always do so. The forum is then faced with the problem of deciding which of
these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine
under
what
category
a
certain
set
of
facts
or
rules
fall. This process is known as "characterization", or the "doctrine of
qualification". It is the "process of deciding whether or not the facts relate to
the kind of question specified in a conflicts rule." 55 The purpose of
"characterization" is to enable the forum to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a
factual situation, event, or operative fact. 57 An essential element of conflict

rules is the indication of a "test" or "connecting factor" or "point of contact".

Choice-of-law
rules
invariably consist of a factual relationship (such as property right, contract
claim) and a connecting factor or point of contact, such as the situs of the res,
the place of celebration, the place of performance, or the place of
wrongdoing. 58
Note that one or more circumstances may be present to serve as
the possible test for the determination of the applicable law. 59 These "test
factors" or "points of contact" or "connecting factors" could be any of the
following:
(1) The nationality of a person, his domicile, his residence, his place
of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is
deemed to be situated. In particular, the lex situs is decisive when real rights
are involved;
(4) the place where an act has been done, the locus actus, such as
the place where a contract has been made, a marriage celebrated, a will
signed or a tort committed. The lex loci actus is particularly important in
contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the
place of performance of contractual duties, or the place where a power of
attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should
govern their agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are
instituted
or
done.
The
lex
fori

the
law
of the forum is particularly important because, as we have seen earlier,
matters of "procedure" not
going to the substance of the claim involved are governed by it;
and
because
the
lex
fori
applies
whenever the content of the otherwise applicable foreign law is excluded
from application in a given case for the reason that it falls under one of the
exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically
all
legal
relationships
of
the
ship
and of its master or owner as such. It also covers contractual relationships
particularly contracts of affreightment. 60 (Emphasis ours.)
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed admitted for purposes of the
motion to dismiss, we are convinced that there is reasonable basis for private
respondent's assertion that although she was already working in Manila,
petitioner brought her to Jeddah on the pretense that she would merely testify
in an investigation of the charges she made against the two SAUDIA crew
members for the attack on her person while they were in Jakarta. As it turned

out, she was the one made to face trial for very serious charges, including
adultery and violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the
"handing over" or "turning over" of the person of private respondent to
Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioner's purported act contributed to and amplified or even
proximately caused additional humiliation, misery and suffering of private
respondent. Petitioner thereby allegedly facilitated the arrest, detention
and prosecution of private respondent under the guise of petitioner's
authority as employer, taking advantage of the trust, confidence and faith
she reposed upon it. As purportedly found by the Prince of Makkah, the
alleged conviction and imprisonment of private respondent was wrongful. But
these capped the injury or harm allegedly inflicted upon her person and
reputation, for which petitioner could be liable as claimed, to provide
compensation
or
redress
for
the
wrongs
done,
once duly proven.
Considering that the complaint in the court a quo is one involving
torts,
the
"connecting
factor"
or
"point
of
contact"
could be the place or places where the tortious conduct or lex loci actus
occurred. And applying the torts principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort (the place where the alleged
tortious conduct took place). This is because it is in the Philippines where
petitioner allegedly deceived private respondent, a Filipina residing and
working here. According to her, she had honestly believed that petitioner
would, in the exercise of its rights and in the performance of its duties, "act
with justice, give her due and observe honesty and good faith." Instead,
petitioner failed to protect her, she claimed. That certain acts or parts of the
injury allegedly occurred in another country is of no moment. For in our view
what is important here is the place where the over-all harm or the totality of
the alleged injury to the person, reputation, social standing and human rights
of complainant, had lodged, according to the plaintiff below (herein private
respondent). All told, it is not without basis toidentify the Philippines as the
situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex
loci delicti commissi, modern theories and rules on tort liability 61 have been
advanced to offer fresh judicial approaches to arrive at just results. In keeping
abreast with the modern theories on tort liability, we find here an occasion to
apply the "State of the most significant relationship" rule, which in our view
should be appropriate to apply now, given the factual context of this case.
In applying said principle to determine the State which has the
most
significant
relationship,
the
following
contacts
are to be taken into account and evaluated according to their relative
importance with respect to the particular issue:
(a) the place where the injury occurred; (b) the place where
the
conduct
causing
the
injury
occurred;
(c)
the

domicile, residence, nationality, place of incorporation and place of business

of the parties, and (d) the place where
the relationship, if any, between the parties is centered. 62
As already discussed, there is basis for the claim that over-all injury
occurred
and
lodged
in
the
Philippines.
There
is
likewise no question that private respondent is a resident Filipina national,
working
with
petitioner,
a
resident
foreign
corporation engaged here in the business of international air carriage. Thus,
the
"relationship"
between
the
parties
was centered here, although it should be stressed that this suit is not based
on mere labor law violations. From the
record, the claim that the Philippines has the most significant
contact with the matter in this dispute, 63 raised by private respondent as
plaintiff below against defendant (herein petitioner), in our view, has been
properly established.
Prescinding from this premise that the Philippines is the situs of the
tort
complained
of
and
the
place
"having
the
most interest in the problem", we find, by way of recapitulation, that the
Philippine law on tort liability should have paramount application to and
control in the resolution of the legal issues arising out of this case. Further, we
hold that the respondent Regional Trial Court has jurisdiction over the parties
and the subject matter of the complaint; the appropriate venue is in
Quezon City, which could properly apply Philippine law. Moreover, we
find
untenable
petitioner's insistence that "[s]ince private respondent instituted this suit, she
has the burden of pleading and proving the applicable Saudi law on the
matter." 64 As aptly said by private respondent, she has "no obligation to
plead
and
prove
the law of the Kingdom of Saudi Arabia since her cause of action is based on
Articles 19 and 21" of the Civil Code of the Philippines. In her Amended
Complaint and subsequent pleadings, she never alleged that Saudi law should
govern this case. And as correctly held by the respondent appellate court,
"considering that it was the petitioner who was invoking the applicability of
the law of Saudi Arabia, then the burden was on it [petitioner] to plead and to
establish what the law of Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent appellate court
in
upholding
the
trial
court's
denial
of
defendant's
(herein petitioner's) motion to dismiss the case. Not only was jurisdiction in
order and venue properly laid, but appeal after trial was obviously available,
and expeditious trial itself indicated by the nature of the case at hand.
Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below, not just forthe benefit of all the litigants, but also
for the vindication of the country's system of law and justice in a
transnational setting. With these guidelines in mind, the trial court must
proceed to try and adjudge the case in the light of relevant Philippine law,

with due consideration of the foreign element or elements involved. Nothing

said herein, of course, should be construed as prejudging the results of the
case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED.
Civil Case No. Q-93-18394 entitled "Milagros
P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to
Regional Trial Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.

Christensen. The will was executed in Manila on March 5, 1951 and contains
the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the Philippines
about twenty-eight years ago, and who is now residing at No. 665 Rodger
Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no
descendants except my above named daughter, MARIA LUCY CHRISTENSEN
DANEY.
x
x
x
x

xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN,
now married to Eduardo Garcia, about eighteen years of age and who,
notwithstanding the fact that she was baptized Christensen, is not in any way
related to me, nor has she been at any time adopted by me, and who, from all
information I have now resides in Egpit, Digos, Davao, Philippines, the sum of
THREE THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine Currency the
same to be deposited in trust for the said Maria Helen Christensen with the
Davao Branch of the Philippine National Bank, and paid to her at the
rate
of
One
Hundred
Pesos
(P100.00),
Philippine Currency per month until the principal thereof as well as any
interest which may have accrued thereon, is exhausted..
x
x
x

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-16749
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E.
CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir
of
the
deceased,
Executor
and
Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositorappellant.
LABRADOR, J.:

xxx
12. I hereby give, devise and bequeath, unto my well-beloved
daughter,
the
said
MARIA
LUCY
CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No.
665
Rodger
Young
Village,
Los Angeles, California, U.S.A., all the income from the rest, remainder, and
residue
of
my
property
and
estate, real, personal and/or mixed, of whatsoever kind or character, and
wheresoever
situated,
of
which
I
may be possessed at my death and which may have come to me from any
source
whatsoever,
during
her
lifetime: ...
It is in accordance with the above-quoted provisions that the
executor in his final account and project of partition ratified the payment of

This is an appeal from a decision of the Court of First Instance of

Davao, Hon. Vicente N. Cusi, Jr., presiding, in Special Proceeding No. 622 of
said court, dated September 14, 1949, approving among things the final
accounts of the executor, directing the executor to reimburse Maria Lucy
Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as
her legacy, and declaring Maria Lucy Christensen entitled to the residue of
the property to be enjoyed during her lifetime, and in case of death without
issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton,
etc., in accordance with the provisions of the will of the testator Edward E.

only P3,600 to Helen Christensen Garcia and proposed that the residue of the
estate be transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by
Helen
Christensen
Garcia,
insofar
as
it
deprives
her
(Helen) of her legitime as an acknowledged natural child, she having been
declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the
deceased Edward E. Christensen. The legal grounds of opposition are (a) that
the distribution should be governed by the laws of the Philippines, and (b)
that said order of distribution is contrary thereto insofar as it denies to Helen
Christensen, one of two acknowledged natural children, one-half of the estate
in
full ownership. In amplification of the above grounds it was alleged that the
law that should govern the estate of the deceased Christensen should not be
the internal law of California alone, but the entire law thereof because several
foreign elements are involved, that the forum is the Philippines and even if
the case were decided in California, Section 946 of the California Civil Code,
which requires that the domicile of the decedent should apply, should be
applicable. It was also alleged that Maria Helen Christensen having been
declared an acknowledged natural child of the decedent, she is deemed for all
purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen
of the United States and of the State of California at the time of his death, the
successional rights and intrinsic validity of the provisions in his will are to be
governed by the law of California, in accordance with which a testator has the
right to dispose of his property in the way he desires, because the right of
absolute dominion over his property is sacred and inviolable (In re McDaniel's
Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117 Cal. 286,
49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but
these were denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL
CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER
OF HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING
TO RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL
LAW,
PARTICULARLY
UNDER
THE
RENVOI
DOCTRINE,
THE
INTRINSIC
VALIDITY
OF
THE

TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE

DECEASED
EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE
PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE
SCHEDULE OF DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY
TO THE PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE
PHILIPPINE
LAWS
HELEN
CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN
FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the
United States and of the State of California at the time of his death. But there
is also no question that at the time of his death he was domiciled in the
Philippines, as witness the following facts admitted by the executor himself in
appellee's brief:
In the proceedings for admission of the will to probate, the facts of
record
show
that
the
deceased
Edward
E.
Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his
first
arrival
in
the
Philippines,
as an appointed school teacher, was on July 1, 1901, on board the U.S. Army
Transport
"Sheridan"
with
Port
of Embarkation as the City of San Francisco, in the State of California, U.S.A.
He
stayed
in
the
Philippines
until 1904.
In December, 1904, Mr. Christensen returned to the United States
and stayed there for the following nine years until 1913, during which time he
resided in, and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the
year
1913.
However,
in
1928,
he
again
departed the Philippines for the United States and came back here the
following
year,
1929.
Some
nine
years
later, in 1938, he again returned to his own country, and came back to the
Philippines
the
following
year,
1939.
Wherefore, the parties respectfully pray that the foregoing
stipulation of facts be admitted and approved by this Honorable Court,
without prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the
Japanese Military Forces in the Philippines during World War II. Upon
liberation, in April 1945, he left for the United States but returned to the
Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao,

Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l",
"MM-2-Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to
California shortly after the making of his last will and testament (now in
question herein) which he executed at his lawyers' offices in Manila on March
5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30,
1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the
Philippines, we are persuaded by the fact that he was born in New York,
migrated to California and resided there for nine years, and since he came to
the Philippines in 1913 he returned to California very rarely and only for
short visits (perhaps to relatives), and considering that he appears never
to have owned or acquired a home or properties in that state, which would
indicate that he would ultimately abandon the Philippines and make home in
the State of California.
Sec. 16. Residence is a term used with many shades of meaning
from mere temporary presence to the most permanent abode. Generally,
however, it is used to denote something more than mere physical presence.
(Goodrich on Conflict of Laws, p. 29)
As to his citizenship, however, We find that the citizenship
that he acquired in California when he resided in Sacramento, California
from 1904 to 1913, was never lost by his stay in the Philippines, for the latter
was a territory of the United States (not a state) until 1946 and the deceased
appears to have considered himself as a citizen of California by the fact that
when he executed his will in 1951 he declared that he was a citizen of that
State; so that he appears never to have intended to abandon his California
citizenship by acquiring another. This conclusion is in accordance with the
following principle expounded by Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean
the same thing, a place of permanent abode. But domicile, as has been
shown, has acquired a technical meaning. Thus one may be domiciled in a
place where he has never been. And he may reside in a place where he has
no domicile. The man with two homes, between which he divides his time,
certainly resides in each one, while living in it. But ifhe went on business
which would require his presence for several weeks or months, he might
properly be said to have sufficient connection with the place to be called
a
resident.
It
is
clear,
however,
that,
if
he
treated
his
settlement as continuing only for the particular business in hand, not giving
up his former "home," he could not be a domiciled New Yorker. Acquisition of
a domicile of choice requires the exercise of intention as well as physical
presence. "Residence simply requires bodily presence of an inhabitant in
a given place, while domicile requires bodily presence in that place and also
an intention to make it one's domicile." Residence, however, is a term used
with many shades of meaning, from the merest temporary presence to the
most

permanent abode, and it is not safe to insist that any one use et the only
proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is
defined in Article 16 of the Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the
law of the country where it is situated.
However, intestate and testamentary successions, both with
respect to the order of succession and to the amount of successional rights
and to the intrinsic validity of testamentary provisions, shall be regulated by
the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
where said property may be found.
The application of this article in the case at bar requires the
determination of the meaning of the term "national law" is used therein.
There is no single American law governing the validity of
testamentary provisions in the United States, each state of the Union having
its own private law applicable to its citizens only and in force only within the
state. The "national law" indicated in Article 16 of the Civil Code above
quoted can not, therefore, possibly mean or apply to any general American
law. So it can refer to no other than the private law of the State of California.
The next question is: What is the law in California governing the
disposition
of
personal
property?
The
decision
of
the court below, sustains the contention of the executor-appellee that under
the
California
Probate
Code,
a
testator
may dispose of his property by will in the form and manner he desires, citing
the
case
of
Estate
of
McDaniel,
77
Cal.
Appl. 2d 877, 176 P. 2d 952. But appellant invokes the provisions of Article
946
of
the
Civil
Code
of
California,
which
is as follows:
If there is no law to the contrary, in the place where personal
property is situated, it is deemed to follow the person of its owner, and is
governed by the law of his domicile.
The existence of this provision is alleged in appellant's opposition
and is not denied. We have checked it in the California Civil Code and it is
there. Appellee, on the other hand, relies on the case cited in the decision and
testified
to by a witness. (Only the case of Kaufman is correctly cited.) It is argued on
executor's behalf that as the deceased Christensen was a citizen of the State
of California, the internal law thereof, which is that given in the abovecited
case, should govern the determination of the validity of the testamentary
provisions of Christensen's will, such law being in force in the State of
California of which Christensen was a citizen. Appellant, on the other hand,
insists that Article 946 should be applicable, and in accordance therewith and
following
the
doctrine
of
the
renvoi,
the
question
of the validity of the testamentary provision in question should be

10

referred back to the law of the decedent's domicile, which is the

Philippines.
The theory of doctrine of renvoi has been defined by various
authors, thus:
The problem has been stated in this way: "When the Conflict of
Laws rule of the forum refers a jural matter to a foreign law for decision, is the
reference to the purely internal rules of law of the foreign system; i.e., to the
totality of the foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose
to accept the renvoi, that is, applied the Conflict of Laws rule of Illinois which
referred the matter back to Michigan law. But once having determined the the
Conflict of Laws principle is the rule looked to, it is difficult to see why the
reference back should not have been to Michigan Conflict of Laws. This would
have resulted in the "endless chain of references" which has so often been
criticized be legal writers. The opponents of the renvoi would have looked
merely to the internal law of Illinois, thus rejecting the renvoi or the reference
back. Yet there seems no compelling logical reason why the original reference
should be the internal law rather than to the Conflict of Laws rule. It is true
that such a solution avoids going on a merry-go-round, but those who have
accepted the renvoi theory avoid this inextricabilis circulas by getting off
at the second reference and at that point applying internal law. Perhaps
the opponents of the renvoi are a bit more consistent for they look always to
internal
law
as
the
rule
of reference.
Strangely enough, both the advocates for and the objectors to the
renvoi plead that greater uniformity will result from adoption of their
respective views. And still more strange is the fact that the only way to
achieve uniformity in this choice-of-law problem is if in the dispute the two
states whose laws form the legal basis of the litigation disagree as to whether
the renvoi should be accepted. If both reject, or both accept the doctrine, the
result of the litigation will vary with the choice of the forum. In the case
stated above, had the Michigan court rejected the renvoi, judgment would
have been against the woman; if the suit had been brought in the
Illinois courts, and they too rejected the renvoi, judgment would be for the
woman. The same result would happen, though the courts would switch with
respect to which would hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where
the title to land is in question, and where the validity of a decree of divorce is
challenged. In these cases the Conflict of Laws rule of the situs of the land, or
the domicile of the parties in the divorce case, is applied by the forum, but
any further reference goes only to the internal law. Thus, a person's title to
land, recognized by the situs, will be recognized by every court; and every
divorce, valid by the domicile of the parties, will be valid everywhere.
(Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)

X, a citizen of Massachusetts, dies intestate, domiciled in

France, leaving movable property in Massachusetts, England, and France.
The question arises as to how this property is to be distributed among X's
next of kin.
Assume (1) that this question arises in a Massachusetts court.
There the rule of the conflict of laws as to intestate succession to movables
calls for an application of the law of the deceased's last domicile. Since by
hypothesis X's last domicile was France, the natural thing for the
Massachusetts court to do would be to turn to French statute of distributions,
or whatever corresponds thereto in French law, and decree a distribution
accordingly. An examination of French law, however, would show that if a
French court were called upon to determine how this property should be
distributed, it would refer the distribution to the national law of the deceased,
thus applying the Massachusetts statute of distributions. So on the
surface of things the Massachusetts court has open to it alternative course
of action: (a) either to apply the French law is to intestate succession, or (b)
to resolve itself into a French court and apply the Massachusetts statute of
distributions, on the assumption that this is what a French court would do. If it
accepts the so-called renvoi doctrine, it will follow the latter course, thus
applying its own law.
This is one type of renvoi. A jural matter is presented which the
conflict-of-laws rule of the forum refers to a foreign law, the conflict-of-laws
rule of which, in turn, refers the matter back again to the law of the forum.
This is renvoi in the narrower sense. The German term for this judicial process
is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
After a decision has been arrived at that a foreign law is to be
resorted to as governing a particular case, the further question may arise: Are
the rules as to the conflict of laws contained in such foreign law also to be
resorted to? This is a question which, while it has been considered by the
courts in but a few instances, has been the subject of frequent discussion by
textwriters and essayists; and the doctrine involved has been descriptively
designated by them as the "Renvoyer" to send back, or the
"Ruchversweisung", or the "Weiterverweisung", since an affirmative answer
to the question postulated and the operation of the adoption of the foreign
law in toto would in many cases result in returning the main
controversy to be decided according to the law of the forum. ... (16 C.J.S.
872.)
Another theory, known as the "doctrine of renvoi", has been
advanced. The theory of the doctrine of renvoi is that the court of the forum,
in determining the question before it, must take into account the whole law of
the other jurisdiction, but also its rules as to conflict of laws, and then apply
the law to the actual question which the rules of the other jurisdiction
prescribe. This may be the law of the forum. The doctrine of the renvoi has
generally been repudiated by the American authorities. (2 Am. Jur. 296)

11

The scope of the theory of renvoi has also been defined and the
reasons for its application in a country explained by Prof. Lorenzen in an
article in the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent
parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the
conflict of laws are to be understood as incorporating not only the ordinary or
internal law of the foreign state or country, but its rules of the conflict of laws
as well. According to this theory 'the law of a country' means the whole of its
law.
Von Bar presented his views at the meeting of the Institute of
International Law, at Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the
application of foreign laws.
(2) Provided that no express provision to the contrary exists, the
court shall respect:
(a) The provisions of a foreign law which disclaims the right to bind
its nationals abroad as regards their personal statute, and desires that said
personal statute shall be determined by the law of the domicile, or even by
the law of the place where the act in question occurred.
(b) The decision of two or more foreign systems of law, provided it
be
certain
that
one
of
them
is
necessarily competent, which agree in attributing the determination of a
question
to
the
same
system
of
law.
x
x
x
x

law should govern in most matters or rights which follow the person of the
owner.
When a man dies leaving personal property in one or more states,
and leaves a will directing the manner of distribution of the property, the law
of the state where he was domiciled at the time of his death will be looked to
in deciding legal questions about the will, almost as completely as the law of
situs is consulted in questions about the devise of land. It is logical that, since
the domiciliary rules control devolution of the personal estate
in case of intestate succession, the same rules should determine the validity
of an attempted testamentary dispostion of the property. Here, also, it is not
that the domiciliary has effect beyond the borders of the domiciliary state.
The rules of the domicile are recognized as controlling by the Conflict of Laws
rules at the situs property, and the reason for the recognition as in the case of
intestate succession, is the general convenience of the doctrine. The New
York court has said on the point: 'The general principle that a
dispostiton of a personal property, valid at the domicile of the owner, is valid
anywhere,
is
one
of
the
universal
application. It had its origin in that international comity which was one of the
first
fruits
of
civilization,
and
it
this
age, when business intercourse and the process of accumulating property
take
but
little
notice
of
boundary
lines, the practical wisdom and justice of the rule is more apparent than ever.
(Goodrich,
Conflict
of
Laws,
Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the
Philippines pointed out as the national law is the internal law of California. But
as above explained the laws of California have prescribed two sets of laws for
its citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal
law prescribed for its citizens residing therein, and enforce the conflict of laws
rules for the citizens domiciled abroad. If we must enforce the law of
California as in comity we are bound to go, as so declared in Article 16 of our
Civil Code, then we must enforce the law of California in accordance with the
express mandate thereof and as above explained, i.e., apply the internal law
for
residents
therein,
and
its
conflict-oflaws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to
the contrary in the place where the property is situated" in Sec. 946 of the
California Civil Code refers to Article 16 of the Civil Code of the Philippines
and that the law to the contrary in the Philippines is the provision in said
Article 16 that the national law of the deceased should govern. This
contention can not be sustained. As explained in the various authorities cited
above the national law mentioned in Article 16 of our Civil Code is the law on
conflict of laws in the California Civil Code,i.e., Article 946, which authorizes
the reference or return of the question to the law of the testator's domicile.

xxx
If, for example, the English law directs its judge to distribute the
personal estate of an Englishman who has died domiciled in Belgium in
accordance with the law of his domicile, he must first inquire whether the law
of Belgium would distribute personal property upon death in accordance with
the law of domicile, and if he finds that the Belgian law would make the
distribution in accordance with the law of nationality that is the English law
he must accept this reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of
laws rule, while the rule applied in In re Kaufman, Supra, its internal law. If the
law on succession and the conflict of laws rules of California are to be
enforced jointly, each in its own intended and appropriate sphere, the
principle cited In re Kaufman should apply to citizens living in the State, but
Article 946 should apply to such of its citizens as are not domiciled in
California but in other jurisdictions. The rule laid down of resorting to the law
of the domicile in the determination of matters with foreign element involved
is in accord with the general principle of American law that the domiciliary

12

The conflict of laws rule in California, Article 946, Civil Code, precisely refers
back the case, when a decedent is not domiciled in California, to the law of
his domicile, the Philippines in the case at bar. The court of the domicile can
not and should not refer the case back to California; such action would leave
the issue incapable of determination because the case will then be like a
football, tossed back and forth between the two states, between the country
of which the decedent was a citizen and the country of his domicile. The
Philippine court must apply its own law as directed in the conflict of laws rule
of the state of the decedent, if the question has to be decided, especially as
the
application
of
the
internal
law
of
California provides no legitime for children while the Philippine law,
Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children
legally acknowledged forced heirs of the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs.
Palmaroli,
40
Phil.
105;
Miciano
vs.
Brimo,
50
Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs.
Government, 59 Phil. 293.) cited by appellees to support the decision can not
possibly apply in the case at bar, for two important reasons, i.e., the subject
in each case does not appear to be a citizen of a state in the United States
but with domicile in the Philippines, and it does not appear in each case that
there exists in the state of which the subject is a citizen, a law similar to or
identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen,
a
citizen
of
California,
is
the
Philippines,
the
validity of the provisions of his will depriving his acknowledged natural child,
the
appellant,
should
be
governed
by
the Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code of
California,
not
by
the
internal
law
of
California..
WHEREFORE, the decision appealed from is hereby reversed
and the case returned to the lower court with instructions that the
partition be made as the Philippine law on succession provides. Judgment
reversed, with costs against appellees.
Padilla, Bautista Angelo, Concepcion, Reyes, Barrera, Paredes,
Dizon, Regala and Makalintal, JJ., concur. Bengzon, C.J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-35694December 23, 1933
ALLISON
G.
GIBBS,
petitioner-appelle,
vs.
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositorappellant.
THE REGISTER OF DEEDS OF THE CITY OF MANILA,
respondent-appellant.
Office of the Solicitor-General Hilado for appellants.
Allison D. Gibbs in his own behalf.

BUTTE, J.:
This is an appeal from a final order of the Court of First Instance of
Manila, requiring the register of deeds of the City of Manila to cancel
certificates of title Nos. 20880, 28336 and 28331, covering lands located in
the City of Manila, Philippine Islands, and issue in lieu thereof new certificates
of transfer of title in favor of Allison D. Gibbs without requiring him to present
any document showing that the succession tax due under Article XI of
Chapter 40 of the Administrative Code has been paid.
The said order of the court of March 10, 1931, recites that the
parcels of land covered by said certificates of title formerly belonged to the
conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs; that the latter
died intestate in Palo Alto, California, on November 28, 1929; that at the time
of her death she and her husband were citizens of the State of California and
domiciled therein.
It appears further from said order that Allison D. Gibbs was
appointed administrator of the state of his said deceased wife in case No.
36795 in the same court, entitled "In the Matter of the Intestate Estate of Eva
Johnson
Gibbs,
Deceased"; that in said intestate proceedings, the said Allison D. Gibbs, on
September 22,1930, filed an ex parte petition in which he alleged "that the
parcels of land hereunder described belong to the conjugal partnership of
your petitioner and his wife, Eva Johnson Gibbs", describing in detail the three
facts here involved; and further alleging that his said wife, a citizen and
resident of California, died on November 28,1929; that in accordance with the

13

law
of
California, the community property of spouses who are citizens of California,
upon the death of the wife previous to that of the husband, belongs
absolutely to the surviving husband without administration; that the
conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs, deceased,
has no obligations or debts and no one will be prejudiced by adjucating said
parcels of land (and seventeen others not here involved) to be the absolute
property
of
the said Allison D. Gibbs as sole owner. The court granted said petition and on
September 22, 1930, entered a decree adjucating the said Allison D. Gibbs to
be the sole and absolute owner of said lands, applying section 1401
of the Civil Code of California. Gibbs presented this decree to the register of
deeds
of
Manila
and
demanded
that
the
latter issue to him a "transfer certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code
provides in part that:
Registers of deeds shall not register in the registry of property any
document transferring real property or real rights therein or any chattel
mortgage, by way of gifts mortis causa, legacy or inheritance, unless the
payment of the tax fixed in this article and actually due thereon shall be
shown. And they shall immediately notify the Collector of Internal Revenue
or the corresponding provincial treasurer of the non payment of the tax
discovered by them. . .
Acting upon the authority of said section, the register of deeds of
the City of Manila, declined to accept as binding said decree of court of
September 22,1930, and refused to register the transfer of title of the said
conjugal property to Allison D. Gibbs, on the ground that the corresponding
inheritance tax had not been paid. Thereupon, under date of December 26,
1930, Allison D. Gibbs filed in the said court a petition for an order requiring
the said register of deeds "to issue the corresponding titles" to the petitioner
without requiring previous payment of any inheritance tax. After due hearing
of the parties, the court reaffirmed said order of September 22, 1930, and
entered the order of March 10, 1931, which is under review on this appeal.
On January 3, 1933, this court remanded the case to the court of
origin
for
new
trial
upon
additional
evidence
in
regard to the pertinent law of California in force at the time of the
death
of
Mrs.
Gibbs,
also
authorizing
the
introduction of evidence with reference to the dates of the acquisition of the
property
involved
in
this
suit
and
with
reference to the California law in force at the time of such acquisition.
The case is now before us with the supplementary evidence.
For the purposes of this case, we shall consider the following facts
as established by the evidence or the admissions of the parties: Allison D.
Gibbs has been continuously, since the year 1902, a citizen of the State of
California and domiciled therein; that he and Eva Johnson Gibbs were married

at Columbus, Ohio, in July 1906; that there was no antenuptial marriage

contract between the parties; that during the existence of said marriage the
spouses acquired the following lands, among others, in the Philippine Islands,
as conjugal property:lawphil.net
1. A parcel of land in the City of Manila represented by transfer
certificate of title No. 20880, dated March 16, 1920, and registered in the
name of "Allison D. Gibbs casado con Eva Johnson Gibbs".
2. A parcel of land in the City of Manila, represented by transfer
certificate of title No. 28336, dated May 14, 1927, in which it is certified "that
spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners in fee simple"
of the land therein described.
3. A parcel of land in the City of Manila, represented by transfer
certificate of title No. 28331, dated April 6, 1927, which it states "that Allison
D. Gibbs married to Eva Johnson Gibbs" is the owner of the land described
therein; that said Eva Johnson Gibbs died intestate on November 28, 1929,
living surviving her her husband, the appellee, and two sons, Allison J. Gibbs ,
now age 25 and Finley J. Gibbs, now aged 22, as her sole heirs of law.
Article XI of Chapter 40 of the Administrative Code entitled "Tax on
inheritances,
legacies
and
other
acquisitions
mortis causa" provides in section 1536 that "Every transmission by virtue of
inheritance
...
of
real
property
...
shall
be
subject to the following tax." It results that the question for determination in
this
case
is
as
follows:
Was
Eva
Johnson
Gibbs at the time of her death the owner of a descendible interest in the
Philippine lands above-mentioned?
The appellee contends that the law of California should determine
the nature and extent of the title, if any, that vested in Eva Johnson Gibbs
under the three certificates of title Nos. 20880, 28336 and 28331 above
referred to, citing article 9 of the Civil Code. But that, even if the nature and
extent of her title under said certificates be governed by the law of the
Philippine Islands, the laws of California govern the succession to such title,
citing the second paragraph of article 10 of the Civil Code.
Article 9 of the Civil Code is as follows:
The laws relating to family rights and duties, or to the status,
condition, and legal capacity of persons, are binding upon Spaniards even
though they reside in a foreign country." It is argued that the conjugal right of
the California wife in community real estate in the Philippine Islands is a
personal right and must, therefore, be settled by the law governing her
personal status, that is, the law of California. But our attention has not been
called to any law of California that incapacitates a married woman from
acquiring or holding land in a foreign jurisdiction in accordance with the lex
rei sitae. There is not the slightest doubt that a California married woman can
acquire title to land in a common law jurisdiction like the State of Illinois or
the District of Columbia, subject to the common-law estate by the courtesy
which would vest in her husband. Nor is there any doubt that if a California

14

husband acquired land in such a jurisdiction his wife would be vested with the
common law right of dower, the prerequisite conditions obtaining. Article 9 of
the Civil Code treats of purely personal relations and status and capacity for
juristic acts, the rules relating to property, both personal and real, being
governed by article 10 of the Civil Code. Furthermore, article 9, by its very
terms, is applicable only to "Spaniards" (now, by construction, to citizens of
the Philippine Islands).
The Organic Act of the Philippine Islands (Act of Congress, August
29, 1916, known as the "Jones Law") as regards the determination of private
rights, grants practical autonomy to the Government of the Philippine Islands.
This Government, therefore, may apply the principles and rules of private
international law (conflicts of laws) on the same footing as an organized
territory or state of the United States. We should, therefore, resort to the law
of California, the nationality and domicile of Mrs. Gibbs, to ascertain the norm
which would be applied here as law were there any question as to her status.
But the appellant's chief argument and the sole basis of the lower
court's decision rests upon the second paragraph of article 10 of the Civil
Code which is as follows:
Nevertheless, legal and testamentary successions, in respect to the
order of succession as well as to the amount of the successional rights and
the intrinsic validity of their provisions, shall be regulated by the national law
of the person whose succession is in question, whatever may be the nature of
the property or the country in which it may be situated.
In construing the above language we are met at the outset with
some difficulty by the expression "the national law of the person whose
succession is in question", by reason of the rather anomalous political status
of the Philippine Islands. (Cf. Manresa, vol. 1, Codigo Civil, pp. 103, 104.) We
encountered no difficulty in applying article 10 in the case of a citizen of
Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to the practical
autonomy of the Philippine Islands, as above stated, we have concluded that
if article 10 is applicable and the estate in question is that of a deceased
American citizen, the succession shall be regulated in accordance with the
norms of the State of his domicile in the United States. (Cf. Babcock
Templeton vs. Rider Babcock, 52 Phil., 130, 137; In re Estate of Johnson, 39
Phil., 156, 166.)
The trial court found that under the law of California, upon the
death
of
the
wife,
the
entire
community
property
without administration belongs to the surviving husband; that he is the
absolute
owner
of
all
the
community
property
from the moment of the death of his wife, not by virtue of succession or by
virtue of her death, but by virtue of the

or expentancy which is extinguished upon her death. Quoting the case of

Estate of Klumpke (167 Cal., 415, 419), the court said: "The decisions under
this section (1401 Civil Code of California) are uniform to the effect that the
husband does not take the community property upon the death of the wife by
succession, but that he holds it all from the moment of her death as though
required by himself. ... It never belonged to the estate of the deceased
wife."
The argument of the appellee apparently leads to this dilemma: If
he takes nothing by succession from his deceased wife, how can the second
paragraph of article 10 be invoked? Can the appellee be heard to say that
there is a legal succession under the law of the Philippine Islands and no legal
succession under the law of California? It seems clear that the second
paragraph of article 10 applies only when a legal or testamentary succession
has taken place in the Philippines and in accordance with the law of the
Philippine Islands; and the foreign law is consulted only in regard to the order
of succession or the extent of the successional rights; in other words, the
second paragraph of article 10 can be invoked only when the deceased was
vested with a descendible interest in property within the jurisdiction of the
Philippine Islands.
In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law ed.,
1028, 1031), the court said:
It is principle firmly established that to the law of the state in which
the land is situated we must look for the rules which govern its descent,
alienation, and transfer, and for the effect and construction of wills and other
conveyances. (United States vs. Crosby, 7 Cranch, 115; 3 L. ed., 287; Clark
vs. Graham, 6 Wheat., 577; 5 L. ed., 334; McGoon vs. Scales, 9 Wall., 23; 19
L. ed., 545; Brine vs. Hartford F. Ins. Co., 96 U. S., 627; 24 L. ed., 858.)" (See
also Estate of Lloyd, 175 Cal., 704, 705.) This fundamental principle is
stated in the first paragraph of article 10 of our Civil Code as follows:
"Personal property is subject to the laws of the nation of the owner thereof;
real property to the laws of the country in which it is situated.
It is stated in 5 Cal. Jur., 478:
In accord with the rule that real property is subject to the lex rei
sitae, the respective rights of husband and wife in such property, in the
absence of an antenuptial contract, are determined by the law of the place
where the property is situated, irrespective of the domicile of the parties or to
the place where the marriage was celebrated. (See also Saul vs. His Creditors,
5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.]; Heidenheimer vs. Loring, 26 S.
W., 99 [Texas].)
Under this broad principle, the nature and extent of the title which
vested in Mrs. Gibbs at the time of the acquisition of the community lands
here in question must be determined in accordance with the lex rei sitae.
It is admitted that the Philippine lands here in question were
acquired as community property of the conjugal partnership of the appellee

fact that when the death of the wife precedes that of the husband
he acquires the community property, not as an heir or as the beneficiary of
his deceased wife, but because she never had more than an inchoate interest

15

and his wife. Under the law of the Philippine Islands, she was vested of a title
equal to that of her husband. Article 1407 of the Civil Code provides:
All the property of the spouses shall be deemed partnership
property in the absence of proof that it belongs exclusively to the husband or
to the wife. Article 1395 provides:
"The conjugal partnership shall be governed by the rules of law
applicable
to
the
contract
of
partnership
in
all
matters in which such rules do not conflict with the express provisions of this
chapter."
Article
1414
provides
that
"the husband may dispose by will of his half only of the property of the
conjugal
partnership."
Article
1426
provides
that upon dissolution of the conjugal partnership and after inventory and
liquidation,
"the
net
remainder
of
the
partnership property shall be divided share and share alike between the
husband
and
wife,
or
their
respective
heirs."
Under the provisions of the Civil Code and the jurisprudence prevailing here,
the
wife,
upon
the
acquisition
of
any
conjugal property, becomes immediately vested with an interest and title
therein
equal
to
that
of
her
husband,
subject to the power of management and disposition which the law vests in
the
husband.
Immediately
upon
her
death, if there are no obligations of the decedent, as is true in the present
case,
her
share
in
the
conjugal
property
is
transmitted to her heirs by succession. (Articles 657, 659, 661, Civil Code; cf.
also
Coronel
vs.
Ona,
33
Phil.,
456,
469.)
It results that the wife of the appellee was, by the law of the
Philippine Islands, vested of a descendible interest, equal to that of her
husband, in the Philippine lands covered by certificates of title Nos. 20880,

28336 and 28331, from the date of their acquisition to the date of her death.
That appellee himself believed that his wife was vested of such a title and
interest in manifest from the second of said certificates, No. 28336, dated
May 14, 1927, introduced by him in evidence, in which it is certified that "the
spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners in fee simple
of the conjugal lands therein described."
The descendible interest of Eva Johnson Gibbs in the lands
aforesaid
was
transmitted
to
her
heirs
by
virtue
of
inheritance and this transmission plainly falls within the language of section
1536
of
Article
XI
of
Chapter
40
of
the
Administrative Code which levies a tax on inheritances. (Cf. Re Estate of
Majot, 199 N. Y., 29; 92 N. E., 402; 29 L.
R. A. [N. S.], 780.) It is unnecessary in this proceeding to determine
the "order of succession" or the "extent of the successional rights" (article 10,
Civil Code, supra) which would be regulated by section 1386 of the Civil Code
of California which was in effect at the time of the death of Mrs. Gibbs.
The record does not show what the proper amount of the
inheritance tax in this case would be nor that the appellee
(petitioner below) in any way challenged the power of the Government to levy
an inheritance tax or the validity of the statute under which the register of
deeds refused to issue a certificate of transfer reciting that the appellee is the
exclusive owner of the Philippine lands included in the three certificates of
title here involved.
The judgment of the court below of March 10, 1931, is reversed
with directions to dismiss the petition, without special pronouncement as to
the costs.
Avancea, C. J., Malcolm, Villa-Real, Abad Santos, Hull, and Vickers,
JJ., concur. Street, J., dissents.
INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL BUILDERS CORPORATION,
respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO
M.
CADALIN,
ET
AL.,
petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT
INTERNATIONAL, INC. and/or ASIA INTERNATIONAL BUILDERS CORPORATION,
respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT
INTERNATIONAL,
INC.,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M.
CADALIN,
ROLANDO
M.
AMUL,
DONATO
B.
EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA, SOLOMON
B.
REYES,
JOSE
M.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.
EVANGELISTA,
and
the
rest
of
1,767
NAMEDCOMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDO,
petitioners,
vs.
PHILIPPINE
OVERSEAS
EMPLOYMENT
ADMINISTRATION'S
ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT

16

ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN

ALEJANDRE,
WILFREDO D. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B. AMUL, AMORSOLO
ANADING,
ANTONIO
T.
ANGLO, VICENTE ARLITA, HERBERT AYO, SILVERIO BALATAZO, ALFREDO
BALOBO,
FALCONERO
BANAAG, RAMON BARBOSA, FELIX BARCENA, FERNANDO BAS, MARIO
BATACLAN,
ROBERTO
S.
BATICA, ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO
BISCOCHO,
FELIX
M.
BOBIER,
DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO, GUILLERMO
CABEZAS,
BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE CAILAO, IRENEO
CANDOR,
JOSE
CASTILLO,
MANUEL CASTILLO, REMAR CASTROJERES, REYNALDO CAYAS, ROMEO
CECILIO,
TEODULO
CREUS,
BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO DE
GUZMAN,
ONOFRE
DE
RAMA, IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON, ANTONIO S.
DOMINGUEZ,
GILBERT
EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR., EDUARTE ERIDAO,
ELADIO
ESCOTOTO,
JOHN
ESGUERRA, EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO ESPIRITU,
NESTOR
M.
ESTEVA,
BENJAMIN ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO, JESUS
GABAWAN,
ROLANDO
GARCIA, ANGEL GUDA, PACITO HERNANDEZ, ANTONIO HILARIO, HENRY L.
JACOB,
HONESTO
JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U. LIRIO
LORETO
LONTOC,
ISRAEL
LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN,
LEOVIGILDO
MARCIAL,
NOEL
MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO, FRANCIS
MEDIODIA,
JOSE
C.
MILANES, RAYMUNDO C. MILAY, CRESENCIANO MIRANDA, ILDEFONSO C.
MOLINA,
ARMANDO
B.
MONDEJAR RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R.
OLIVARES,
PEDRO
ORBISTA,
JR., RICARDO ORDONEZ, ERNIE PANCHO, JOSE PANCHO, GORGONIO P.
PARALA,
MODESTO
PINPIN,
JUANITO PAREA, ROMEO I. PATAG, FRANCISCO PINPIN, LEONARDO POBLETE,
JAIME
POLLOS,
DOMINGO PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL, GAUDENCIO
RETANAN,
JR.,
TOMAS
B.
RETENER, ALVIN C. REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G.

RICAZA,
RODELIO
RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES,
JOSE
ROBLEZA,
QUIRINO
RONQUILLO, AVELINO M. ROQUE, MENANDRO L. SABINO, PEDRO SALGATAR,
EDGARDO
SALONGA,
NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR., GABRIEL SANTOS,
JUANITO
SANTOS,
PAQUITO SOLANTE, CONRADO A. SOLIS, JR., RODOLFO SULTAN, ISAIAS
TALACTAC,
WILLIAM
TARUC,
MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO, BENEDICTO TORRES,
MAXIMIANO
TORRES,
FRANCISCO G. TRIAS, SERGIO A. URSOLINO, ROGELIO VALDEZ, LEGORIO E.
VERGARA,
DELFIN
VICTORIA,
GILBERT
VICTORIA,
HERNANE
VICTORIANO,
FRANCISCO
VILLAFLORES,
DOMINGO
VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO
VILLANUEVA,
ROGELIO
VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO, FRANCISCO ZARA,
ROGELIO
AALAGOS,
NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES, EDUARDO ABANTE,
JOSE
ABARRO,
JOSEFINO ABARRO, CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL
ABESTANO,
RODRIGO
G.
ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN
ACTA,
EUGENIO
C.
11/2015, 12:37 A
ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO ACUPAN,
MANUEL P. ADANA, FLORENTINO
R. AGNE, QUITERIO R. AGUDO, MANUEL P. AGUINALDO, DANTE
AGUIRRE, HERMINIO AGUIRRE,
GONZALO ALBERTO, JR., CONRADO ALCANTARA, LAMBERTO Q.
ALCANTARA, MARIANITO J.
ALCANTARA, BENCIO ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN
ALEJANDRO, EDUARDO L.
ALEJANDRO, MAXIMINO ALEJANDRO, ALBERTO ALMENAR, ARNALDO
ALONZO, AMADO ALORIA,
CAMILO ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO,
CARLOS AMORES, BERNARD P.
ANCHETA, TIMOTEO O. ANCHETA, JEOFREY ANI, ELINO P. ANTILLON,
ARMANDRO B. ANTIPONO, LARRY
T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO, FRANCISCO
APOLINARIO, BARTOLOME M.
AQUINO, ISIDRO AQUINO, PASTOR AQUINO, ROSENDO M. AQUINO,
ROBERTO ARANGORIN, BENJAMIN

17

O. ARATEA, ARTURO V. ARAULLO, PRUDENCIO ARAULLO,

ALEXANDER ARCAIRA, FRANCISCO
ARCIAGA, JOSE AREVALO, JUANTO AREVALO, RAMON AREVALO,
RODOLFO AREVALO, EULALIO
ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO
ASUNCION, ARTEMIO M. ASUNCION,
EDGARDO ASUNCION, REXY M. ASUNCION, VICENTE AURELIO,
ANGEL
AUSTRIA,
RICARDO
P.
AVERILLA,
JR., VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA, FELIMON
BACAL,
JOSE
L.
BACANI,
ROMULO R. BALBIERAN, VICENTE BALBIERAN, RODOLFO BALITBIT, TEODORO
Y.
BALOBO,
DANILO
O.
BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS, VIVENCIO C.
BAUAN,
GAUDENCIO
S.
BAUTISTA, LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO BAUTISTA,
RUPERTO
B.
BAUTISTA,
TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA, WINIEFREDO
BAYACAL,
WINIEFREDO
BEBIT, BEN G. BELIR, ERIC B. BELTRAN, EMELIANO BENALES, JR., RAUL
BENITEZ,
PERFECTO
BENSAN,
IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO I. BERMUDEZ, DANILO
BERON,
BENJAMIN
BERSAMIN, ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL, JR.,
FRANCISCO
BICOL,
ROGELIO
BICOL, ROMULO L. BICOL, ROGELIO BILLIONES, TEOFILO N. BITO, FERNANDO
BLANCO,
AUGUSTO
BONDOC, DOMINGO BONDOC, PEPE S. BOOC, JAMES R. BORJA, WILFREDO
BRACEROS,
ANGELES
C.
BRECINO, EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO,
ARCHIMEDES
BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO BUENCONSEJO,
ALEXANDER
BUSTAMANTE,
VIRGILIO BUTIONG, JR., HONESTO P. CABALLA, DELFIN CABALLERO,
BENEDICTO
CABANIGAN,
MOISES
CABATAY, HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C. CAGAYAT,
ROGELIO
L.
CALAGOS,
REYNALDO V. CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA, RENATO
R.
CALMA,
NELSON
T.
CAMACHO, SANTOS T. CAMACHO, ROBERTO CAMANA, FLORANTE C. CAMANAG
EDGARDO
M.
CANDA,
SEVERINO CANTOS, EPIFANIO A. CAPONPON, ELIAS D. CARILLO, JR., ARMANDO
CARREON, MENANDRO
M. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO,
JOSEPH B. CASTILLO, ANSELMO

CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P.

CASTILLO, SESINANDO CATIBOG,
DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR.,
ROMEO
A.
DE
CASTRO,
JAIME
B.
CATLI,
DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO,
VICTORIANO
CELESTINO,
BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE,
AUGUSTO
COLOMA,
TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO CORALES,
RENATO
C.
CORCUERA,
APOLINAR CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR.,
LEONARDO
CORPUZ,
JESUS
M.
CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO
COSTALES,
SR.,
CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO
DELA
CRUZ,
AMELIANO
DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P.
CRUZ,
TEODORO
S.
CRUZ,
ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN
DAGONDON,
RICHARD
DAGUINSIN, CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE DATOON,
EDUARDO
DAVID,
ENRICO
T.
DAVID, FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO
T.
DELOSO,
CELERINO
DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON,
JOSELITO
L.
DE
LUMBAN,
NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO,
ALBERTO
DELA
CRUZ,
JOSE
DELA CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ,
FELIX
DIAZ,
MELCHOR
DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC,
ROLANDO
DIONISIO,
PHILIPP
G.
DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E.
DOZA,
BENJAMIN
DUPA,
DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE, GODOFREDO
E.
EISMA,
ARDON
B.
ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO
ENGUANCIO,
ELIAS
EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO
ESCOBAR,
ROMEO
T.
ESCUYOS,
ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO
ESPIRITU,
JULIAN
ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R.
ESTRO,
ERNESTO
M.
ESTEVA,
CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA,

18

WILFREDO
P.
FAUSTINO,
EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M. FIGURACION, ARMANDO
F.
FLORES,
BENJAMIN
FLORES, EDGARDO C. FLORES, BUENAVENTURA FRANCISCO, MANUEL S.
FRANCISCO,
ROLANDO
FRANCISCO, VALERIANO FRANCISCO, RODOLFO GABAWAN, ESMERALDO
GAHUTAN,
CESAR
C.
GALANG, SANTIAGO N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON,
JUAN
GANZON,
ANDRES
GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA,
PATRICIO
L.
GARCIA,
JR.,
PONCIANO G. GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO
S.
GARCIA,
OSIAS
G.
GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA,
RAYMUNDO
GERON,
PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D. GUANIO, MARTIN V.
GUERRERO,
JR.,
ALEXIS GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ,
IGNACIO
B.
GUTIERREZ,
ANGELITO DE GUZMAN, JR., CESAR H. HABANA, RAUL G. HERNANDEZ,
REYNALDO
HERNANDEZ,
JOVENIANO D. HILADO, JUSTO HILAPO, ROSTITO HINAHON, FELICISIMO
HINGADA,
EDUARDO
HIPOLITO,
RAUL L. IGNACIO, MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO A.
INSIONG,
GRACIANO
G.
ISLA,
ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO
HONRADES,
GENEROSO
IGNACIO,
FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER,
ROMEO
M.
JAVIER,
PRIMO
DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ, DANILO E. JIMENEZ,
PEDRO
C.
JOAQUIN,
FELIPE W. JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO S.
JOCSON,
PEDRO
B.
JOLOYA,
ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING,
EDUARDO
S.
KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B.
LACERONA, JOSE B. LACSON,
G.R.
No.
L-104776

R. LAZARO, ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE

LEMOS, JR., PEDRO G. DE LEON,
MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING,
RENATO
LISING,
WILFREDO
S.
LISING,
CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO M. LOPEZ,
CLODY
LOPEZ,
GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ, BERNARDITO G.
LOREJA,
DOMINGO
B.
LORICO, DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M. LUALHATI,
EMMANUEL
LUALHATI,
JR.,
LEONIDEZ C. LUALHATI, SEBASTIAN LUALHATI, FRANCISCO LUBAT, ARMANDO
LUCERO,
JOSELITO
L.
DE LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO
MACALINO,
RICARDO
MACALINO, ARTURO V. MACARAIG, ERNESTO V. MACARAIG, RODOLFO V.
MACARAIG,
BENJAMIN
MACATANGAY, HERMOGENES MACATANGAY, RODEL MACATANGAY, ROMULO
MACATANGAY,
OSIAS
Q.
MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT, EFREN C.
MAGBANUA,
BENJAMIN
MAGBUHAT, ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO
MAGPANTAY,
RICARDO
C.
MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S.
MAGSINO,
ANTONIO
MAGTIBAY, VICTOR V. MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO,
RICARDO
MAMADIS,
RODOLFO MANA, BERNARDO A. MANALILI, MANUEL MANALILI, ANGELO
MANALO,
AGUILES
L.
MANALO,
LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL
MANONSON,
ERNESTO
F.
MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON MAPILE, ROBERTO
C.
MARANA,
NEMESIO
MARASIGAN, WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F.
MARIANO,
JOEL
MARIDABLE,
SANTOS E. MARINO, NARCISO A. MARQUEZ, RICARDO MARTINEZ, DIEGO
MASICAMPO,
AURELIO
MATABERDE, RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL,
LOLITO
M.
MELECIO,
BENIGNO
MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE, RODEL MEMIJE, AVELINO
MENDOZA,
JR.,
CLARO
MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA
MERCED,
RICARDO
MERCENA,
NEMESIO METRELLO, RODEL MEMIJE, GASPAR MINIMO, BENJAMIN MIRANDA,
FELIXBERTO
D.
MISA,
CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO MONTON, RENATO

08/11/2015, 12:37 AM
MARIO J. LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN
M. LAMADRID, GUADENCIO
LATANAN, VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO
LAUREL, ALFREDO LAXAMANA, DANIEL

19

MORADA,
RICARDO
MORADA, RODOLFO MORADA, ROLANDO M. MORALES, FEDERICO M.
MORENO,
VICTORINO
A.
MORTEL,
JR., ESPIRITU A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO
MUNOZ,
ERNESTO
NAPALAN,
MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE,
PACIFICO
D.
NAVARRO,
FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO
NEPUMUCENO,
HERBERT
G.
NG,
FLORENCIO NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA,
DANILO
OCAMPO,
EDGARDO OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO, REYNALDO
P.
OCSON,
BENJAMIN
ODESA, ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V.
ORALLO,
ROMEO
S.
ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS, VIRGILIO PA-A, DAVID
PAALAN,
JESUS
N.
PACHECO,
ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO
T.
PAGUIO,
EMILIO
PAKINGAN, LEANDRO PALABRICA, QUINCIANO PALO, JOSE PAMATIAN,
GONZALO
PAN,
PORFIRIO
PAN,
BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO
PASIMIO,
JR.,
JOSE
V.
PASION, ANGELITO M. PENA, DIONISIO PENDRAS, HERMINIO PERALTA,
REYNALDO
M.
PERALTA,
ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E.
PEREZ,
ROMULO
PEREZ,
WILLIAM PEREZ, FERNANDO G. PERINO, FLORENTINO DEL PILAR, DELMAR F.
PINEDA,
SALVADOR
PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE, DOMINADOR
R.
PRIELA,
BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE, DANTE PUEYO,
REYNALDO Q. PUEYO, RODOLFO
O. PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L.
QUINTO, ROMEO QUINTOS, EDUARDO
W. RACABO, RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO
DE RAMA, FERNANDO A.
RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.
RAMIREZ, ALBERTO RAMOS, ANSELMO
C. RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO, REYNALDO
RAQUEDAN,
MANUEL
F.
RAVELAS,
WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO REDAZA,
ARTHUR
REJUSO,
TORIBIO
M.
RELLAMA, JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA,
REDENTOR
C.
REY,

ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO R. REYES, GREGORIO B.

REYES,
JOSE
A.
REYES,
JOSE C. REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO,
FERNANDO
M.
RICO,
EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES,
RODOLFO
ROBLEZA,
RODRIGO
ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO
RODRIGUEZ,
ELIGIO
RODRIGUEZ,
ALMONTE ROMEO, ELIAS RONQUILLO, ELISE RONQUILLO, LUIS VAL B.
RONQUILLO,
REYNOSO
P.
RONQUILLO, RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES,
ALBERTO
DEL
ROSARIO,
GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO, VIRGILIO L. ROSARIO,
CARLITO
SALVADOR,
JOSE SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M.
SANCHA,
ARTEMIO
B.
SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S.
SANTIAGO,
SERGIO
SANTIAGO,
EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL
SAPUYOT,
ALEX
S.
SERQUINA,
DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG, FAUSTINO D.
SILANG,
RODOLFO
B.
DE
SILOS, ANICETO G. SILVA, EDGARDO M. SILVA, ROLANDO C. SILVERTO,
ARTHUR
B.
SIMBAHON,
DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS,
III,
EDGARDO
SOLIS,
ERNESTO SOLIS, ISAGANI M. SOLIS, EDUARDO L. SOTTO, ERNESTO G. STA.
MARIA,
VICENTE
G.
STELLA,
FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P.
TALUSIK,
FERMIN
TARUC,
JR., LEVY S. TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL
TOLENTINO,
MARIO
M.
TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE TORRES,
GAVINO
U.
TUAZON,
AUGUSTO B. TUNGUIA, FRANCISCO UMALI, SIMPLICIO UNIDA, WILFREDO V.
UNTALAN,
ANTONIO
VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO, EDGARDO C. VASQUEZ,
ELPIDIO
VELASQUEZ,
NESTOR DE VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO
VERGARA,
RAMON
R.
VERZOSA, FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P.
VIDALLO,
SABINO
N.
VIERNEZ,
JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO
VILLAGERA,
ALEX
VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M.

20

VILLANUEVA,
MANUEL
R.
VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO,
RAFAEL
VILLAROMAN,
CARLOS VILLENA, FERDINAND VIVO, ROBERTO YABUT, VICENTE YNGENTE,
AND ORO C. ZUNIGA,
respondents.
Gerardo A. Del Mundo and Associates for petitioners.
Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices
for BRII/AIBC. Florante M. De Castro for private respondents in 105029-32.

(1) to reverse the Resolution dated September 2, 1991 of NLRC in

POEA
Cases
Nos.
L-84-06-555,
L85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC
insofar as it denied the motions for reconsideration of AIBC and BRII (Rollo,
pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified
the
decision
of
POEA
in
four
labor
cases:
(1)
awarded monetary benefits only to 149 claimants and (2) directed
Labor
Arbiter
Fatima
J.
Franco
to
conduct
hearings and to receive evidence on the claims dismissed by the POEA for
lack
of
substantial
evidence
or
proof
of
employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the
Third Division while G.R. Nos. 104911-14 were raffled to the Second Division.
In the Resolution dated July 26, 1993, the Second Division referred G.R. Nos.
104911-14 to the Third Division (G.R. Nos. 104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division
granted the motion filed in G.R. Nos. 104911-14 for the consolidation of said
cases with G.R. Nos. 104776 and 105029-32, which were assigned to the First
Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos. 105029-30,
Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the
First Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R.
No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo,
p. 1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and
Donato
B.
Evangelista,
in
their
own
behalf
and
on
behalf of 728 other overseas contract workers (OCWs) instituted a class suit
by
filing
an
"Amended
Complaint"
with
the Philippine Overseas Employment Administration (POEA) for money claims
arising
from
their
recruitment
by
AIBC and employment by BRII (POEA Case No. L-84-06-555). The claimants
were
represented
by
Atty.
Gerardo
del
Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas,
and is engaged in construction; while AIBC is a domestic corporation licensed
as a service contractor to recruit, mobilize and deploy Filipino workers for
overseas employment on behalf of its foreign principals.
The amended complaint principally sought the payment of the
unexpired
portion
of
the
employment
contracts,
which
was terminated prematurely, and secondarily, the payment of the interest of
the earnings of the Travel and Reserved Fund, interest on all the unpaid

QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M.
Cadalin, et. al. v. Philippine Overseas Employment Administration's
Administrator, et. al.," was filed under Rule 65 of the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the
National Labor Relations Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to
render a new decision: (i) declaring private respondents as in default; (ii)
declaring the said labor cases as a class suit; (iii) ordering Asia International
Builders Corporation (AIBC) and Brown and Root International Inc. (BRII) to
pay the claims of the 1,767 claimants in said labor cases; (iv) declaring Atty.
Florante M. de Castro guilty of forum-shopping; and (v) dismissing POEA Case
No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of NLRC,
denying the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M.
Cadalin, et. al., v. Hon. National Labor Relations Commission, et. al.," was filed
under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in
POEA
Cases
Nos.
L-84-06-555,
L85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive
period under the Labor Code of the Philippines instead of the ten-year
prescriptive period under the Civil Code of the Philippines; and (ii) denied the
"three-hour daily average" formula in the computation of
petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC,
denying the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International
Builders Corporation, et. al., v. National Labor Relations Commission, et. al."
was filed under Rule 65 of the Revised Rules of Court:

21

benefits; area wage and salary differential pay; fringe benefits; refund of SSS
and premium not remitted to the SSS; refund of withholding tax not
remitted to the BIR; penalties for committing prohibited practices; as well
as the suspension of the license of AIBC and the accreditation of BRII (G.R.
No. 104776, Rollo, pp. 13-14). At the hearing on June 25, 1984, AIBC was
furnished a copy of the complaint and was given, together with BRII, up to
July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and
BRII,
ordered
the
claimants
to
file
a
bill
of
particulars within ten days from receipt of the order and the movants to file
their
answers
within
ten
days
from
receipt of the bill of particulars. The POEA Administrator also scheduled a pretrial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and
Manifestation."
On
July
23,
1984,
AIBC
filed
a
"Motion to Strike Out of the Records", the "Complaint" and the "Compliance
and
Manifestation."
On
July
25,
1984,
the claimants filed their "Rejoinder and Comments," averring, among other
matters,
the
failure
of
AIBC
and
BRII
to
file their answers and to attend the pre-trial conference on July 25, 1984. The
claimants
alleged
that
AIBC
and
BRII
had waived their right to present evidence and had defaulted by failing to file
their
answers
and
to
attend
the
pre-trial
conference.
On October 2, 1984, the POEA Administrator denied the "Motion to
Strike Out of the Records" filed by AIBC but required the claimants to correct
the deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to
comply with the Order of October 2, 1984 and filed an "Urgent Manifestation,"
praying that the POEA Administrator direct the parties to submit
simultaneously their position papers, after which the case should be deemed
submitted for decision. On the same day, Atty. Florante de Castro filed
another complaint for the same money claims and benefits in behalf of
several claimants, some of whom were also claimants in POEA Case No. L-8406-555 (POEA Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the
Order dated October 2, 1984 and an "Urgent Manifestation," praying that
the POEA direct the parties to submit simultaneously their position papers
after which the case would be deemed submitted for decision. On the same
day, AIBC asked for time to file its comment on the "Compliance" and "Urgent
Manifestation" of claimants. On November 6, 1984, it filed a second motion
for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that
its motion for extension of time was granted.

On November 14, 1984, claimants filed an opposition to the

motions for extension of time and asked that AIBC and BRII be declared in
default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying,
among other reliefs, that claimants should be ordered to amend their
complaint.
On December 27, 1984, the POEA Administrator issued an order
directing AIBC and BRII to file their answers within ten days from receipt of
the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking
the reversal of the said order of the POEA Administrator. Claimants opposed
the appeal, claiming that it was dilatory and praying that AIBC and BRII be
declared in default.
On April 2, 1985, the original claimants filed an "Amended
Complaint and/or Position Paper" dated March 24, 1985, adding new
demands: namely, the payment of overtime pay, extra night work pay, annual
leave differential pay, leave indemnity pay, retirement and savings benefits
and their share of forfeitures (G.R. No. 104776, Rollo, pp. 1416). On April 15, 1985, the POEA Administrator directed AIBC to file its answer
to the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary
Judgment." On the same day, the POEA issued an order directing AIBC and
BRII to file their answers to the "Amended Complaint," otherwise, they would
be deemed to have waived their right to present evidence and the
case would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as
Improper Class Suit and Motion for Bill of Particulars Re: Amended Complaint
dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his
directive to AIBC and BRII to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC,
together with a petition for the issuance of a writ of injunction. On September
19, 1985, NLRC enjoined the POEA Administrator from hearing the labor cases
and suspended the period for the filing of the answers of AIBC and BRII. On
September 19, 1985, claimants asked the POEA Administrator to include
additional claimants in the case and to investigate alleged wrongdoings of
BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a
complaint
(POEA
Case
No.
L-85-10-777)
against
AIBC and BRII with the POEA, demanding monetary claims similar to those
subject of POEA Case No. L-84-06-555. In the same month, Solomon Reyes
also filed his own complaint (POEA Case No. L-85-10-779) against AIBC and
BRII.

22

On October 17, 1985, the law firm of Florante M. de Castro &

Associates asked for the substitution of the original counsel of record and the
cancellation of the special powers of attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of
the claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money
claims (POEA Case No. 86-05-460) in behalf of 11 claimants including
Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed
on February 27, 1985 and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA
Administrator, it is not amiss to mention that two cases were filed in the
Supreme Court by the claimants, namely G.R. No. 72132 on September 26,
1985 and Administrative Case No. 2858 on March 18, 1986. On May 13,
1987,
the
Supreme
Court
issued
a
resolution
in
Administrative Case No. 2858 directing the POEA Administrator to resolve the
issues
raised
in
the
motions
and
oppositions filed in POEA Cases Nos. L-84-06-555 and L-86-05-460 and to
decide
the
labor
cases
with
deliberate
dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489),
questioning the Order dated September 4, 1985 of the POEA Administrator.
Said order required BRII and AIBC to answer the amended complaint in POEA
Case
No.
L84-06-555. In a resolution dated November 9, 1987, we dismissed the
petition by informing AIBC that all its technical objections may properly be
resolved in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was
filed
on
September
22,
1988
by
claimant
Hermie
Arguelles and 18 co-claimants against the POEA Administrator and
several NLRC Commissioners. The
Ombudsman merely referred the complaint to the Secretary of
Labor
and
Employment
with
a
request
for
the
early
disposition of POEA Case No. L-84-06-555. The second was filed on April 28,
1989
by
claimants
Emigdio
P.
Bautista and Rolando R. Lobeta charging AIBC and BRII for violation of labor
and
social
legislations.
The
third
was
filed by Jose R. Santos, Maximino N. Talibsao and Amado B. Bruce denouncing
AIBC
and
BRII
of
violations
of
labor
laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the
NLRC Resolution dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator
its motion for suspension of the period for filing an answer or motion for
extension of time to file the same until the resolution of its motion for

reconsideration of the order of the NLRC dismissing the two appeals. On April
28, 1987, NLRC en banc denied the motion for reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the
complaint.
At
the
same
hearing,
the
parties
were
given a period of 15 days from said date within which to submit their
respective
position
papers.
On
June
24,
1987
claimants filed their "Urgent Motion to Strike Out Answer," alleging that the
answer
was
filed
out
of
time.
On
June
29, 1987, claimants filed their "Supplement to Urgent Manifestational Motion"
to
comply
with
the
POEA
Order
of
June 19, 1987. On February 24, 1988, AIBC and BRII submitted their position
paper.
On
March
4,
1988,
claimants
filed their "Ex-Parte Motion to Expunge from the Records" the position paper
of
AIBC
and
BRII,
claiming
that
it
was
filed out of time.
On September 1, 1988, the claimants represented by Atty. De
Castro
filed
their
memorandum
in
POEA
Case
No.
L86-05-460. On September 6, 1988, AIBC and BRII submitted their
Supplemental
Memorandum.
On
September
12,
1988, BRII filed its "Reply to Complainant's Memorandum." On October 26,
1988,
claimants
submitted
their
"ExParte Manifestational Motion and Counter-Supplemental Motion," together
with 446 individual contracts of
employments and service records. On October 27, 1988, AIBC and
BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision
in POEA Case No. L-84-06-555 and the other consolidated cases, which
awarded the amount of $824,652.44 in favor of only 324 complainants.
On February 10, 1989, claimants submitted their "Appeal
Memorandum For Partial Appeal" from the decision of the POEA. On the same
day, AIBC also filed its motion for reconsideration and/or appeal in addition to
the "Notice of Appeal" filed earlier on February 6, 1989 by another counsel for
AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal,"
praying
for
the
dismissal
of
the
appeal
of
AIBC
and
BRII.
On March 15, 1989, claimants filed their "Supplement to
Complainants' Appeal Memorandum," together with their "newly discovered
evidence" consisting of payroll records.
On April 5, 1989, AIBC and BRII submitted to NLRC their
"Manifestation," stating among other matters that there were only 728 named
claimants. On April 20, 1989, the claimants filed their "CounterManifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution"
of the Decision dated January 30, 1989 on the grounds that BRII had failed to

23

appeal on time and AIBC had not posted the supersedeas bond in the amount
of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve
the labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion,"
praying
that
all
the
1,767
claimants
be
awarded
their monetary claims for failure of private respondents to file their answers
within
the
reglamentary
period
required
by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing
as follows:
WHEREFORE, premises considered, the Decision of the POEA in
these consolidated cases is modified to the extent and in accordance with
the following dispositions:
1. The claims of the 94 complainants identified and listed in
Annex "A" hereof are dismissed for having prescribed;
2. Respondents AIBC and Brown & Root are hereby ordered, jointly
and severally, to pay the 149 complainants, identified and listed in Annex "B"
hereof, the peso equivalent, at the time of payment, of the total amount in US
dollars indicated opposite their respective names;
3. The awards given by the POEA to the 19 complainants classified
and
listed
in
Annex
"C" hereof, who appear to have worked elsewhere than in Bahrain are hereby
set aside.
4. All claims other than those indicated in Annex "B", including
those
for
overtime
work
and favorably granted by the POEA, are hereby dismissed for lack of
substantial
evidence
in support thereof or are beyond the competence of this Commission to pass
upon.
In addition, this Commission, in the exercise of its powers and
authority under Article 218(c) of the Labor Code, as amended by R.A.
6715, hereby directs Labor Arbiter Fatima J. Franco of this Commission
to summon parties, conduct hearings and receive evidence, as expeditiously
as possible, and thereafter submit a written report to this Commission (First
Division) of the proceedings taken, regarding the claims of the following:
(a) complainants identified and listed in Annex "D" attached and
made an integral part of this Resolution, whose claims were dismissed by
the POEA for lack of proof of employment in Bahrain (these complainants
numbering 683, are listed in pages 13 to 23 of the decision of POEA, subject
of the appeals) and,
(b) complainants identified and listed in Annex "E" attached and
made an integral part of this Resolution, whose awards decreed by the POEA,
to Our mind, are not supported by substantial evidence" (G.R. No. 104776;

Rollo,
pp.
113-115;
G.R.
Nos.
104911-14,
pp.
8587; G.R. Nos. 105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12
co-claimants, who were former clients of Atty. Del Mundo, filed a
petition for certiorari with the Supreme Court (G.R. Nos. 120741-44). The
petition was dismissed in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991
Resolution of the NLRC were filed. The first, by the claimants represented by
Atty. Del Mundo; the second, by the claimants represented by Atty. De Castro;
and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions
for reconsideration.
Hence, these petitions filed by the claimants represented by Atty.
Del Mundo (G.R. No. 104776), the claimants represented by Atty. De Castro
(G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and
AIBC and BRII have submitted, from time to time, compromise agreements for
our approval and jointly moved for the dismissal of their respective petitions
insofar as the claimants-parties to the compromise agreements were
concerned (See Annex A for list of claimants who signed quitclaims).
Thus the following manifestations that the parties had arrived at a
compromise agreement and the corresponding motions for the approval of
the agreements were filed by the parties and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio
Abarquez and 47 co-claimants dated
September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263-406; G.R.
Nos. 105029-32, Rollo, pp. 470-615);
2) Joint Manifestation and Motion involving petitioner Bienvenido
Cadalin and 82 co-petitioners dated September 3, 1992 (G.R. No. 104776,
Rollo, pp. 364-507);
3) Joint Manifestation and Motion involving claimant Jose
M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos.
105029-32, Rollo, pp. 613-722;
G.R. No. 104776, Rollo, pp. 518-626; G.R. Nos. 104911-14, Rollo, pp.
407-516);
4) Joint Manifestation and Motion involving claimant Antonio T.
Anglo and 17 co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713;
G.R. Nos. 104911-14, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant Dionisio
Bobongo
and
6
co-claimants
dated

24

January 15, 1993 (G.R. No. 104776, Rollo, pp. 813-836; G.R. Nos. 104911-14,
Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant Valerio A.
Evangelista
and
4
co-claimants
dated
March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746; G.R. No. 104776,
Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri
Banaag
and
5
co-claimants
dated
March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R. Nos. 104911-14,
Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin
Ambrosio and 15 other co-claimants dated May 4, 1993 (G.R. Nos. 10502932, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679729; G.R. No. 104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio Evangelista and
3 co-claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829);
10) Joint Manifestation and Motion involving petitioner Quiterio R.
Agudo
and
36
co-claimants
dated
June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R. Nos. 10491114, Rollo, pp. 748-864;
G.R. No. 104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant Arnaldo J.
Alonzo and 19 co-claimants dated July 22, 1993 (G.R. No. 104776, Rollo, pp.
1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-14,
Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C.
Dayrit and 2 co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 12431254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C.
Aceres and 37 co-claimants dated September 8, 1993 (G.R. No. 104776,
Rollo, pp.
1257-1375; G.R. Nos.
104911-14, Rollo, pp.
9871105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and
27 co-claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano and
six co-claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No.
104776; G.R. Nos. 104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more than fifty
volumes now comprising the records of these cases. From the records, it
appears that the complainants-appellants allege that they were recruited by
respondent-appellant AIBC for its accredited foreign principal, Brown & Root,
on various dates from 1975 to 1983. They were all deployed at various

projects undertaken by Brown & Root in several countries in the Middle East,
such as Saudi Arabia, Libya, United Arab Emirates and Bahrain, as well as in
Southeast Asia, in Indonesia and Malaysia.
Having been officially processed as overseas contract workers by
the Philippine Government, all the individual complainants signed standard
overseas employment contracts (Records, Vols. 25-32.
Hereafter, reference to the records would be sparingly made,
considering their chaotic arrangement) with AIBC before their departure from
the Philippines. These overseas employment contracts invariably contained
the following relevant terms and conditions.
PART B
(1) Employment Position Classification : (Code) :

(2) Company Employment Status :

(3) Date of Employment to Commence on :
(4) Basic Working Hours Per Week :
(5) Basic Working Hours Per Month :
(6) Basic Hourly Rate :
(7) Overtime Rate Per Hour :
(8) Projected Period of Service
(Subject to C(1) of this [sic]) : Months and/or
Job Completion
xxx xxx xxx
3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and overtime
rate as set out in Part B of this Document.
b) The hours of work shall be those set forth by the Employer, and
Employer may, at his sole option, change or adjust such hours as maybe
deemed necessary from time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this
agreement, the Employer may, at his sole discretion, terminate employee's
service with cause, under this agreement at any time. If the Employer
terminates the services of the Employee under this Agreement because
of the completion or termination, or suspension of the work on which
the Employee's services were being utilized, or because of a reduction in
force due to a decrease in scope of such work, or by change in the type of
construction of such work. The Employer will be responsible for his return
transportation to his country of origin. Normally on the most expeditious air
route, economy class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or satisfactory
completion of contract, employee shall be entitled to 12-days vacation leave

25

with pay. This shall be computed at the basic wage rate. Fractions of a year's
service will be computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the employee for every
year of service for non-work connected injuries or illness. If the employee
failed to avail of such leave benefits, the same shall be forfeited at the end of
the year in which said sick leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will be accrued
and payable only upon satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of rest with
8 hours regular pay. If work is performed on this day, all hours work shall be
paid at the premium rate. However, this offday pay provision is applicable
only when the laws of the Host Country require payments for rest day.
In the State of Bahrain, where some of the individual complainants
were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued
his Amiri Decree No. 23 on June 16, 1976, otherwise known as the Labour Law
for the Private Sector (Records, Vol. 18). This decree took effect on August
16, 1976. Some of the provisions of Amiri Decree No. 23 that are
relevant to the claims of the complainants-appellants are as follows (italics
supplied only for emphasis):
Art. 79: . . . A worker shall receive payment for each extra hour
equivalent to his wage entitlement increased by a minimum of twenty-five
per centum thereof for hours worked during the day; and by a minimum of
fifty per centum thereof for hours worked during the night which shall be
deemed to being from seven o'clock in the evening until seven o'clock in the
morning. . .
Art. 80: Friday shall be deemed to be a weekly day of rest on full
pay.
. . . an employer may require a worker, with his consent, to work on
his weekly day of rest if circumstances so require and in respect of which an
additional sum equivalent to 150% of his normal wage shall be paid to him. . .
Art. 81: . . . When conditions of work require the worker to work on
any official holiday, he shall be paid an additional sum equivalent to 150% of
his normal wage.
Art. 84: Every worker who has completed one year's continuous
service with his employer shall be entitled to leave on full pay for a period of
not less than 21 days for each year increased to a period not less than 28
days after five continuous years of service.
A worker shall be entitled to such leave upon a quantum
meruit in respect of the proportion of his service in that year.
Art.

terminated by either party thereto after giving the other party thirty days'
prior
notice
before
such termination, in writing, in respect of monthly paid workers and fifteen
days'
notice
in
respect of other workers. The party terminating a contract without giving the
required
notice shall pay to the other party compensation equivalent to the
amount
of
wages
payable to the worker for the period of such notice or the unexpired portion
thereof.
Art.
111: . . . the employer concerned shall pay to such worker, upon
termination
of
employment, a leaving indemnity for the period of his employment calculated
on
the
basis
of fifteen days' wages for each year of the first three years of service and of
one
month's
wages for each year of service thereafter. Such worker shall be entitled to
payment
of
leaving indemnity upon a quantum meruit in proportion to the period
of
his
service
completed within a year.
All the individual complainants-appellants have already been
repatriated to the Philippines at the time of the filing of these cases (R.R. No.
104776, Rollo, pp. 59-65).
IV
The issues raised before and resolved by the NLRC were:
First: Whether or not complainants are entitled to the benefits
provided by Amiri Decree No. 23 of Bahrain;
(a) Whether or not the complainants who have worked in
Bahrain are entitled to the above-mentioned benefits.
(b) Whether or not Art.
44 of the same Decree
(allegedly
prescribing a more favorable treatment of alien employees) bars
complainants from enjoying its benefits.
Second: Assuming that Amiri Decree No. 23 of Bahrain is
applicable in these cases, whether or not complainants' claim for the benefits
provided therein have prescribed.
Third: Whether or not the instant cases qualify as a class suit.
Fourth: Whether or not the proceedings conducted by the POEA,
as well as the decision that is the subject of these appeals, conformed with
the requirements of due process;
(a) Whether or not the respondent-appellant was denied its right to
due process;

107: A contract of employment made for a period of indefinite duration

may
be

26

(b) Whether or not the admission of evidence by the POEA

after these cases were submitted for decision was valid;
(c) Whether or not the POEA acquired jurisdiction over Brown &
Root International, Inc.;
(d) Whether or not the judgment awards are supported by
substantial evidence;
(e) Whether or not the awards based on the averages and formula
presented by the complainants-appellants are supported by substantial
evidence;
(f) Whether or not the POEA awarded sums beyond what the
complainants-appellants prayed for; and, if so, whether or not these awards
are valid.
Fifth: Whether or not the POEA erred in holding respondents AIBC
and Brown & Root jointly are severally liable for the judgment awards despite
the alleged finding that the former was the employer of the complainants;
(a) Whether or not the POEA has acquired jurisdiction over Brown &
Root;
(b) Whether or not the undisputed fact that AIBC was a licensed
construction contractor precludes a finding that Brown & Root is liable for
complainants claims.
Sixth: Whether or not the POEA Administrator's failure to hold
respondents in default constitutes a reversible error.

Eighth: Whether or not the POEA Administrator erred in not

dismissing
POEA
Case
No.
(L)
86-65460 on the ground of multiplicity of suits (G.R. Nos. 104911-14, Rollo, pp. 2529, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989
Revised
Rules
on
Evidence
governing
the
pleading and proof of a foreign law and admitted in evidence a simple copy of
the
Bahrain's
Amiri
Decree
No.
23
of
1976 (Labour Law for the Private Sector). NLRC invoked Article 221 of the
Labor
Code
of
the
Philippines,
vesting
on
the Commission ample discretion to use every and all reasonable means to
ascertain
the
facts
in
each
case
without
regard to the technicalities of law or procedure. NLRC agreed with the POEA
Administrator
that
the
Amiri
Decree
No. 23, being more favorable and beneficial to the workers, should form part
of
the
overseas
employment
contract
of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to
the claimants, who worked in Bahrain, and set aside awards of the POEA
Administrator in favor of the claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the
filing of the claims of the complainants was three years, as provided in Article
291 of the Labor Code of the Philippines, and not ten years as provided in
Article 1144 of the Civil Code of the Philippines nor one year as provided in
the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that
the labor cases cannot be treated as a class suit for the simple reason that
not all the complainants worked in Bahrain and therefore, the subject matter
of the action, the claims arising from the Bahrain law, is not of common or
general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the
cardinal rules of administrative due process: namely, (1) the failure of the
POEA Administrator to consider the evidence presented by AIBC and BRII; (2)
some findings of fact were not supported by substantial evidence; and (3)
some of the evidence upon which the decision was based were not disclosed
to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA
Administrator that BRII and AIBC are solidarily liable for the claims of the
complainants and held that BRII was the actual employer of the complainants,
or at the very least, the indirect employer, with AIBC as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA
Administrator through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was
correct in denying the Motion to Declare AIBC in default.

Seventh: Whether or not the POEA Administrator erred in

dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of at least 100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to SSS;
j. Refund of withholding tax not remitted to BIR;
k. Fringe benefits under B & R's "A Summary of Employee
Benefits" (Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent of the judgment award;
n. Other reliefs, like suspending and/or cancelling the license to
recruit of AIBC and the accreditation of B & R issued by POEA;
o.
Penalty
for
violations
of
Article
34 (prohibited practices), not excluding reportorial
requirements thereof.

27

On the seventh issue, which involved other money claims not based
on the Amiri Decree No. 23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims
for refund of the SSS premiums and
refund of withholding taxes and the claimants should file their
claims for said refund with the appropriate government agencies;
(2) the claimants failed to establish that they are entitled to the
claims which are not based on the overseas employment contracts nor the
Amiri Decree No. 23 of 1976;
(3) that the POEA Administrator has no jurisdiction over claims for
moral and exemplary damages and nonetheless, the basis for granting said
damages was not established;
(4) that the claims for salaries corresponding to the unexpired
portion of their contract may be allowed if filed within the three-year
prescriptive period;
(5) that the allegation that complainants were prematurely
repatriated prior to the expiration of their overseas contract was not
established; and
(6) that the POEA Administrator has no jurisdiction over the
complaint for the suspension or cancellation of the AIBC's recruitment
license and the cancellation of the accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case
No. (L) 86-65-460 should have been dismissed on the ground that the
claimants in said case were also claimants in POEA Case No. (L) 84-06-555.
Instead of dismissing POEA Case No. (L) 86-65-460, the POEA just resolved
the corresponding claims in POEA Case No. (L) 84-06-555. In other words, the
POEA did not pass upon the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on
the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to
a speedy disposition of their cases as guaranteed by Section 16, Article III of
the 1987 Constitution. The POEA Administrator allowed private respondents
to file their answers in two years (on June 19, 1987) after the filing of the
original complaint (on April 2, 1985) and NLRC, in total disregard of its own
rules, affirmed the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared
AIBC
and
BRII
in
default
and
should
have rendered summary judgment on the basis of the pleadings and evidence
submitted by claimants;
(3) the NLRC and POEA Administrator erred in not holding that the
labor cases filed by AIBC and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims is ten
years; and

(5) that NLRC and the POEA Administrator should have dismissed
POEA Case No. L-86-05-460, the case filed by Atty. Florante de Castro (Rollo,
pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776,
argued:
(1) that they were not responsible for the delay in the disposition of
the labor cases, considering the great difficulty of getting all the records of
the more than 1,500 claimants, the piece-meal filing of the complaints and
the addition of hundreds of new claimants by petitioners;
(2) that considering the number of complaints and claimants, it was
impossible to prepare the answers within the ten-day period provided in the
NLRC Rules, that when the motion to declare AIBC in default was filed on July
19, 1987, said party had already filed its answer, and that considering the
staggering amount of the claims (more than US$50,000,000.00) and the
complicated issues raised by the parties, the ten-day rule to answer was not
fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject matter of
the controversy which was the applicability of the Amiri Decree No. 23.
Likewise, the nature of the claims varied, some being based on salaries
pertaining to the unexpired portion of the contracts while others being for
pure money claims. Each claimant demanded separate claims peculiar only to
himself and depending upon the particular circumstances obtaining in his
case;
(4) that the prescriptive period for filing the claims is that
prescribed by Article 291 of the Labor Code of the Philippines (three years)
and not the one prescribed by Article 1144 of the Civil Code of the
Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA
Case No. L-86-05-460 should be dismissed, this being a private quarrel
between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike
out the joint manifestations and motions of
AIBC and BRII dated September 2 and 11, 1992, claiming that all
the
claimants
who
entered
into
the
compromise
agreements subject of said manifestations and motions were his clients and
that
Atty.
Florante
M.
de
Castro
had
no
right to represent them in said agreements. He also claimed that the
claimants
were
paid
less
than
the
award
given
them by NLRC; that Atty. De Castro collected additional attorney's fees on top
of
the
25%
which
he
was
entitled
to
receive; and that the consent of the claimants to the compromise agreements
and
quitclaims
were
procured
by
fraud

28

(G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated November 23,
1992,
the
Court
denied
the
motion
to
strike out the Joint Manifestations and Motions dated September 2 and 11,
1992
(G.R.
Nos.
104911-14,
Rollo,
pp.
608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim
to Enforce Attorney's Lien," alleging that the claimants who entered into
compromise agreements with AIBC and BRII with the assistance of Atty. De
Castro, had all signed a retainer agreement with his law firm (G.R. No.
104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del
Mundo to cite Atty. De Castro and Atty. Katz Tierra for contempt of court and
for violation of Canons 1, 15 and 16 of the Code of Professional Responsibility.
The said lawyers allegedly misled this Court, by making it appear that the
claimants who entered into the compromise agreements were represented
by Atty. De Castro, when in fact they were represented by Atty. Del Mundo
(G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges
against Atty. De Castro for unethical practices and moved for the voiding of
the quitclaims submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for
certiorari on the grounds that NLRC gravely abused its discretion when it: (1)
applied the three-year prescriptive period under the Labor Code of the
Philippines; and (2) it denied the claimant's formula based on an average
overtime pay of three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself
during the negotiation for an amicable settlement of their money claims in
Bahrain as shown in the Memorandum dated April 16, 1983 of the Ministry of
Labor of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R.
No. 104776 that the prescriptive period in the Labor Code of the Philippines, a
special law, prevails over that provided in the Civil Code of the Philippines, a
general law.
As to the memorandum of the Ministry of Labor of Bahrain on the
method
of
computing
the
overtime
pay,
BRII
and

AIBC claimed that they were not bound by what appeared therein, because
such
memorandum
was
proposed
by
a
subordinate Bahrain official and there was no showing that it was approved
by
the
Bahrain
Minister
of
Labor.
Likewise, they claimed that the averaging method was discussed in the
course
of
the
negotiation
for
the
amicable
settlement of the dispute and any offer made by a party therein could not be
used
as
an
admission
by
him
(Rollo,
pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely
abused its discretion when it: (1) enforced the provisions of the Amiri Decree
No. 23 of 1976 and not the terms of the employment contracts; (2) granted
claims for holiday, overtime and leave indemnity pay and other benefits, on
evidence admitted in contravention of petitioner's constitutional right to due
process; and (3) ordered the POEA Administrator to hold new hearings for the
683 claimants whose claims had been dismissed for lack of proof by the POEA
Administrator or NLRC itself. Lastly, they allege that assuming that the Amiri
Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply the
one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although
they disagreed as to the time that should be embraced within the prescriptive
period.
To the POEA Administrator, the prescriptive period was ten years,
applying Article 1144 of the Civil Code of the Philippines. NLRC believed
otherwise, fixing the prescriptive period at three years as provided in Article
291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14,
invoking different grounds, insisted that NLRC erred in ruling that the
prescriptive period applicable to the claims was three years, instead of ten
years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the
prescriptive period was one year as prescribed by the Amiri Decree No. 23 of
1976 but he deferred to the ruling of NLRC that Article 291 of the Labor Code
of the Philippines was the operative law.
worker's contracts of employment. Respondents consciously failed to conform
to these provisions which specifically provide for the increase of the worker's
rate. It was only after June 30, 1983, four months after the brown builders
brought a suit against B & R in Bahrain for this same claim, when respondent
AIBC's contracts have undergone amendments in Bahrain for the new
hires/renewals (Respondent's Exhibit 7).

The POEA Administrator held the view that:

These money claims (under Article 291 of the Labor Code) refer to
those arising from the employer's violation of the employee's right as
provided by the Labor Code.
In the instant case, what the respondents violated are not the rights
of the workers as provided by the Labor Code, but the provisions of the
Amiri Decree No. 23 issued in Bahrain, which ipso facto amended the

29

Hence, premises considered, the applicable law of prescription to

this instant case is Article 1144 of the Civil Code of the Philippines, which
provides:
Art. 1144. The following actions may be brought within ten years
from the time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the
respondents shall prescribe in ten years from August 16, 1976. Inasmuch as
all claims were filed within the ten-year prescriptive period, no claim suffered
the infirmity of being prescribed (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the
prescriptive period is three years as provided in Article 291 of the Labor Code
of the Philippines, the NLRC argued as follows:
The Labor Code provides that "all money claims arising from
employer-employee relations . . . shall be filed within three years from the
time the cause of action accrued; otherwise they shall be forever barred"
(Art. 291, Labor Code, as amended). This three-year prescriptive period shall
be the one applied here and which should be reckoned from the date of
repatriation of each individual complainant, considering the fact that the
case is having (sic) filed in this country. We do not agree with
the POEA Administrator that this three-year prescriptive period applies
only to money claims specifically recoverable under the Philippine Labor
Code. Article 291 gives no such indication.
Likewise, We can not consider complainants' cause/s of action to
have accrued from a violation of their employment contracts. There was no
violation; the claims arise from the benefits of the law of the country where
they worked. (G.R. No. 104776, Rollo, pp.
90-91).
Anent the applicability of the one-year prescriptive period as
provided
by
the
Amiri
Decree
No.
23
of
1976,
NLRC
opined that the applicability of said law was one of characterization, i.e.,
whether
to
characterize
the
foreign
law
on
prescription or statute of limitation as "substantive" or "procedural." NLRC
cited
the
decision
in
Bournias
v.
Atlantic
Maritime Company (220 F. 2d. 152, 2d Cir. [1955], where the issue was the
applicability
of
the
Panama
Labor
Code
in a case filed in the State of New York for claims arising from said Code. In
said
case,
the
claims
would
have
prescribed under the Panamanian Law but not under the Statute of
Limitations
of
New
York.
The
U.S.
Circuit
Court
of Appeals held that the Panamanian Law was procedural as it was not
"specifically
intended
to
be
substantive,"
hence, the prescriptive period provided in the law of the forum should apply.
The Court observed:

. And where, as here, we are dealing with a statute of limitations of

a foreign country, and it is not clear on the face of the statute that its purpose
was to limit the enforceability, outside as well as within the foreign country
concerned, of the substantive rights to which the statute pertains, we think
that as a yardstick for determining whether that was the purpose this test is
the most satisfactory one. It does not lead American courts into the necessity
of examining into the unfamiliar peculiarities and refinements of different
foreign legal systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the libelant is entitled
to succeed, for the respondents have failed to satisfy us that the Panamanian
period of limitation in question was specifically aimed against the particular
rights which the libelant seeks to enforce. The Panama Labor Code is a
statute
having
broad objectives, viz: "The present Code regulates the relations between
capitalandlabor, placing them on a basis of social justice, so that, without
injuring any of the parties, there may be guaranteed for labor the necessary
conditions for a normal life and to capital an equitable return to its
investment." In pursuance of these objectives the Code gives laborers various
rights against their employers. Article 623 establishes the period of limitation
for all such rights, except certain ones which are enumerated in
Article 621. And there is nothing in the record to indicate that the Panamanian
legislature gave special consideration to the impact of Article 623 upon the
particular rights sought to be enforced here, as distinguished from the other
rights to which that Article is also applicable. Were we confronted with the
question of whether the limitation period of Article 621 (which carves
out particular rights to be
governed by a shorter limitation period) is to be regarded as
"substantive"
or
"procedural"
under
the
rule of "specifity" we might have a different case; but here on the surface of
things
we
appear
to
be
dealing with a "broad," and not a "specific," statute of limitations (G.R. No.
104776,
Rollo,
pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of
the Labor Code of the Philippines, which was applied by NLRC, refers only to
claims "arising from the employer's violation of the employee's right as
provided by the Labor Code." They assert that their claims are based
on the violation of their employment contracts, as amended by the Amiri
Decree No. 23 of 1976 and therefore the claims may be brought within ten
years as provided by Article 1144 of the Civil Code of the Philippines (Rollo,
G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine
Airlines, Inc., 70 SCRA 244 (1976).

30

AIBC and BRII, insisting that the actions on the claims have
prescribed under the Amiri Decree No. 23 of 1976, argue that there is in force
in the Philippines a "borrowing law," which is Section 48 of the Code of Civil
Procedure and that where such kind of law exists, it takes precedence over
the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on
prescription of action based on the Amiri Decree No. 23 of 1976 or a
Philippine law on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry of the
contract. (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the
forum. Procedural matters, such as service of process, joinder of actions,
period and requisites for appeal, and so forth, are governed by the laws of the
forum. This is true even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International
Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in
the sense that it may be viewed either as procedural or substantive,
depending on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American
court applied the statute of limitations of New York, instead of the
Panamanian law, after finding that there was no showing that the
Panamanian law on prescription was intended to be substantive. Being
considered merely a procedural law even in Panama, it has to give way to the
law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or
substantive
law
becomes
irrelevant
when
the
country
of the forum has a "borrowing statute." Said statute has the practical effect of
treating
the
foreign
statute
of
limitation
as one of substance (Goodrich, Conflict of Laws 152-153 [1938]). A
"borrowing
statute"
directs
the
state
of
the
forum
to apply the foreign statute of limitations to the pending claims based on a
foreign
law
(Siegel,
Conflicts,
183
[1975]).
While there are several kinds of "borrowing statutes," one form provides that
an
action
barred
by
the
laws
of
the
place where it accrued, will not be enforced in the forum even though the
local
statute
has
not
run
against
it
(Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our
Code
of
Civil
Procedure
is
of
this
kind.
Said Section provides:
If by the laws of the state or country where the cause of action
arose, the action is barred, it is also barred in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of

the Philippines. Article 2270 of said Code repealed only those provisions of
the Code of Civil Procedures as to which were inconsistent with it. There is no
provision in the Civil Code of the Philippines, which is inconsistent with or
contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine
Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be
enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious
to the forum's public policy (Canadian Northern Railway Co. v. Eggen, 252
U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the one-year
prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims
in question would contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987
Constitution emphasized that:
The state shall promote social justice in all phases of national
development. (Sec. 10).
The state affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987
Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
Having determined that the applicable law on prescription is the
Philippine law, the next question is whether the prescriptive period governing
the filing of the claims is three years, as provided by the Labor Code or ten
years, as provided by the Civil Code of the Philippines.
The claimants are of the view that the applicable provision is Article
1144 of the Civil Code of the Philippines, which provides:
The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is
Article 291 of the Labor Code of the Philippines, which in pertinent part
provides:
Money claims-all money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three
(3) years from the time the cause of action accrued, otherwise they shall be
forever barred.
xxx xxx xxx

31

The case of Philippine Air Lines Employees Association v. Philippine

Air
Lines,
Inc.,
70
SCRA
244
(1976)
invoked
by
the claimants in G.R. Nos. 104911-14 is inapplicable to the cases at bench
(Rollo,
p.
21).
The
said
case
involved
the
correct computation of overtime pay as provided in the collective bargaining
agreements
and
not
the
Eight-Hour
Labor Law.
As noted by the Court: "That is precisely why petitioners did not
make any reference as to the computation for overtime work under the
Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead insisted
that work computation provided in the collective bargaining agreements
between the parties be observed. Since the claim for pay differentials is
primarily anchored on the written contracts between the litigants, the tenyear prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended
by R.A. No. 19933) provides:
Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued otherwise
such action shall be forever barred, . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor Law
(CA
No.
444
as
amended)
will
apply, if the claim for differentials for overtime work is solely based on said
law,
and
not
on
a
collective
bargaining agreement or any other contract. In the instant case, the claim for
overtime
compensation
is
not so much because of Commonwealth Act No. 444, as amended but
because
the
claim
is
demandable right of the employees, by reason of the above-mentioned
collective
bargaining
agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive
period for filing "actions to enforce any cause of action under said law." On
the other hand, Article 291 of the Labor Code of the Philippines provides the
prescriptive period for filing "money claims arising from employer-employee
relations." The claims in the cases at bench all arose from the employeremployee relations, which is broader in scope than claims arising from a
specific law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year
prescriptive period under Article 291 of the Labor Code of the Philippines
applies only to money claims specifically recoverable under said Code, does
not find support in the plain language of the provision. Neither is the
contention of the claimants in G.R. Nos. 104911-14 that said Article refers
only to claims "arising from the employer's violation of the employee's right,"

as provided by the Labor Code supported by the facial reading of the

provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776,
claimants aver: (1) that while their complaints were filed on June 6, 1984 with
POEA, the case was decided only on January 30, 1989, a clear denial of their
right to a speedy disposition of the case; and (2) that NLRC and the POEA
Administrator should have declared AIBC and BRII in default (Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987
Constitution, which provides:
Sec. 16. All persons shall have the right to a speedy disposition of
their cases before all judicial, quasijudicial, or administrative bodies.
It is true that the constitutional right to "a speedy disposition of
cases" is not limited to the accused in criminal proceedings but extends to all
parties in all cases, including civil and administrative cases, and in all
proceedings, including judicial and quasi-judicial hearings. Hence, under the
Constitution, any party to a case may demand expeditious action on all
officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987),
"speedy
disposition
of
cases"
is
a
relative
term.
Just like the constitutional guarantee of "speedy trial" accorded to the
accused
in
all
criminal
proceedings,
"speedy
disposition of cases" is a flexible concept. It is consistent with delays and
depends
upon
the
circumstances
of
each
case. What the Constitution prohibits are unreasonable, arbitrary and
oppressive
delays
which
render
rights
nugatory.
Caballero laid down the factors that may be taken into
consideration in determining whether or not the right to a "speedy disposition
of cases" has been violated, thus:
In the determination of whether or not the right to a "speedy trial"
has been violated, certain factors may be considered and balanced against
each other. These are length of delay, reason for the delay, assertion of the
right or failure to assert it, and prejudice caused by the delay. The same
factors may also be considered in answering judicial inquiry whether or not a
person officially charged with the administration of justice has violated the
speedy disposition of cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we
held:
It must be here emphasized that the right to a speedy disposition of
a
case,
like
the
right
to
speedy
trial,
is deemed violated only when the proceeding is attended by vexatious,

32

capricious,
and
oppressive
delays; or when unjustified postponements of the trial are asked for and
secured,
or
when
without
cause or justified motive a long period of time is allowed to elapse without the
party
having
his
case
tried.
Since July 25, 1984 or a month after AIBC and BRII were served with
a copy of the amended complaint, claimants had been asking that AIBC and
BRII be declared in default for failure to file their answers within the ten-day
period provided in Section 1, Rule III of Book VI of the Rules and Regulations
of the POEA. At that time, there was a pending motion of AIBC and BRII to
strike out of the records the amended complaint and the "Compliance" of
claimants to the order of the POEA, requiring them to submit a bill of
particulars.
The cases at bench are not of the run-of-the-mill variety, such that
their final disposition in the administrative level after seven years from their
inception, cannot be said to be attended by unreasonable, arbitrary and
oppressive delays as to violate the constitutional rights to a speedy
disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of
1,767 claimants. Said complaint had undergone several amendments, the
first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They
were deployed in different areas, one group in and the other groups outside
of, Bahrain. The monetary claims totalling more than US$65 million according
to Atty. Del Mundo, included:
1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal
Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees
Benefits consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to
recruit of AIBC and issued by the POEA; and

15. Penalty for violation of Article 34 (Prohibited practices) not

excluding reportorial requirements thereof (NLRC Resolution, September 2,
1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient
definiteness and clarity of some facts, the claimants were ordered to comply
with the motion of AIBC for a bill of particulars. When claimants filed their
"Compliance and Manifestation," AIBC moved to strike out the complaint from
the records for failure of claimants to submit a proper bill of particulars. While
the POEA Administrator denied the motion to strike out the complaint, he
ordered the claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the
complaint, the records of employment of the more than 1,700 claimants had
to be retrieved from various countries in the Middle East. Some of the records
dated as far back as 1975.
The hearings on the merits of the claims before the POEA
Administrator were interrupted several times by the various appeals, first to
NLRC and then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases
were filed against AIBC and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May
29,
1986
(POEA
Case
No.
L-86-05-460).
NLRC,
in exasperation, noted that the exact number of claimants had never been
completely
established
(Resolution,
Sept.
2, 1991, G.R. No. 104776, Rollo, p. 57). All the three new cases were
consolidated
with
POEA
Case
No.
L-84-06555.
NLRC blamed the parties and their lawyers for the delay in
terminating the proceedings, thus:
These cases could have been spared the long and arduous route
towards resolution had the parties and their counsel been more interested in
pursuing the truth and the merits of the claims rather than exhibiting a
fanatical reliance on technicalities. Parties and counsel have made these
cases a litigation of emotion. The intransigence of parties and counsel is
remarkable. As late as last month, this Commission made a last and final
attempt to bring the counsel of all the parties (this Commission issued a
special order directing respondent Brown & Root's resident agent/s to appear)
to come to a more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay
in the disposition of the cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these
consolidated
cases
appear
to
be
not
only the individual complainants, on the one hand, and AIBC and Brown &
Root,
on
the
other
hand.
The two lawyers for the complainants, Atty. Gerardo Del Mundo and Atty.

33

Florante De Castro, have yet to settle the right of representation, each one
persistently claiming to appear in behalf of most of the complainants. As a
result, there are two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of their respective
authority to represent the complainants prove futile. The bickerings by
these two counsels are reflected in their pleadings. In the charges and
countercharges of falsification of documents and signatures, and in the
disbarment proceedings by one against the other. All these have, to a large
extent, abetted in confounding the issues raised in these cases, jumble the
presentation of evidence, and even derailed the prospects of an amicable
settlement. It would not be far-fetched to imagine that both counsel,
unwittingly,
perhaps,
painted
a
rainbow
for
the
complainants, with the proverbial pot of gold at its end containing more than
US$100 million, the aggregate of the claims in these cases. It is, likewise, not
improbable that their misplaced zeal and exuberance caused them to throw
all caution to the wind in the matter of elementary rules of procedure and
evidence (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the
listing of some of the complainants in both petitions filed by the two lawyers.
As noted by NLRC, "the problem created by this situation is that if one of the
two petitions is dismissed, then the parties and the public respondents would
not know which claim of which petitioner was dismissed and which was not."
B. Claimants insist that all their claims could properly be
consolidated in a "class suit" because "all the named complainants have
similar money claims and similar rights sought irrespective of whether they
worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya or in any part
of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is
one of common or general interest to many and the parties are so numerous
that it is impracticable to bring them all before the court (Revised Rules of
Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law,
many of the claimants worked outside Bahrain. Some of the claimants were
deployed in Indonesia and Malaysia under different terms and
conditions of employment.
NLRC and the POEA Administrator are correct in their stance that
inasmuch as the first requirement of a class suit is not present (common or
general interest based on the Amiri Decree of the State of Bahrain), it is only
logical that only those who worked in Bahrain shall be entitled to file their
claims in a class suit.
While there are common defendants (AIBC and BRII) and the
nature
of
the
claims
is
the
same
(for
employee's
benefits), there is no common question of law or fact. While some claims are
based
on
the
Amiri
Law
of
Bahrain,
many of the claimants never worked in that country, but were deployed

elsewhere. Thus, each claimant is interested only in his own demand and not
in the claims of the other employees of defendants. The named claimants
have a special or particular interest in specific benefits completely different
from the benefits in which the other named claimants and those included as
members of a "class" are claiming (Berses v. Villanueva, 25 Phil. 473 [1913]).
It appears that each claimant is only interested in collecting his own claims. A
claimants has no concern in protecting the interests of the other claimants as
shown by the fact, that hundreds of them have abandoned their co-claimants
and have entered into separate compromise settlements of their respective
claims. A principle basic to the concept of "class suit" is that plaintiffs brought
on the record must fairly represent and protect the interests of the others
(Dimayuga v. Court of Industrial Relations, 101 Phil. 590 [1957]). For this
matter, the claimants who worked in Bahrain can not be allowed to sue in a
class suit in a judicial proceeding. The most that can be accorded to them
under the Rules of Court is to be allowed to join as plaintiffs in one complaint
(Revised Rules of Court, Rule 3, Sec.
6).
The Court is extra-cautious in allowing class suits because they are
the exceptions to the condition sine qua non, requiring the joinder of all
indispensable parties.
In an improperly instituted class suit, there would be no problem if
the decision secured is favorable to the plaintiffs. The problem arises when
the decision is adverse to them, in which case the others who were impleaded
by their self-appointed representatives, would surely claim denial of due
process.
C. The claimants in G.R. No. 104776 also urged that the POEA
Administrator
and
NLRC
should
have
declared
Atty.
Florante De Castro guilty of "forum shopping, ambulance chasing
activities,
falsification,
duplicity
and
other
unprofessional activities" and his appearances as counsel for some of the
claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is
intended to put a stop to the practice of some parties of filing multiple
petitions and complaints involving the same issues, with the result that the
courts
or
agencies
have
to resolve the same issues. Said Rule, however, applies only to petitions filed
with theSupreme Court and the Court of Appeals. It is entitled "Additional
Requirements For Petitions Filed with the Supreme Court and the Court of
Appeals To Prevent Forum Shopping or Multiple Filing of Petitioners and
Complainants."
The
first
sentence
of
the
circular expressly states that said circular applies to an governs the filing of
petitions
in
the
Supreme
Court
and
the
Court of Appeals.

34

While Administrative Circular No. 04-94 extended the application of

the anti-forum shopping rule to the lower courts and administrative agencies,
said circular took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for
unethical conduct against Atty. De Castro because NLRC and POEA have no
jurisdiction to investigate charges of unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December
14, 1992 was filed by Atty. Gerardo A. Del Mundo to protect his claim for
attorney's fees for legal services rendered in favor of the claimants (G.R. No.
104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the
court or administrative agency which renders and executes the money
judgment secured by the lawyer for his clients. The lawyer shall cause written
notice thereof to be delivered to his clients and to the adverse party (Revised
Rules of Court, Rule 138, Sec. 37). The statement of the claim for the charging
lien of Atty. Del Mundo should have been filed with the administrative agency
that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante
De Castro and Atty. Katz Tierra for violation of the Code of Professional
Responsibility should be filed in a separate and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not
accepting their formula of "Three Hours Average Daily Overtime" in
computing the overtime payments. They claim that it was BRII itself which
proposed the formula during the negotiations for the settlement of their
claims in Bahrain and therefore it is in estoppel to disclaim said offer (Rollo,
pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of
Bahrain
dated
April
16,
1983,
which
in
pertinent
part
states:
After the perusal of the memorandum of the Vice President and the
Area Manager, Middle East, of Brown & Root Co. and the Summary of the
compensation offered by the Company to the employees in respect of the
difference of pay of the wages of the overtime and the difference of vacation
leave and the perusal of the documents attached thereto i.e., minutes
of
the
meetings
between
the
Representative of the employees and the management of the Company, the
complaint filed by the employees on 14/2/83 where they have claimed as
hereinabove stated, sample of the Service Contract executed between one of
the employees and the company through its agent in (sic) Philippines,
International Builders Corporation where it has been provided for 48
hours of work per week and an annual leave of 12 days and an overtime
wage of 1 & 1/4 of the normal hourly wage.

xxx xxx xxx

The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is
35 months for the Philippino (sic) employees . . .
2. The average wage per hour for the Philippino (sic) employee is
US$2.69 . . .
3. The average hours for the overtime is 3 hours plus in all public
holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation
for the difference of the wages of the overtime done for each Philippino (sic)
employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not
prepared by them but by a subordinate official in the Bahrain Department of
Labor; (2) that there was no showing that the Bahrain Minister of Labor had
approved said memorandum; and (3) that the offer was made in the course of
the negotiation for an amicable settlement of the claims and therefore it was
not admissible in evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing
the rule on presenting official documents of a foreign government as provided
in Section 24, Rule 132 of the 1989 Revised Rules on Evidence, it can be
admitted in evidence in proceedings before an administrative body. The
opposing parties have a copy of the said memorandum, and they could
easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as
contained in the memorandum is another matter. Under Section 27, Rule 130
of the 1989 Revised Rules on Evidence, an offer to settle a claim is not an
admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. In civil cases, an offer of
compromise is not an admission of any liability, and is not admissible in
evidence against the offeror.
This Rule is not only a rule of procedure to avoid the
cluttering of the record with unwanted evidence but a statement of
public policy. There is great public interest in having the protagonists settle
their differences amicable before these ripen into litigation. Every effort must
be taken to encourage them to arrive at a settlement. The submission of
offers and counter-offers in the negotiation table is a step in the right
direction. But to bind a party to his offers, as what claimants would make this
Court do, would defeat the salutary purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for
greater benefits than those stipulated in the overseas-employment contracts
of the claimants. It was of the belief that "where the laws of the host country
are more favorable and beneficial to the workers, then the laws of the host
country shall form part of the overseas employment contract." It quoted

35

with approval the observation of the POEA Administrator that ". . . in

labor proceedings, all doubts in the implementation of the provisions of the
Labor Code and its implementing regulations shall be resolved in favor of
labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and
whimsically
when
it
refused
to
enforce
the
overseasemployment contracts, which became the law of the parties. They contend
that the principle that a law is deemed to be a part of a contract applies only
to provisions of Philippine law in relation to contracts executed in the
Philippines.
The overseas-employment contracts, which were prepared by AIBC
and BRII themselves, provided that the laws of the host country became
applicable to said contracts if they offer terms and conditions more favorable
that those stipulated therein. It was stipulated in said contracts that:
The Employee agrees that while in the employ of the
Employer, he will not engage in any other business or occupation, nor seek
employment with anyone other than the Employer; that he shall devote his
entire time and attention and his best energies, and abilities to the
performance of such duties as may be assigned to him by the Employer; that
he shall at all times be subject to the direction and control of the Employer;
and that the benefits provided to Employee hereunder are substituted for and
in lieu of all other benefits provided by any applicable law, provided of
course, that total remuneration and benefits do not fall below that of the
host country regulation or custom, it being understood that should applicable
laws establish that fringe benefits, or other such benefits additional to the
compensation herein agreed cannot be waived, Employee agrees that such
compensation will be adjusted downward so that the total compensation
hereunder, plus the non-waivable benefits shall be equivalent to the
compensation herein agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more
felicitously.
While
a
part
thereof
provides
that
the compensation to the employee may be "adjusted downward so that the
total
computation
(thereunder)
plus
the
non-waivable benefits shall be equivalent to the compensation" therein
agreed, another part of the same provision categorically states "that total
remuneration and benefits do not fall below that of the host country
regulation and custom."
Any ambiguity in the overseas-employment contracts should be
interpreted against AIBC and BRII, the parties that drafted it (Eastern Shipping
Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion
where there is already a prepared form containing the stipulations of the

employment contract and the employees merely "take it or leave it." The
presumption is that there was an imposition by one party against the other
and that the employees signed the contracts out of necessity that reduced
their bargaining power (Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70
[1968]).
Applying the said legal precepts, we read the overseas-employment
contracts in question as adopting the provisions of the Amiri Decree No. 23 of
1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be
governed (Cheshire, Private International Law, 187 [7th ed.]). In such a case,
the foreign law is adopted as a "system" to regulate the relations of the
parties, including questions of their capacity to enter into the contract, the
formalities to be observed by them, matters of performance, and so forth (16
Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties
may just agree that specific provisions of a foreign statute shall be deemed
incorporated into their contract "as a set of terms." By such reference to the
provisions of the foreign law, the contract does not become a foreign contract
to be governed by the foreign law. The said law does not operate as a statute
but as a set of contractual terms deemed written in the contract (Anton,
Private International Law, 197 [1967]; Dicey and Morris, The Conflict of Laws,
702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties
(Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal of
Transnational Law 1, 21 [1977]). Such party expectation is protected by giving
effect to the parties' own choice of the applicable law (Fricke v. Isbrandtsen
Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must, however,
bear some relationship to the parties or their transaction (Scoles and Hayes,
Conflict of Law 644-647 [1982]). There is no question that the contracts
sought to be enforced by claimants have a direct connection with the
Bahrain law because the services were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117
SCRA 486 (1982), the "Employment Agreement," between Norse Management
Co. and the late husband of the private respondent, expressly provided that in
the event of illness or injury to the employee arising out of and in the course
of his employment and not due to his own misconduct, "compensation shall
be paid to employee in accordance with and subject to the limitation
of the Workmen's Compensation Act of the Republic of the Philippines or the
Worker's Insurance Act of registry of the vessel, whichever is greater." Since
the laws of Singapore, the place of registry of the vessel in which the late
husband of private respondent served at the time of his death, granted a
better compensation package, we applied said foreign law in preference to
the terms of the contract.

36

The case of Bagong Filipinas Overseas Corporation v. National

Labor
Relations
Commission,
135
SCRA
278
(1985), relied upon by AIBC and BRII is inapposite to the facts of the cases at
bench. The issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the shipboard
employment contract executed in the Philippines or the Hongkong law.
Holding
that
the
shipboard
employment
contract was controlling, the court differentiated said case from Norse
Management Co. in that in the latter case there was an express stipulation in
the employment contract that the foreign law would be applicable if it
afforded greater compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right
to due process when said administrative agency granted Friday-pay
differential, holiday-pay differential, annual-leave differential and leave
indemnity pay to the claimants listed in Annex B of the Resolution. At first,
NLRC reversed the resolution of the POEA Administrator granting these
benefits on a finding that the POEA Administrator failed to consider the
evidence presented by AIBC and BRII, that some findings of fact of the POEA
Administrator were not supported by the evidence, and that some of the
evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But
instead of remanding the case to the POEA Administrator for a new hearing,
which means further delay in the termination of the case, NLRC decided to
pass upon the validity of the claims itself. It is this procedure that AIBC and
BRII complain of as being irregular and a "reversible error."
They pointed out that NLRC took into consideration evidence
submitted
on
appeal,
the
same
evidence
which
NLRC
found to have been "unilaterally submitted by the claimants and not disclosed
to
the
adverse
parties"
(Rollo,
pp.
3739).
NLRC noted that so many pieces of evidentiary matters were
submitted to the POEA administrator by the claimants after the cases were
deemed submitted for resolution and which were taken cognizance of
by
the
POEA
Administrator in resolving the cases. While AIBC and BRII had no
opportunity to refute said evidence of the claimants before the POEA
Administrator, they had all the opportunity to rebut said evidence and to
present their counter-evidence before NLRC. As a matter of fact, AIBC and
BRII themselves were able to present before NLRCadditional evidence which
they failed to present before the POEA Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is
enjoined to "use every and all reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of law
or procedure, all in the interest of due process."
In deciding to resolve the validity of certain claims on the basis of
the evidence of both parties submitted before the POEA Administrator and

NLRC, the latter considered that it was not expedient to remand the cases to
the POEA Administrator for that would only prolong the already protracted
legal controversies.
Even the Supreme Court has decided appealed cases on the merits
instead of remanding them to the trial court for the reception of evidence,
where the same can be readily determined from the uncontroverted facts on
record (Development Bank of the Philippines v. Intermediate Appellate Court,
190 SCRA 653 [1990]; Pagdonsalan v. National Labor Relations Commission,
127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when
it ordered the POEA Administrator to hold new hearings for 683 claimants
listed in Annex D of the Resolution dated September 2, 1991 whose claims
had been denied by the POEA Administrator "for lack of proof" and for 69
claimants listed in Annex E of the same Resolution, whose claims had been
found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the
Philippines, which empowers it "[to] conduct investigation for the
determination of a question, matter or controversy, within its
jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under
Article 218(c) to remand a case involving claims which had already been
dismissed because such provision contemplates only situations where
there is still a question or controversy to be resolved (Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the
technical rules of procedure and evidence do not apply to the proceedings
conducted by administrative agencies (First Asian Transport & Shipping
Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld Publishing House, Inc. v.
Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the
Labor Code of the Philippines and is now the bedrock of proceedings before
NLRC.
Notwithstanding the non-applicability of technical rules of
procedure and evidence in administrative proceedings, there are cardinal
rules which must be observed by the hearing officers in order to comply with
the due process requirements of the Constitution. These cardinal rules are
collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised
Rules of Court on the grounds that NLRC had committed grave abuse of
discretion amounting to lack of jurisdiction in issuing the questioned orders.
We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.

37

respectively; that the parties were divorced in Nevada, United

States, in 1982; and that petitioner has re-married also in Nevada, this time
to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner
in Civil Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City,
stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for
short), is conjugal property of the parties, and asking that petitioner be
ordered to render an accounting of that business, and that private respondent
be declared with right to manage the conjugal property. Petitioner moved to
dismiss the case on the ground that the cause of action is barred by previous
judgment in the divorce proceedings before the Nevada Court wherein
respondent had acknowledged that he and petitioner had "no community
property" as of June 11, 1982. The Court below denied the Motion to Dismiss
in the mentioned case on the ground that the property involved is located in
the Philippines so that the Divorce Decree has no bearing in the case. The
denial is now the subject of this certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is
interlocutory
and
is
not
subject
to
appeal.
certiorari
and
Prohibition are neither the remedies to question the propriety of an
interlocutory
order
of
the
trial
Court.
However,
when a grave abuse of discretion was patently committed, or the lower Court
acted
capriciously
and
whimsically,
then it devolves upon this Court in a certiorari proceeding to exercise its
supervisory authority and to correct the
error committed which, in such a case, is equivalent to lack of
jurisdiction. 1 Prohibition would then lie since it would be useless and a waste
of time to go ahead with the proceedings. 2 Weconsider the petition filed in
this case within the exception, and we have given it due course.
For resolution is the effect of the foreign divorce on the parties and
their alleged conjugal property in the Philippines.
Petitioner contends that respondent is estopped from laying claim
on the alleged conjugal property because of the representation he made in
the divorce proceedings before the American Court that they had no
community of property; that the Galleon Shop was not established through
conjugal funds, and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued
by the Nevada Court cannot prevail over the prohibitive laws of the
Philippines and its declared national policy; that the acts and declaration of a
foreign Court cannot, especially if the same is contrary to public policy, divest
Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine
whether
the
property
relations
between
petitioner
and
private respondent, after their marriage, were upon absolute or relative
community
property,
upon
complete

Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-68470 October 8, 1985
ALICE
REYES
VAN
DORN,
petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch
CX, Regional Trial Court of the National Capital Region Pasay City and
RICHARD UPTON respondents.

MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes
Van Dorn seeks to set aside the Orders, dated September 15, 1983 and
August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which
denied her Motion to Dismiss said case, and her Motion for Reconsideration of
the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the
Philippines
while
private
respondent
is
a
citizen
of
the United States; that they were married in Hongkong in 1972; that, after
the
marriage,
they
established
their
residence in the Philippines; that they begot two children born on April
4, 1973 and December 18, 1975,

38

separation of property, or upon any other regime. The pivotal fact in this case
is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained
jurisdiction
over
petitioner
who
appeared
in
person before the Court during the trial of the case. It also obtained
jurisdiction
over
private
respondent
who,
giving
his address as No. 381 Bush Street, San Francisco, California, authorized his
attorneys
in
the
divorce
case,
Karp
&
Gradt Ltd., to agree to the divorce on the ground of incompatibility in the
understanding that there were neither community property nor community
obligations. 3 As explicitly stated in the Power of Attorney he executed in favor
of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to
represent him in the divorce proceedings:
xxx xxx xxx
You are hereby authorized to accept service of Summons, to file an
Answer,
appear
on
my
behalf
and
do an things necessary and proper to represent me, without further
contesting, subject to the following:
1. That my spouse seeks a divorce on the ground of incompatibility.
2. That there is no community of property to be adjudicated by the
Court.
3. 'I'hat there are no community obligations to be adjudicated by
the court. xxx xxx xxx 4
There can be no question as to the validity of that Nevada divorce
in any of the States of the United States. The decree is binding on private
respondent as an American citizen. For instance, private respondent
cannot sue petitioner, as her husband, in any State of the Union. What he is
contending in this case is that the divorce is not valid and binding in this
jurisdiction, the same being contrary to local law and public policy.

either. A husband without a wife, or a wife without a husband, is unknown to

the law. When the law provides, in the nature of a penalty. that the guilty
party shall not marry again, that party, as well as the other, is still absolutely
freed from the bond of the former marriage.
Thus, pursuant to his national law, private respondent is no longer
the husband of petitioner. He would have no standing to sue in the case
below as petitioner's husband entitled to exercise control over conjugal
assets. As he is bound by the Decision of his own country's Court, which
validly exercised jurisdiction over him, and whose decision he does not
repudiate, he is estopped by his own representation before said Court from
asserting his right over the alleged conjugal property.
To maintain, as private respondent does, that, under our laws,
petitioner has to be considered still married to private respondent and still
subject to a wife's obligations under Article 109, et. seq. of the Civil Code
cannot be just. Petitioner should not be obliged to live together with, observe
respect and fidelity, and render support to private respondent. The latter
should not continue to be one of her heirs with possible rights to conjugal
property. She should not be discriminated against in her own country if the
ends of justice are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is
hereby ordered to dismiss the Complaint filed in Civil Case No. 1075-P of his
Court.
Without costs.
SO ORDERED.

It is true that owing to the nationality principle embodied in Article

5
15
of
the
Civil
Code,
only
Philippine
nationals
are
covered by the policy against absolute divorces the same being considered
contrary
to
our
concept
of
public
police
and
morality. However, aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid
according to their national law. 6 In this case, the divorce in Nevada
released private respondent from the marriage from the standards of
American law, under which divorce dissolves the marriage. As stated by the
Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed.
794, 799:
The purpose and effect of a decree of divorce from the bond of
matrimony by a court of competent jurisdiction are to change the existing
status or domestic relation of husband and wife, and to free them both from
the bond. The marriage tie when thus severed as to one party, ceases to bind

39

G.R. No. 80116 June 30, 1989

IMELDA
MANALAYSAY

PILAPIL,

After about three and a half years of marriage, such

connubial
disharmony
eventuated
in
private
respondent
initiating a divorce proceeding against petitioner in Germany before the
Schoneberg Local Court in January, 1983.
He claimed that there was failure of their marriage and that they
had been living apart since April, 1982. 2
Petitioner, on the other hand, filed an action for legal separation,
support
and
separation
of
property
before
the
Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the
same is still pending as Civil Case No. 83-15866. 3
On January 15, 1986, Division 20 of the Schoneberg Local Court,
Federal
Republic
of
Germany,
promulgated
a
decree of divorce on the ground of failure of marriage of the spouses. The
custody
of
the
child
was
granted
to
petitioner. The records show that under German law said court was locally
and
internationally
competent
for
the
divorce proceeding and that the dissolution of said marriage was legally
founded on and authorized by the applicable law of that foreign
jurisdiction. 4
On June 27, 1986, or more than five months after the issuance of
the
divorce
decree,
private
respondent
filed
two
complaints for adultery before the City Fiscal of Manila alleging that, while still
married
to
said
respondent,
petitioner
"had an affair with a certain William Chia as early as 1982 and with yet
another
man
named
Jesus
Chua
sometime
in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding
investigation, recommended the
dismissal of the cases on the ground of insufficiency of evidence. 5
However,
upon
review,
the
respondent
city
fiscal
approved a resolution, dated January 8, 1986, directing the filing of two
6
complaints
for
adultery
against
the
petitioner.
The
complaints were accordingly filed and were eventually raffled to two branches
of
the
Regional
Trial
Court
of
Manila.
The
case
entitled "People of the Philippines vs. Imelda Pilapil and William Chia",
docketed
as
Criminal
Case
No.
87-52435,
was
assigned to Branch XXVI presided by the respondent judge; while the other
case,
"People
of
the
Philippines
vs.
Imelda
Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the
sala of Judge Leonardo Cruz, Branch XXV, of
the same court. 7
On March 14, 1987, petitioner filed a petition with the Secretary of
Justice
asking
that
the
aforesaid
resolution
of
respondent fiscal be set aside and the cases against her be dismissed. 8 A
similar
petition
was
filed
by
James
Chua,
her co-accused in Criminal Case No. 87-52434. The Secretary of Justice,

petitioner,

vs.
HON. CORONA IBAY-SOMERA, in her capacity as Presiding
Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS
C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH
EKKEHARD GEILING, respondents.
REGALADO, J.:
An ill-starred marriage of a Filipina and a foreigner which ended in a
foreign absolute divorce, only to be followed by a criminal infidelity suit of the
latter against the former, provides Us the opportunity to lay down a decisional
rule on what hitherto appears to be an unresolved jurisdictional question.
On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a
Filipino
citizen,
and
private
respondent
Erich
Ekkehard Geiling, a German national, were married before the Registrar
of
Births,
Marriages
and
Deaths
at
Friedensweiler in the Federal Republic of Germany. The marriage started
auspiciously enough, and the couple lived
together for some time in Malate, Manila where their only child,
Isabella Pilapil Geiling, was born on April 20, 1980. 1
Thereafter, marital discord set in, with mutual recriminations
between the spouses, followed by a separation de facto between them.

40

the dismissal of the complaints against the petitioner. 16

We find this petition meritorious. The writs prayed for shall
accordingly issue.
Under Article 344 of the Revised Penal Code, 17 the crime of
adultery,
as
well
as
four
other
crimes
against
chastity,
cannot be prosecuted except upon a sworn written complaint filed by
the
offended
spouse.
It
has
long
since
been
established, with unwavering consistency, that compliance with this rule
is a jurisdictional, and not merely a formal,
requirement. 18 While in point of strict law the jurisdiction of the
court over the offense is vested in it by the Judiciary Law, the
requirement for a sworn written complaint is just as jurisdictional a mandate
since it is that complaint which starts the
prosecutory proceeding 19 and without which the court cannot
exercise its jurisdiction to try the case.
Now, the law specifically provides that in prosecutions for adultery
and concubinage the person who can legally file the complaint should be the
offended spouse, and nobody else. Unlike the offenses of seduction,
abduction, rape and acts of lasciviousness, no provision is made for the
prosecution of the crimes of adultery and concubinage by the parents,
grandparents or guardian of the offended party. The so-called exclusive and
successive rule in the prosecution of the first four offenses above mentioned
do not apply to adultery and concubinage. It is significant that while the
State, as parens patriae, was added and vested by the 1985 Rules of Criminal
Procedure with the power to initiate the criminal action for a deceased or
incapacitated victim in the aforesaid offenses of seduction, abduction, rape
and acts of lasciviousness, in default of her parents, grandparents or
guardian, such amendment did not include the crimes of adultery and
concubinage. In other words, only the offended spouse, and no other,
is authorized by law to initiate the action therefor.
Corollary to such exclusive grant of power to the offended spouse to
institute the action, it necessarily follows that such initiator must have the
status, capacity or legal representation to do so at the time of the filing of the
criminal action. This is a familiar and express rule in civil actions; in fact, lack
of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is
determined as of the filing of the complaint or petition.
The absence of an equivalent explicit rule in the prosecution of
criminal cases does not mean that the same requirement and rationale would
not apply. Understandably, it may not have been found necessary since
criminal actions are generally and fundamentally commenced by the
State, through the People of the Philippines, the offended party being
merely the complaining witness therein. However, in the so-called "private
crimes" or those which cannot be prosecuted de oficio, and the present
prosecution for adultery is of such genre, the offended spouse assumes a

through
the
Chief
State
Prosecutor,
gave
due
course to both petitions and directed the respondent city fiscal to inform the
Department
of
Justice
"if
the
accused
have
already been arraigned and if not yet arraigned, to move to defer further
proceedings" and to elevate the entire records of
both cases to his office for review. 9
Petitioner thereafter filed a motion in both criminal cases to
defer her arraignment and to suspend further proceedings thereon. 10 As a
consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case
No.
87-52434.
On the other hand, respondent judge merely reset the date of the
arraignment
in
Criminal
Case
No.
87-52435
to
April
6,
1987. Before such scheduled date, petitioner moved for the cancellation
of
the
arraignment
and
for
the
suspension
of
proceedings in said Criminal Case No. 87-52435 until after the resolution of
the petition for review then pending before the
Secretary of Justice. 11 A motion to quash was also filed in the same
12
case
on
the
ground
of
lack
of
jurisdiction,
which
motion was denied by the respondent judge in an order dated
September
8,
1987.
The
same
order
also
directed
the
arraignment of both accused therein, that is, petitioner and William Chia. The
latter
entered
a
plea
of
not
guilty
while
the
petitioner refused to be arraigned. Such refusal of the petitioner being
considered by respondent judge as direct contempt,
she and her counsel were fined and the former was ordered
detained until she submitted herself for arraignment. 13 Later, private
respondent entered a plea of not guilty. 14
On October 27, 1987, petitioner filed this special civil action
for
certiorari
and
prohibition,
with
a
prayer
for
a
temporary restraining order, seeking the annulment of the order of the lower
court
denying
her
motion
to
quash.
The
petition is anchored on the main ground that the court is without jurisdiction
"to
try
and
decide
the
charge
of
adultery,
which is a private offense that cannot be prosecuted de officio (sic), since the
purported
complainant,
a
foreigner,
does not qualify as an offended spouse having obtained a final divorce decree
under his national law prior to his filing the criminal complaint." 15
On October 21, 1987, this Court issued a temporary restraining
order
enjoining
the
respondents
from
implementing
the aforesaid order of September 8, 1987 and from further proceeding
with Criminal Case No. 87-52435.
Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A.
Ordoez
acted
on
the
aforesaid
petitions
for
review and, upholding petitioner's ratiocinations, issued a resolution directing
the respondent city fiscal to move for

41

more predominant role since the right to commence the action, or to refrain
therefrom, is a matter exclusively within his power and option.
This policy was adopted out of consideration for the aggrieved
party who might prefer
to suffer the outrage in silence
rather than go through the scandal of a public trial. 20 Hence, as cogently
argued
by
petitioner,
Article
344
of
the
Revised
Penal Code thus presupposes that the marital relationship is still subsisting at
the
time
of
the
institution
of
the
criminal
action
for, adultery. This is a logical consequence since the raison d'etre of said
provision of law would be absent where the
supposed offended party had ceased to be the spouse of the
alleged offender at the time of the filing of the criminal case. 21
In these cases, therefore, it is indispensable that the status and
capacity
of
the
complainant
to
commence
the
action
be definitely established and, as already demonstrated, such status or
capacity
must
indubitably
exist
as
of
the
time
he initiates the action. It would be absurd if his capacity to bring the action
would
be
determined
by
his
status
before
or subsequent to the commencement thereof, where such capacity or status
existed
prior
to
but
ceased
before,
or
was acquired subsequent to but did not exist at the time of, the institution of
the
case.
We
would
thereby
have
the
anomalous spectacle of a party bringing suit at the very time when he is
without the legal capacity to do so.
To repeat, there does not appear to be any local precedential
jurisprudence
on
the
specific
issue
as
to
when
precisely the status of a complainant as an offended spouse must exist where
a criminal prosecution can becommenced only by one who in law can be
categorized as possessed of such status. Stated differently and with reference
to the present case, the inquiry ;would be whether it is necessary in the
commencement of a criminal action for adultery that the marital bonds
between the complainant and the accused be unsevered and existing at the
time of the institution of the action by the former against the latter.
American jurisprudence, on cases involving statutes in that
jurisdiction which are in pari materia with ours, yields the
rule that after a divorce has been decreed, the innocent spouse no longer has
the
right
to
institute
proceedings
against the offenders where the statute provides that the innocent spouse
shall
have
the
exclusive
right
to
institute
a
prosecution for adultery. Where, however, proceedings have been properly
commenced, a divorce subsequently
granted can have no legal effect on the prosecution of the criminal
proceedings to a conclusion. 22
In the cited Loftus case, the Supreme Court of Iowa held that

'No prosecution for adultery can be commenced except on the

complaint of the husband or wife.' Section 4932, Code. Though Loftus was
husband of defendant when the offense is said to have been committed, he
had ceased to be such when the prosecution was begun; and appellant insists
that his status was not such as to entitle him to make the complaint. We have
repeatedly said that the offense is against the unoffending spouse, as well as
the state, in explaining the reason for this provision in the statute; and we are
of the opinion that the unoffending spouse must be such when the
prosecution is commenced. (Emphasis supplied.)
We see no reason why the same doctrinal rule should not apply in
this case and in our jurisdiction, considering our statutory law and jural policy
on the matter. We are convinced that in cases of such nature, the status of
the complainant vis-a-vis the accused must be determined as of the time the
complaint was filed. Thus, the person who initiates the adultery case must be
an offended spouse, and by this is meant that he is still married to the
accused spouse, at the time of the filing of the complaint.
In the present case, the fact that private respondent obtained a
valid
divorce
in
his
country,
the
Federal
Republic
of
Germany, is admitted. Said divorce and its legal effects may be recognized in
the Philippines insofar as private
respondent is concerned 23 in view of the nationality principle in our
civil law on the matter of status of persons.
Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a
divorce
was
granted
by
a
United
States
court
between Alice Van Dornja Filipina, and her American husband, the latter filed
a
civil
case
in
a
trial
court
here
alleging
that
her
business concern was conjugal property and praying that she be ordered to
render
an
accounting
and
that
the
plaintiff
be
granted the right to manage the business. Rejecting his pretensions, this
Court
perspicuously
demonstrated
the
error
of
such
stance, thus:
There can be no question as to the validity of that Nevada divorce
in any of the States of the United States. The decree is binding on private
respondent as an American citizen. For instance, private respondent cannot
sue petitioner, as her husband, in any State of the Union. ..
It is true that owing to the nationality principle embodied in Article
15 of the Civil Code, only Philippine nationals are covered by the policy
against absolute divorces the same being considered contrary to our concept
of public policy and morality. However, aliens may obtain divorces abroad,
which may be recognized in the Philippines, provided they are valid according
to their national law. ..
Thus, pursuant to his national law, private respondent is no longer
the
husband
of
petitioner.
He
would

42

have no standing to sue in the case below as petitioner's husband entitled to

exercise control over conjugal assets. ... 25
Under the same considerations and rationale, private respondent,
being
no
longer
the
husband
of
petitioner,
had
no
legal standing to commence the adultery case under the imposture that he
was
the
offended
spouse
at
the
time
he
filed suit.
The allegation of private respondent that he could not have brought
this
case
before
the
decree
of
divorce
for
lack
of
knowledge, even if true, is of no legal significance or consequence in this
case.
When
said
respondent
initiated
the
divorce proceeding, he obviously knew that there would no longer be a family
nor
marriage
vows
to
protect
once
a
dissolution of the marriage is decreed. Neither would there be a danger of
introducing spurious heirs into the family,
which is said to be one of the reasons for the particular formulation
of our law on adultery, 26 since there would thenceforth be no spousal
relationship to speak of. The severance of the marital bond had the effect of
dissociating the former spouses from each other, hence the actuations of one
would not affect or cast obloquy on the other.
The aforecited case of United States vs. Mata cannot be
successfully
relied
upon by private respondent.
In
applying
Article 433 of the old Penal Code, substantially the same as Article 333 of the
Revised
Penal
Code,
which
punished
adultery "although the marriage be afterwards declared void", the Court
merely
stated
that
"the
lawmakers
intended
to declare adulterous the infidelity of a married woman to her marital vows,
even
though
it
should
be
made
to
appear
that she is entitled to have her marriage contract declared null and void, until
and
unless
she
actually
secures
a
formal judicial declaration to that effect". Definitely, it cannot be logically
inferred
therefrom
that
the
complaint
can
still be filed after the declaration of nullity because such declaration that the
marriage
is
void
ab
initio
is
equivalent
to
stating that it never existed. There being no marriage from the beginning, any
complaint
for
adultery
filed
after
said
declaration of nullity would no longer have a leg to stand on. Moreover, what
was
consequently
contemplated
and
within the purview of the decision in said case is the situation where the
criminal
action
for
adultery
was
filed
before
the termination of the marriage by a judicial declaration of its nullity ab initio.
The same rule and requisite wouldnecessarily apply where the termination of
the marriage was effected, as in this case, by a valid foreign divorce.
Private respondent's invocation of Donio-Teves, et al. vs. Vamenta,
27
hereinbefore
cited,
must
suffer
the
same
fate
of

inapplicability. A cursory reading of said case reveals that the offended

spouse
therein
had
duly
and
seasonably
filed
a
complaint for adultery, although an issue was raised as to its sufficiency but
which
was
resolved
in
favor
of
the
complainant.
Said case did not involve a factual situation akin to the one at bar or any
issue determinative of the controversy herein.
WHEREFORE, the questioned order denying petitioner's motion to
quash is SET ASIDE and another one entered DISMISSING the complaint in
Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining
order issued in this case on October 21, 1987 is hereby made permanent.
SO ORDERED.

43

FIRST DIVISION
G.R. No. 1243717
PAULA
T.

LLORENTE,

On November 30, 1943, Lorenzo was admitted to United States

citizenship and Certificate of Naturalization No. 5579816 was issued in his
favor by the United States District Court, Southern District of New York. 6
Upon the liberation of the Philippines by the American Forces in
1945, Lorenzo was granted an accrued leave by the U. S. Navy, to visit his
wife and he visited the Philippines. 7 He discovered that his wife Paula was
pregnant and was "living in" and having an adulterous relationship with his
brother, Ceferino Llorente.8
On December 4, 1945, Paula gave birth to a boy registered in the
Office
of
the
Registrar
of
Nabua
as
"Crisologo
Llorente," with the certificate stating that the child was not legitimate and the
line for the fathers name was left
blank.9
Lorenzo refused to forgive Paula and live with her. In fact, on
February
2,
1946,
the
couple
drew
a
written
agreement to the effect that (1) all the family allowances allotted by the
United
States
Navy
as
part
of
Lorenzos
salary and all other obligations for Paulas daily maintenance and support
would
be
suspended;
(2)
they
would
dissolve their marital union in accordance with judicial proceedings; (3) they
would
make
a
separate
agreement
regarding their conjugal property acquired during their marital life; and (4)
Lorenzo
would
not
prosecute
Paula
for
her adulterous act since she voluntarily admitted her fault and agreed to
separate
from
Lorenzo
peacefully.
The
agreement was signed by both Lorenzo and Paula and was witnessed by
Paulas father and stepmother. The
agreement was notarized by Notary Public Pedro Osabel. 10
Lorenzo returned to the United States and on November 16, 1951
filed
for
divorce
with
the
Superior
Court
of
the
State of California in and for the County of San Diego. Paula was represented
by
counsel,
John
Riley,
and
actively
participated in the proceedings. On November 27, 1951, the Superior Court of
the State of California, for the County
of San Diego found all factual allegations to be true and issued an
interlocutory judgment of divorce.11

petitioner,

vs.
COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
DECISION
PARDO,
J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of
Appeals1 modifying that of the Regional Trial Court, Camarines Sur, Branch 35,
Iriga City2 declaring respondent Alicia F. Llorente (herinafter referred to as
"Alicia"), as co-owners of whatever property she and the deceased Lorenzo N.
Llorente (hereinafter referred to as "Lorenzo") may have acquired during the
twenty-five (25) years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of
the United States Navy from March 10, 1927 to September 30, 1957. 3
On February 22, 1937, Lorenzo and petitioner Paula Llorente
(hereinafter referred to as "Paula") were married before a parish priest,
Roman Catholic Church, in Nabua, Camarines Sur.4
Before the outbreak of the Pacific War, Lorenzo departed for the
United States and Paula stayed in the conjugal home in barrio Antipolo,
Nabua, Camarines Sur.5

On December 4, 1952, the divorce decree became final. 12

In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. 13
Apparently, Alicia had no knowledge of the first marriage even if they resided
in the same town as Paula, who did not oppose the marriage or cohabitation. 14
From 1958 to 1985, Lorenzo and Alicia lived together as husband
and wife.15 Their twenty-five (25) year union produced three children, Raul,
Luz and Beverly, all surnamed Llorente.16

44

On March 13, 1981, Lorenzo executed a Last Will and Testament.

The will was notarized by Notary Public Salvador
M. Occiano, duly signed by Lorenzo with attesting witnesses
Francisco Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo
bequeathed all his property to Alicia and their three children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively
my residential house and lot, located at San Francisco, Nabua, Camarines
Sur, Philippines, including ALL the personal properties and other
movables or belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and
to
my
children,
Raul
F.
Llorente,
Luz
F.
Llorente
and Beverly F. Llorente, in equal shares, all my real properties whatsoever and
wheresoever
located,
specifically
my
real properties located at Barangay Aro-Aldao, Nabua, Camarines Sur;
Barangay
Paloyon,
Nabua,
Camarines
Sur;
Barangay Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon,
Sitio
Nalilidong,
Nabua,
Camarines
Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R.
Fortuno
and
unto
my
children,
Raul
F.
Llorente,
Luz F. Llorente and Beverly F. Llorente, in equal shares, my real properties
located
in
Quezon
City
Philippines,
and
covered by Transfer Certificate of Title No. 188652; and my lands in Antipolo,
Rizal,
Philippines,
covered
by
Transfer
Certificate of Title Nos. 124196 and 165188, both of the Registry of Deeds of
the province of Rizal, Philippines;
"(4) That their respective shares in the above-mentioned properties,
whether real or personal properties, shall not be disposed of, ceded, sold and
conveyed to any other persons, but could only be sold, ceded, conveyed and
disposed of by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor
of this my Last Will and Testament, and in her default or incapacity of the
latter to act, any of my children in the order of age, if of age;
"(6) I hereby direct that the executor named herein or her lawful
substitute should served (sic) without bond;
"(7) I hereby revoke any and all my other wills, codicils, or
testamentary dispositions heretofore executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in
any
degree
in
the
Llorentes
Side
should
ever
bother and disturb in any manner whatsoever my wife Alicia R. Fortunato and
my
children
with
respect
to
any
real
or
personal properties I gave and bequeathed respectively to each one of
them by virtue of this Last Will and
Testament."17

On December 14, 1983, Lorenzo filed with the Regional Trial Court,
Iriga,
Camarines
Sur,
a
petition
for
the
probate
and allowance of his last will and testament wherein Lorenzo moved that
Alicia be appointed Special Administratrix
of his estate.18
On January 18, 1984, the trial court denied the motion for the
reason that the testator Lorenzo was still alive. 19 On January 24, 1984, finding
that the will was duly executed, the trial court admitted the will to probate. 20
On June 11, 1985, before the proceedings could be terminated, Lorenzo
died.21
On September 4, 1985, Paula filed with the same court a petition 22
for
letters
of
administration
over
Lorenzos
estate in her favor. Paula contended (1) that she was Lorenzos surviving
spouse,
(2)
that
the
various
property
were
acquired during their marriage, (3) that Lorenzos will disposed of all his
property in favor of Alicia and her children,
encroaching on her legitime and 1/2 share in the conjugal
property.23
On December 13, 1985, Alicia filed in the testate proceeding (Sp.
Proc. No. IR-755), a petition for the issuance of letters testamentary. 24
On October 14, 1985, without terminating the testate proceedings,
the trial court gave due course to Paulas petition in Sp. Proc. No. IR-888. 25
On November 6, 13 and 20, 1985, the order was published in the
newspaper "Bicol Star".26 On May 18, 1987, the Regional Trial Court issued a
joint decision, thus:
"Wherefore, considering that this court has so found that the
divorce decree granted to the late Lorenzo Llorente is void and inapplicable in
the Philippines, therefore the marriage he contracted with Alicia Fortunato on
January 16, 1958 at Manila is likewise void. This being so the petition of Alicia
F. Llorente for the issuance of letters testamentary is denied. Likewise, she is
not entitled to receive any share from the estate even if the will especially
said so her relationship with Lorenzo having gained the status of paramour
which is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular
Llorente,
meritorious,
and
so
declares
the
intrinsic
disposition of the will of Lorenzo Llorente dated March 13, 1981 as void and
declares
her
entitled
as
conjugal
partner and entitled to one-half of their conjugal properties, and as primary
compulsory
heir,
Paula
T.
Llorente
is
also
entitled to one-third of the estate and then one-third should go to the
illegitimate
children,
Raul,
Luz
and
Beverly,
all
surname (sic) Llorente, for them to partition in equal shares and also entitled
to
the
remaining
free
portion
in
equal
shares.

45

"Petitioner, Paula Llorente is appointed legal administrator of the

estate of the deceased, Lorenzo Llorente. As such let the corresponding
letters of administration issue in her favor upon her filing a bond in the
amount (sic) of P100,000.00 conditioned for her to make a return to the court
within three (3) months a true and complete inventory of all goods, chattels,
rights, and credits, and estate which shall at any time come to her possession
or to the possession of any other person for her, and from the proceeds to
pay and discharge all debts, legacies and charges on the same, or such
dividends thereon as shall be decreed or required by this court; to render a
true and just account of her administration to the court within one (1) year,
and at any other time when required by the court and to perform all orders of
this court by her to be performed.
"On the other matters prayed for in respective petitions for want of
evidence could not be granted. "SO ORDERED."27
In time, Alicia filed with the trial court a motion for reconsideration
of the aforequoted decision.28
On September 14, 1987, the trial court denied Alicias motion for
reconsideration
but
modified
its
earlier
decision,
stating that Raul and Luz Llorente are not children "legitimate or otherwise" of
Lorenzo since they were not legally
adopted by him.29 Amending its decision of May 18, 1987, the trial
court
declared
Beverly
Llorente
as
the
only
illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and
one-third (1/3) of the free portion of the
estate.30

We do not agree with the decision of the Court of Appeals. We

remand the case to the trial court for ruling on the intrinsic validity of the will
of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American
citizen long before and at the time of: (1) his divorce
from Paula; (2) marriage to Alicia; (3) execution of his will; and (4)
death,
is
duly
established,
admitted
and
undisputed.
Thus, as a rule, issues arising from these incidents are necessarily
governed by foreign law. The Civil Code clearly provides:
"Art. 15. Laws relating to family rights and duties, or to the status,
condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad.
"Art. 16. Real property as well as personal property is subject to the
law of the country where it is situated.
"However, intestate and testamentary succession, both with
respect to the order of succession and to the amount of successional rights
and to the intrinsic validity of testamentary provisions, shall be regulated by
the national law of the person whose succession is under consideration,
whatever may be the nature of the property and regardless of the country
wherein said property may be found." (emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and
our courts are not authorized to take judicial notice of them. Like any other
fact, they must be alleged and proved.37
While the substance of the foreign law was pleaded, the Court of
Appeals did not admit the foreign law. The Court of Appeals and the trial court
called to the fore the renvoi doctrine, where the case was "referred back" to
the law of the decedents domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York
was
not
sufficiently
proven,
in
the
same
breath
it
made the categorical, albeit equally unproven statement that "American law
follows the domiciliary theory hence,
Philippine law applies when determining the validity of Lorenzos
will.38
First, there is no such thing as one American law.1wph!1 The
"national law" indicated in Article 16 of the Civil Code cannot
possibly apply to general American law. There is no such law governing the
validity
of
testamentary
provisions
in
the
United States. Each State of the union has its own law applicable to its
citizens and in force only within the State. It
can therefore refer to no other than the law of the State of which
the decedent was a resident.39 Second, there is no showing that the
application of the renvoi doctrine is called for or required by New York State
law.

On September 28, 1987, respondent appealed to the Court of

Appeals.31
On July 31, 1995, the Court of Appeals promulgated its decision,
affirming with modification the decision of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with
the MODIFICATION that Alicia is declared as co-owner of whatever properties
she and the deceased may have acquired during the twenty-five (25) years
of cohabitation.
"SO ORDERED."32
On August 25, 1995, petitioner filed with the Court of Appeals a
motion for reconsideration of the decision. 33 On March 21, 1996, the Court of
Appeals,34 denied the motion for lack of merit.
Hence, this petition.35
The Issue
Stripping the petition of its legalese and sorting through the various
arguments raised,36 the issue is simple. Who are entitled to inherit from the
late Lorenzo N. Llorente?

46

The trial court held that the will was intrinsically invalid since it
contained dispositions in favor of Alice, who in the trial courts opinion was a
mere paramour. The trial court threw the will out, leaving Alice, and her two
children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice
entitled to one half (1/2) of whatever property she and Lorenzo acquired
during their cohabitation, applying Article 144 of the Civil Code of the
Philippines.
The hasty application of Philippine law and the complete disregard
of the will, already probated as duly executed in accordance with the
formalities of Philippine law, is fatal, especially in light of the factual
and legal circumstances here obtaining.
Validity of the Foreign Divorce

"When the acts referred to are executed before the diplomatic or

consular officials of the Republic of the Philippines in a foreign country, the
solemnities established by Philippine laws shall be observed in their
execution." (underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second
wife
and
children
by
her
is
glaringly
shown
in
the
will he executed. We do not wish to frustrate his wishes, since he was a
foreigner, not covered by our laws on
"family rights and duties, status, condition and legal capacity." 44
Whether the will is intrinsically valid and who shall inherit from
Lorenzo are issues best proved by foreign law which must be pleaded and
proved. Whether the will was executed in accordance with the formalities
required is answered by referring to Philippine law. In fact, the will was duly
probated.
As a guide however, the trial court should note that whatever public
policy
or
good
customs
may
be
involved
in
our
system of legitimes, Congress did not intend to extend the same to the
succession of foreign nationals. Congress
specifically left the amount of successional rights to the decedent's
national law.45
Having thus ruled, we find it unnecessary to pass upon the other
issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals in CA-G. R. SP No. 17446 promulgated on July 31, 1995
is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional
Trial Court and RECOGNIZES as VALID the decree of divorce granted in favor
of the deceased Lorenzo N. Llorente by the Superior Court of the State of
California in and for the County of San Diego, made final on December 4,
1952.
Further, the Court REMANDS the cases to the court of origin for
determination of the intrinsic validity of Lorenzo N. Llorentes will and
determination of the parties successional rights allowing proof of foreign law
with instructions that the trial court shall proceed with all deliberate dispatch
to settle the estate of the deceased within the framework of the Rules of
Court.
No costs.
SO ORDERED.

In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality

principle embodied in Article 15 of the Civil Code, only Philippine nationals are
covered by the policy against absolute divorces, the same being considered
contrary to our concept of public policy and morality. In the same case, the
Court ruled that aliens may obtain divorces abroad, provided they are valid
according to their national law.
Citing this landmark case, the Court held in Quita v. Court of
Appeals,41 that once proven that respondent was no longer a Filipino citizen
when he obtained the divorce from petitioner, the ruling in Van Dorn
would become applicable and petitioner could "very well lose her right to
inherit" from him.
In Pilapil v. Ibay-Somera, 42 we recognized the divorce obtained by
the
respondent
in
his
country,
the
Federal
Republic of Germany. There, we stated that divorce and its legal effects may
be
recognized
in
the
Philippines
insofar as respondent is concerned in view of the nationality principle in our
civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of
Appeals must be reversed.43 We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and recognized in this jurisdiction
as a matter of comity. Now, the effects of this divorce (as to the succession to
the estate of the decedent) are matters best left to the determination of the
trial court.
Validity of the Will
The Civil Code provides:
"Art. 17. The forms and solemnities of contracts, wills, and other
public instruments shall be governed by the laws of the country in which they
are executed.

47

"WHEREFORE, this Court declares the marriage between Grace J.

Garcia
and
Rederick
A.
Recio
solemnized
on January 12, 1994 at Cabanatuan City as dissolved and both parties can
now remarry under existing and
applicable laws to any and/or both parties."3
The assailed Order denied reconsideration of the above-quoted
Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an
Australian citizen, in Malabon, Rizal, on March 1, 1987. 4 They lived together
as husband and wife in Australia. On May 18, 1989, 5 a decree of divorce,
purportedly dissolving the marriage, was issued by an Australian family court.
On June 26, 1992, respondent became an Australian citizen, as
shown by a "Certificate of Australian Citizenship" issued by the Australian
government.6 Petitioner - a Filipina - and respondent were married on January
12, 1994 in Our Lady of Perpetual Help Church in Cabanatuan City. 7 In their
application for a marriage license, respondent was declared as "single" and
"Filipino."8
Starting October 22, 1995, petitioner and respondent lived
separately
without
prior
judicial
dissolution
of
their
marriage. While the two were still in Australia, their conjugal assets were
divided on May 16, 1996, in accordance
with their Statutory Declarations secured in Australia.9
On March 3, 1998, petitioner filed a Complaint for Declaration of
Nullity of Marriage10 in the court a quo, on the ground of bigamy - respondent
allegedly had a prior subsisting marriage at the time he married her on
January 12, 1994. She claimed that she learned of respondent's marriage to
Editha Samson only in November, 1997.
In his Answer, respondent averred that, as far back as 1993, he had
revealed
to
petitioner
his
prior
marriage
and
its
subsequent dissolution.11 He contended that his first marriage to an
Australian citizen had been validly dissolved by a divorce decree obtained in
Australian in 1989;12 thus, he was legally capacitated to marry petitioner in
1994.1wphi1.nt
On July 7, 1998 - or about five years after the couple's wedding and
while the suit for the declaration of nullity was pending - respondent was able
to secure a divorce decree from a family court in Sydney, Australia because
the "marriage ha[d] irretrievably broken down." 13
Respondent prayed in his Answer that the Complained be dismissed
on the ground that it stated no cause of action.14 The Office of the Solicitor
General agreed with respondent. 15 The court marked and admitted the
documentary evidence of both parties.16 After they submitted their respective
memoranda, the case was submitted for resolution.
Thereafter, the trial court rendered the assailed Decision and Order.
Ruling of the Trial Court

G.R. No. 138322ober 2, 2001

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner,
vs.
REDERICK A. RECIO, respondents.
PANGANIBAN, J.:
A divorce obtained abroad by an alien may be recognized in our
jurisdiction, provided such decree is valid according to the national law of the
foreigner. However, the divorce decree and the governing personal law of the
alien spouse who obtained the divorce must be proven. Our courts do not
take judicial notice of foreign laws and judgment; hence, like any other facts,
both the divorce decree and the national law of the alien must be alleged and
proven according to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of
Court, seeking to nullify the January 7, 1999 Decision 1 and the March 24,
1999 Order2 of the Regional Trial Court of Cabanatuan City, Branch 28, in Civil
Case No. 3026-AF. The assailed Decision disposed as follows:

48

The trial court declared the marriage dissolved on the ground that
the divorce issued in Australia was valid and recognized in the Philippines. It
deemed the marriage ended, but not on the basis of any defect in an
essential element of the marriage; that is, respondent's alleged lack of legal
capacity to remarry. Rather, it based its Decision on the divorce decree
obtained by respondent. The Australian divorce had ended the marriage;
thus, there was no more martial union to nullify or annual.

Petitioner assails the trial court's recognition of the divorce between

respondent
and
Editha
Samson.
Citing
Adong
v.
Cheong Seng Gee,20 petitioner argues that the divorce decree, like any other
foreign
judgment,
may
be
given
recognition in this jurisdiction only upon proof of the existence of (1) the
foreign law allowing absolute divorce and (2) the alleged divorce decree itself.
She adds that respondent miserably failed to establish these elements.
Petitioner adds that, based on the first paragraph of Article 26 of
the Family Code, marriages solemnized abroad are governed by the law of the
place where they were celebrated (the lex loci celebrationist). In effect, the
Code requires the presentation of the foreign law to show the conformity of
the marriage in question to the legal requirements of the place where the
marriage was performed.
At the outset, we lay the following basic legal principles as the takeoff
points
for
our
discussion.
Philippine
law
does
not provide for absolute divorce; hence, our courts cannot grant it. 21 A
marriage
between
two
Filipinos
cannot
be
dissolved even by a divorce obtained abroad, because of Articles 15 22 and
1723
of
the
Civil
Code. 24
In
mixed
marriages involving a Filipino and a foreigner, Article 26 25 of the Family Code
allows
the
former
to
contract
a
subsequent marriage in case the divorce is "validly obtained abroad by the
alien spouse capacitating him or her to remarry." 26 A divorce obtained abroad
by a couple, who are both aliens, may be recognized in the Philippines,
provided it is consistent with their respective national laws.27
A comparison between marriage and divorce, as far as pleading and
proof are concerned, can be made. Van Dorn
v. Romillo Jr. decrees that "aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided
they are valid according to their national law." 28 Therefore, before a
foreign
divorce
decree
can
be
recognized
by
our courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law
allowing it.29 Presentation solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in
evidence, it must first comply with the registration requirements under
Articles 11, 13 and 52 of the Family Code. These articles read as follows:
"ART. 11. Where a marriage license is required, each of the
contracting parties shall file separately a sworn application for such license
with the proper local civil registrar which shall specify the following:
xxx
xxx
xxx
"(5) If previously married, how, when and where the previous
marriage was dissolved or annulled;
xxx
xxx
xxx

Hence, this Petition.18

Issues
Petitioner submits the following issues for our consideration:
"I
The trial court gravely erred in finding that the divorce decree
obtained in Australia by the respondent ipso facto terminated his first
marriage to Editha Samson thereby capacitating him to contract a second
marriage with the petitioner.
"2
The failure of the respondent, who is now a naturalized Australian,
to present a certificate of legal capacity to marry constitutes absence of a
substantial requisite voiding the petitioner' marriage to the respondent.
"3
The trial court seriously erred in the application of Art. 26 of the
Family Code in this case.
"4
The trial court patently and grievously erred in disregarding Arts.
11, 13, 21, 35, 40, 52 and 53 of the Family Code as the applicable provisions
in this case.
"5
The trial court gravely erred in pronouncing that the divorce gravely
erred
in
pronouncing
that
the
divorce
decree obtained by the respondent in Australia ipso facto capacitated the
parties to remarry, without first
securing a recognition of the judgment granting the divorce decree
before our courts."19
The Petition raises five issues, but for purposes of this Decision, we
shall
concentrate
on
two
pivotal
ones:
(1)
whether the divorce between respondent and Editha Samson was proven, and
(2)
whether
respondent
was
proven
to be legally capacitated to marry petitioner. Because of our ruling on these
two,
there
is
no
more
necessity
to
take
up the rest.
The Court's Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson

49

"ART. 13. In case either of the contracting parties has been

previously married, the applicant shall be required to furnish, instead of the
birth of baptismal certificate required in the last preceding article, the death
certificate of the deceased spouse or the judicial decree of annulment or
declaration of nullity of his or her previous marriage. x x x.
"ART. 52. The judgment of annulment or of absolute nullity of the
marriage, the partition and distribution of the properties of the spouses, and
the delivery of the children's presumptive legitimes shall be recorded in the
appropriate civil registry and registries of property; otherwise, the same shall
not affect their persons."
Respondent, on the other hand, argues that the Australian divorce
decree is a public document - a written official act of an Australian family
court. Therefore, it requires no further proof of its authenticity and due
execution.
Respondent is getting ahead of himself. Before a foreign judgment
is given presumptive evidentiary value, the document must first be presented
and admitted in evidence.30 A divorce obtained abroad is proven by the
divorce decree itself. Indeed the best evidence of a judgment is the judgment
itself.31 The decree purports to be a written act or record of an act of an
officially body or tribunal of a foreign country.32
Under Sections 24 and 25 of Rule 132, on the other hand, a writing
or
document
may
be
proven
as
a
public
or
official record of a foreign country by either (1) an official publication or (2) a
copy
thereof
attested33
by
the
officer
having legal custody of the document. If the record is not kept in the
Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or
consular officer in the Philippine foreign service stationed in the foreign
country in which the record is kept and (b) authenticated by the seal of his
office.34
The divorce decree between respondent and Editha Samson
appears to be an authentic one issued by an Australian family court. 35
However,
appearance
is
not
sufficient;
compliance
with
the
aforemetioned rules on evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce decree of May
18,
1989
was
submitted
in
evidence,
counsel
for petitioner objected, not to its admissibility, but only to the fact that it had
not been registered in the Local Civil
Registry of Cabanatuan City. 36 The trial court ruled that it was
admissible,
subject
to
petitioner's
qualification. 37
Hence, it was admitted in evidence and accorded weight by the judge.
Indeed, petitioner's failure to object properly
rendered the divorce decree admissible as a written act of the
Family Court of Sydney, Australia.38

Compliance with the quoted articles (11, 13 and 52) of the Family
Code
is
not
necessary;
respondent
was
no
longer
bound by Philippine personal laws after he acquired Australian citizenship in
1992.39
Naturalization
is
the
legal
act
of adopting an alien and clothing him with the political and civil rights
belonging
to
a
citizen.40
Naturalized
citizens,
freed from the protective cloak of their former states, don the attires of their
adoptive
countries.
By
becoming
an
Australian, respondent severed his allegiance to the Philippines and the
vinculum
juris
that
had
tied
him
to
Philippine
personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce
law falls upon petitioner, because she is the party challenging the validity of a
foreign judgment. He contends that petitioner was satisfied with the original
of the divorce decree and was cognizant of the marital laws of Australia,
because she had lived and worked in that country for quite a long time.
Besides, the Australian divorce law is allegedly known by Philippine courts:
thus, judges may take judicial notice of foreign laws in the exercise of sound
discretion.
We are not persuaded. The burden of proof lies with "the
party
who
alleges
the
existence
of
a
fact
or
thing
necessary in the prosecution or defense of an action." 41 In civil cases,
plaintiffs have the burden of proving the material allegations of the complaint
when those are denied by the answer; and defendants have the burden of
proving the material allegations in their answer when they introduce
new
matters.42
Since
the
divorce
was
a
defense raised by respondent, the burden of proving the pertinent Australian
law
validating
it
falls
squarely
upon
him.
It is well-settled in our jurisdiction that our courts cannot take
judicial
notice
of
foreign
laws.43
Like
any
other
facts,
they must be alleged and proved. Australian marital laws are not among
those matters that judges are supposed to
know by reason of their judicial function. 44 The power of judicial
notice must be exercised with caution, and every reasonable doubt upon the
subject should be resolved in the negative.
Second Issue:
Respondent's Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the
divorce, respondent was legally incapacitated to marry her in 1994.
Hence, she concludes that their marriage was void ab initio.

50

Respondent replies that the Australian divorce decree, which

was validly admitted in evidence, adequately established his legal
capacity to marry under Australian law.
Respondent's contention is untenable. In its strict legal sense,
divorce
means
the
legal
dissolution
of
a
lawful
union
for a cause arising after marriage. But divorces are of different types. The two
basic
ones
are
(1)
absolute
divorce
or
a vinculo matrimonii and (2) limited divorce or a mensa et thoro. The first kind
terminates the marriage, while the
second suspends it and leaves the bond in full force. 45 There is no
showing in the case at bar which type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory decree - a
conditional
or
provisional
judgment
of
divorce.
It
is in effect the same as a separation from bed and board, although an
absolute divorce may follow after the lapse of
the prescribed period during which no reconciliation is effected.46
Even after the divorce becomes absolute, the court may under
some
foreign
statutes
and
practices,
still
restrict
remarriage. Under some other jurisdictions, remarriage may be limited by
statute;
thus,
the
guilty
party
in
a
divorce
which was granted on the ground of adultery may be prohibited from
remarrying again. The court may allow a
remarriage only after proof of good behavior.47
On its face, the herein Australian divorce decree contains a
restriction that reads:
"1. A party to a marriage who marries again before this decree
becomes absolute (unless the other party has died) commits the offence of
bigamy."48
This quotation bolsters our contention that the divorce obtained by
respondent may have been restricted. It did not absolutely establish his legal
capacity to remarry according to his national law. Hence, we find no basis for
the ruling of the trial court, which erroneously assumed that the Australian
divorce ipso facto restored respondent's capacity to remarry despite the
paucity of evidence on this matter.
We also reject the claim of respondent that the divorce decree
raises a disputable presumption or presumptive evidence as to his civil status
based on Section 48, Rule 3949 of the Rules of Court, for the simple reason
that no proof has been presented on the legal effects of the divorce decree
obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by
Article 21 of the Family Code was not submitted together with the application
for a marriage license. According to her, its absence is proof that respondent
did not have legal capacity to remarry.

We clarify. To repeat, the legal capacity to contract marriage

is
determined
by
the
national
law
of
the
party
concerned. The certificate mentioned in Article 21 of the Family Code would
have
been
sufficient
to
establish
the
legal capacity of respondent, had he duly presented it in court. A duly
authenticated and admitted certificate is prima
facie evidence of legal capacity to marry on the part of the alien
applicant for a marriage license.50
As it is, however, there is absolutely no evidence that proves
respondent's legal capacity to marry petitioner. A review of the records before
this Court shows that only the following exhibits were presented before the
lower court:
(1) for petitioner: (a) Exhibit "A" - Complaint; 51 (b) Exhibit "B" Certificate of Marriage Between Rederick A. Recto (Filipino-Australian) and
Grace J. Garcia (Filipino) on January 12, 1994 in Cabanatuan City, Nueva
Ecija;52 (c) Exhibit "C" - Certificate of Marriage Between Rederick A. Recio
(Filipino) and Editha D. Samson (Australian) on
March 1, 1987 in Malabon, Metro Manila; 53 (d) Exhibit "D" Office of the City Registrar of Cabanatuan City Certification that no
information of annulment between Rederick A. Recto and Editha D.
Samson was in its
records;54 and (e) Exhibit "E" - Certificate of Australian Citizenship
of Rederick A. Recto;55 (2) for respondent: (Exhibit "1" - Amended Answer; 56
(b) Exhibit "S" - Family Law Act 1975 Decree Nisi of Dissolution of Marriage in
the Family Court of Australia;57 (c) Exhibit "3" - Certificate of Australian
Citizenship of Rederick A. Recto;58 (d)
Exhibit "4" - Decree Nisi of Dissolution of Marriage in the Family
Court
of
Australia
Certificate; 59
and
Exhibit
"5"
Statutory Declaration of the Legal Separation Between Rederick A. Recto and
Grace J. Garcia Recio since October
22, 1995.60
Based on the above records, we cannot conclude that respondent,
who was then a naturalized Australian citizen, was legally capacitated to
marry petitioner on January 12, 1994. We agree with petitioner's contention
that the court a quo erred in finding that the divorce decree ipso facto clothed
respondent with the legal capacity to remarry without requiring him to
adduce sufficient evidence to show the Australian personal law governing his
status; or at the very least, to prove his legal capacity to contract the second
marriage.
Neither can we grant petitioner's prayer to declare her marriage to
respondent null and void on the ground of bigamy. After all, it may turn out
that under Australian law, he was really capacitated to marry petitioner as a
direct result of the divorce decree. Hence, we believe that the most judicious
course is to remand this case to the trial court to receive evidence, if any,
which show petitioner's legal capacity to marry petitioner. Failing in that, then

51

the court a quo may declare a nullity of the parties' marriage on the ground of
bigamy, there being already in evidence two existing marriage certificates,
which were both obtained in the Philippines, one in Malabon, Metro Manila
dated March 1, 1987 and the other, in Cabanatuan City dated January 12,
1994.
WHEREFORE, in the interest of orderly procedure and substantial
justice, we REMAND the case to the court a quo for the purpose of receiving
evidence which conclusively show respondent's legal capacity to marry
petitioner; and failing in that, of declaring the parties' marriage void on the
ground of bigamy, as above discussed. No costs.
SO ORDERED.

Given a valid marriage between two Filipino citizens, where one

party is later naturalized as a foreign citizen and obtains a valid divorce
decree capacitating him or her to remarry, can the Filipino spouse likewise
remarry under Philippine law?
Before us is a case of first impression that behooves the Court to
make a definite ruling on this apparently novel question, presented as a pure
question of law.
In this petition for review, the Solicitor General assails the Decision 1
dated May 15, 2002, of the Regional Trial Court of Molave, Zamboanga del
Sur, Branch 23 and its Resolution2 dated July 4, 2002 denying the motion for
reconsideration. The court a quo had declared that herein respondent
Cipriano Orbecido III is capacitated to remarry. The fallo of the impugned
Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of
Art. 26 of the Family Code and by reason of the divorce decree obtained
against him by his American wife, the petitioner is given the capacity to
remarry under the Philippine Law.
IT IS SO ORDERED.3
The factual antecedents, as narrated by the trial court, are as
follows.

G.R. No. 154380 October 5, 2005

REPUBLIC
OF
THE
PHILIPPINES,

On May 24, 1981, Cipriano Orbecido III married Lady Myros M.

Villanueva at the United Church of Christ in the Philippines in Lam-an, Ozamis
City. Their marriage was blessed with a son and a daughter, Kristoffer
Simbortriz V. Orbecido and Lady Kimberly V. Orbecido.
In 1986, Ciprianos wife left for the United States bringing along
their son Kristoffer. A few years later, Cipriano discovered that his wife had
been naturalized as an American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had
obtained a divorce decree and then married a certain Innocent Stanley. She,
Stanley and her child by him currently live at 5566 A. Walnut Grove Avenue,
San Gabriel, California.
Cipriano thereafter filed with the trial court a petition for authority
to remarry invoking Paragraph 2 of Article 26 of the Family Code. No
opposition was filed. Finding merit in the petition, the court granted the same.
The Republic, herein petitioner, through the Office of the Solicitor General
(OSG), sought reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:

Petitioner,

vs.
CIPRIANO ORBECIDO III, Respondent.
DECISION
QUISUMBING, J.:

WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26

OF THE FAMILY CODE4
The OSG contends that Paragraph 2 of Article 26 of the Family Code
is
not
applicable
to
the
instant
case
because
it
only applies to a valid mixed marriage; that is, a marriage celebrated
between a Filipino citizen and an alien. The

52

proper remedy, according to the OSG, is to file a petition for

annulment
or
for
legal
separation.5
Furthermore,
the
OSG argues there is no law that governs respondents situation. The OSG
posits that this is a matter of legislation
and not of judicial determination.6
For his part, respondent admits that Article 26 is not directly
applicable
to
his
case
but
insists
that
when
his
naturalized alien wife obtained a divorce decree which capacitated her to
remarry, he is likewise capacitated by
operation of law pursuant to Section 12, Article II of the
Constitution.7
At the outset, we note that the petition for authority to remarry filed
before the trial court actually constituted a petition for declaratory relief. In
this connection, Section 1, Rule 63 of the Rules of Court provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
Section 1. Who may file petitionAny person interested under a
deed, will, contract or other written instrument, or whose rights are affected
by a statute, executive order or regulation, ordinance, or other governmental
regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties, thereunder.
The requisites of a petition for declaratory relief are: (1) there must
be
a
justiciable
controversy;
(2)
the
controversy
must be between persons whose interests are adverse; (3) that the party
seeking the relief has a legal interest in the
controversy; and (4) that the issue is ripe for judicial
determination.8
This case concerns the applicability of Paragraph 2 of Article 26 to a
marriage between two Filipino citizens where one later acquired alien
citizenship, obtained a divorce decree, and remarried while in the U.S.A. The
interests of the parties are also adverse, as petitioner representing the State
asserts its duty to protect the institution of marriage while respondent, a
private citizen, insists on a declaration of his capacity to remarry. Respondent,
praying for relief, has legal interest in the controversy. The issue raised is also
ripe for judicial determination inasmuch as when respondent remarries,
litigation ensues and puts into question the validity of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article
26 of the Family Code apply to the case of respondent? Necessarily, we must
dwell on how this provision had come about in the first place, and what was
the intent of the legislators in its enactment?
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law
Executive Order No. 209, otherwise known as the "Family Code," which took
effect on August 3, 1988. Article 26 thereof states:

All marriages solemnized outside the Philippines in accordance with

the
laws
in
force
in
the
country
where
they
were
solemnized, and valid there as such, shall also be valid in this country, except
those
prohibited
under
Articles
35,
37,
and 38.
On July 17, 1987, shortly after the signing of the original Family
Code, Executive Order No. 227 was likewise signed into law, amending
Articles 26, 36, and 39 of the Family Code. A second paragraph was added to
Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in
accordance with the laws in force in the country where they were solemnized,
and valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained abroad by the
alien spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)
On its face, the foregoing provision does not appear to govern the
situation presented by the case at hand. It seems to apply only to cases
where at the time of the celebration of the marriage, the parties are a Filipino
citizen and a foreigner. The instant case is one where at the time the
marriage was solemnized, the parties were two Filipino citizens, but later on,
the wife was naturalized as an American citizen and subsequently obtained a
divorce granting her capacity to remarry, and indeed she remarried an
American citizen while residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings 9 on the Family
Code, the Catholic Bishops Conference of the Philippines (CBCP) registered
the following objections to Paragraph 2 of Article 26:
1. The rule is discriminatory. It discriminates against those whose
spouses are Filipinos who divorce them abroad. These spouses who are
divorced will not be able to re-marry, while the spouses of foreigners who
validly divorce them abroad can.
2. This is the beginning of the recognition of the validity of divorce
even
for
Filipino
citizens.
For
those
whose
foreign
spouses validly divorce them abroad will also be considered to be validly
divorced
here
and
can
re-marry.
We
propose that this be deleted and made into law only after more widespread
consultation. (Emphasis supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed
that the intent of Paragraph 2 of Article 26, according to Judge Alicia SempioDiy, a member of the Civil Code Revision Committee, is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse.

53

Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985

case of Van Dorn v. Romillo, Jr.10 The Van Dorn case involved a marriage
between a Filipino citizen and a foreigner. The Court held therein that a
divorce decree validly obtained by the alien spouse is valid in the Philippines,
and consequently, the Filipino spouse is capacitated to remarry under
Philippine law.
Does the same principle apply to a case where at the time of the
celebration of the marriage, the parties were Filipino citizens, but later on,
one of them obtains a foreign citizenship by naturalization?

divorce is obtained abroad by the alien spouse capacitating the latter to

remarry.
In this case, when Ciprianos wife was naturalized as an American
citizen, there was still a valid marriage that has been celebrated between her
and Cipriano. As fate would have it, the naturalized alien wife subsequently
obtained a valid divorce capacitating her to remarry. Clearly, the twin
requisites for the application of Paragraph 2 of Article 26 are both present in
this case. Thus Cipriano, the "divorced" Filipino spouse, should be allowed to
remarry.
We are also unable to sustain the OSGs theory that the proper
remedy of the Filipino spouse is to file either a petition for annulment or a
petition for legal separation. Annulment would be a long and tedious process,
and in this particular case, not even feasible, considering that the marriage of
the parties appears to have all the badges of validity. On the other hand, legal
separation would not be a sufficient remedy for it would not sever the
marriage tie; hence, the legally separated Filipino spouse would still remain
married to the naturalized alien spouse.
However, we note that the records are bereft of competent
evidence
duly
submitted
by
respondent
concerning
the
divorce decree and the naturalization of respondents wife. It is settled rule
that one who alleges a fact has the
burden of proving it and mere allegation is not evidence. 13
Accordingly, for his plea to prosper, respondent herein must prove
his
allegation
that
his
wife
was
naturalized
as
an
American citizen. Likewise, before a foreign divorce decree can be recognized
by our own courts, the party pleading
it must prove the divorce as a fact and demonstrate its conformity
to
the
foreign
law
allowing
it. 14
Such
foreign
law
must also be proved as our courts cannot take judicial notice of foreign laws.
Like any other fact, such laws must be
alleged and proved.15 Furthermore, respondent must also show that
the divorce decree allows his former wife to remarry as specifically required in
Article 26. Otherwise, there would be no evidence sufficient to declare that he
is capacitated to enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of
Article 26 of the Family Code (E.O. No. 209, as amended by E.O. No. 227),
should be interpreted to allow a Filipino citizen, who has been divorced by a
spouse who had acquired foreign citizenship and remarried, also to remarry.
However, considering that in the present petition there is no sufficient
evidence submitted and on record, we are unable to declare, based on
respondents bare allegations that his wife, who was naturalized as an
American citizen, had obtained a divorce decree and had remarried an
American, that respondent is now capacitated to remarry. Such
declaration could only be made properly upon respondents submission of
the aforecited evidence in his favor.

The jurisprudential answer lies latent in the 1998 case of Quita v.

Court of Appeals.11 In Quita, the parties were, as in this case, Filipino citizens
when they got married. The wife became a naturalized American citizen in
1954 and obtained a divorce in the same year. The Court therein hinted, by
way of obiter dictum, that a Filipino divorced by his naturalized foreign spouse
is no longer married under Philippine law and can thus remarry.
Thus, taking into consideration the legislative intent and applying
the rule of reason, we hold that Paragraph 2 of Article 26 should be
interpreted to include cases involving parties who, at the time of the
celebration
of
the
marriage
were Filipino citizens, but later on, one of them becomes naturalized as a
foreign citizenand obtains a divorce decree. The Filipino spouse should
likewise be allowed to remarry as if the other party were a foreigner at the
time of the solemnization of the marriage. To rule otherwise would be to
sanction
absurdity
and
injustice.
Where
the
interpretation of a statute according to its exact and literal import would lead
to mischievous results or contravene the clear purpose of the legislature, it
should be construed according to its spirit and reason, disregarding as far as
necessary the letter of the law. A statute may therefore be extended to cases
not within the literal meaning of its terms, so long as they come within its
spirit or intent.12
If we are to give meaning to the legislative intent to avoid the
absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce is no longer married to the Filipino
spouse, then the instant case must be deemed as coming within the
contemplation of Paragraph 2 of Article 26.
In view of the foregoing, we state the twin elements for the
application of Paragraph 2 of Article 26 as follows:
1. There is a valid marriage that has been celebrated between a
Filipino citizen and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse
capacitating him or her to remarry.
The reckoning point is not the citizenship of the parties at the time
of the celebration of the marriage, but their citizenship at the time a valid

54

ACCORDINGLY, the petition by the Republic of the Philippines is

GRANTED. The assailed Decision dated May 15, 2002, and Resolution dated
July 4, 2002, of the Regional Trial Court of Molave, Zamboanga del Sur, Branch
23, are hereby SET ASIDE.
No
pronouncement
as
to
costs.
SO ORDERED.

G.R. No. 46631

November 16, 1939
IDONAH

SLADE

PERKINS,

petitioner,

vs.
ARSENIO P. DIZON, Judge of First Instance of Manila,
EUGENE ARTHUR PERKINS, and BENGUET CONSOLIDATED MINING
COMPANY, respondents.
Alva J. Hill for petitioner.
Ross, Lawrence, Selph & Carrascoso for respondent Judge and
Benguet Consolidated Mining Company. DeWitt, Perkins & Ponce Enrile for
respondent Perkins.

MORAN, J.:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an
action in the Court of First Instance of Manila against the Benguet
Consolidated Mining Company for dividends amounting to P71,379.90 on
52,874 shares of stock registered in his name, payment of which was being
withheld by the company; and, for the recognition of his right to the control
and disposal of said shares, to the exclusion of all others. To the complaint,
the company filed its answer alleging, by way of defense, that the withholding
of such dividends and the non-recognition of plaintiff's right to the disposal
and control of the shares were due to certain demands made with respect to
said shares by the petitioner herein, Idonah Slade Perkins, and by one George
H. Engelhard. The answer prays that the adverse claimants be made parties
to the action and served with notice thereof by publication, and that
thereafter all such parties be required to interplead and settle the rights
among themselves. On September
5,
1938, the trial court ordered
respondent Eugene Arthur Perkins to include in his complaint as parties
defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The
complaint was accordingly amended and in addition to the relief prayed for in
the original complaint, respondent Perkins prayed that petitioner Idonah
Slade Perkins and George Engelhard be adjudged without interest in the
shares of stock in question and excluded from any claim they assert thereon.
Thereafter, summons by publication were served upon the non-resident
defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the
order of the trial court. On December 9, 1938, Engelhard filed his answer to
the amended complaint, and on December 10, 1938, petitioner Idonah Slade
Perkins, through counsel, filed her pleading entitled "objection to venue,
motion to quash, and demurrer to jurisdiction" wherein she challenged the
jurisdiction of the lower court over her person. Petitioner's objection, motion
and demurrer having been overruled as well as her motion for reconsideration
of the order of denial, she now brought the present petition for certiorari,
praying that the summons by publication issued against her be declared null

55

and
void,
and
that,
with
respect
to
her,
respondent Judge be permanently prohibited from taking any action on the
case.
The controlling issue here involved is whether or not the Court of
First Instance of Manila has acquired jurisdiction over the person of the
present petitioner as a non-resident defendant, or, notwithstanding the
want of such jurisdiction, whether or not said court may validly try the case.
The parties have filed lengthy memorandums relying on numerous
authorities, but the principles governing the question are well settled in this
jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a
non-resident defendant is sued in the Philippine courts and it appears, by the
complaint or by affidavits, that the action relates to real or personal property
within the Philippines in which said defendant has or claims a lien or interest,
actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding such person from any interest therein, service of summons
maybe made by publication.
We have fully explained the meaning of this provision in El Banco
Espaol Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the
following rules:
(1) In order that the court may validly try a case, it must have
jurisdiction over the subject-matter and over the persons of the parties.
Jurisdiction over the subject-matter is acquired by concession of the
sovereign authority which organizes a court and determines the nature and
extent of its powers in general and thus fixes its jurisdiction with reference to
actions which it may entertain and the relief it may grant. Jurisdiction over the
persons of the parties is acquired by their voluntary appearance in court and
their submission to its authority, or by the coercive power of legal process
exerted over their persons.
(2) When the defendant is a non-resident and refuses to
appear voluntary, the court cannot acquire jurisdiction over his person
even if the summons be served by publication, for he is beyond the reach of
judicial process. No tribunal established by one State can extend its process
beyond its territory so as to subject to its decisions either persons or property
located in another State. "There aremany expressions in the American reports
from which it might be inferred that the court acquires personal jurisdiction
over the person of the defendant by publication and notice; but such is not
the case. In truth, the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication and notice was never clearly
understood even in the American courts until after the decision had been
rendered by the Supreme Court of the United States in the leading case of
Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of that decisions
which have subsequently been rendered in that and other courts, the
proposition that jurisdiction over the person cannot be thus acquired by
publication and notice is no longer open to question; and it is now fully

established that a personal judgment upon constructive or substituted service

against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the
judgment
is
rendered; and the only exception seems to be found in the case where the
non-resident defendant has expressly or impliedly consented to the mode of
service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585;
35 L.R.A. [N.S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident
cannot
be
entertained
by
a
Philippine
court. Where, however, the action is in rem or quasi in rem in
connection with property located in the Philippines, the court acquires
jurisdiction over the res, and its jurisdiction over the person of the nonresident is non-essential. In order that the court may exercise power over the
res, it isnotnecessary that the court should take actual custody of the
property, potential custody thereof being sufficient. There is potential
custody when, from the nature of the action brought, the power of the court
over the property is impliedly recognized by law. "An illustration of what
we term potential jurisdiction over the res, is found in the proceeding to
register the title of land under our system for the registration of land. Here
the
court,
without
taking actual physical control over the property , assumes, at the instance of
some person claiming to be owner, to exercise a jurisdiction in rem over the
property and to adjudicate the title in favor of the petitioner against all the
world."
(4) As before stated, in an action in rem or quasi in rem against a
non-resident defendant, jurisdiction over his person is non-essential, and if
the law requires in such case that the summons upon the defendant be
served by publication, it is merely to satisfy the constitutional requirement of
due
process.
If
any
be
said,
in
this
connection, that "may reported cases can be cited in which it is assumed that
the question of the sufficiency of publication or notice in the case of this kind
is a question affecting the jurisdiction of the court, and the court is sometimes
said to acquire jurisdiction by virtue of the publication. This phraseology was
undoubtedly
originally adopted by the court because of the analogy between service by
publication and personal service of process upon the defendant; and, as has
already been suggested, prior to the decision of Pennoyer v. Neff (supra), the
difference between the legal effects of the two forms of service was obscure.
It
is
accordingly
not
surprising that the modes of expression which had already been moulded into
legal tradition before that case was decided have been brought down to the
present day. But it is clear that the legal principle here involved is not affected

56

by the peculiar languages in which the courts have expounded their

ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire
jurisdiction over the person of a non-resident, as laid down by the Supreme
Court of the United States in Pennoyer v. Neff, supra, may be found in a
recognized principle of public law to the effect that "no State can exercise
direct jurisdiction and authority over persons or property without its territory.
Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several States are of
equal dignity and authority, and the independence of one implies the
exclusion of power from all others. And so it is laid down by jurists, as an
elementary principle, that the laws of one State have no operation outside of
its territory, except so far as is allowed by comity; and that no tribunal
established by it can extend its process beyond that territory so as to subject
either persons or property to its decisions. "Any exertion of authority of this
sort beyond this limit," says Story, "is a mere nullity, and incapable of binding
such persons or property in any other tribunals." Story, Confl. L., sec. 539."
(Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).
When, however, the action relates to property located in the
Philippines, the Philippine courts may validly try the case, upon the principle
that a "State, through its tribunals, may subject property situated within its
limits owned by non-residents to the payment of the demand of its own
citizens against them; and the exercise of this jurisdiction in no respect
infringes upon the sovereignty of the State where the owners are domiciled.
Every State owes protection to its citizens; and, when non-residents deal with
them, it is a legitimate and just exercise of authority to hold and appropriate
any property owned by such non-residents to satisfy the claims of its citizens.
It is in virtue of the State's jurisdiction over the property of the non-resident
situated within its limits that its tribunals can inquire into the nonresident's
obligations to its own citizens, and the inquiry can then be carried only to the
extent necessary to control the disposition of the property. If the non-resident
has no property in the State, there is nothing upon which the tribunals can
adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action
brought
by
Eugene
Arthur
Perkins
in
his
amended
complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her
from
any
interest
in
a
property
located
in the Philippines. That property consists in certain shares of stocks of the
Benguet
Consolidated
Mining
Company,
a sociedad anonima, organized in the Philippines under the provisions of the
Spanish
Code
of
Commerce,
with
its
principal office in the City of Manila and which conducts its mining activities
therein.
The
situs
of
the
shares
is
in
the
jurisdiction where the corporation is created, whether the certificated
evidencing
the
ownership
of
those
shares
are
within or without that jurisdiction. (Fletcher Cyclopedia Corporations,

Permanent
ed.
Vol.
11,
p.
95).
Under
these
circumstances, we hold that the action thus brought is quasi in rem, for while
the
judgement
that
may
be
rendered
therein is not strictly a judgment in rem, "it fixes and settles the title to the
property in controversy and to that extent partakes of the nature of the
judgment in rem." (50 C.J., p 503). As held by the Supreme Court of the
United States in Pennoyer v. Neff (supra);
It is true that, in a strict sense, a proceeding in rem is one taken
directly against property, and has for its object the disposition of the property,
without reference to the title of individual claimants; but , in a large and more
general sense, the terms are applied to actions between parties, where the
direct object is to reach and dispose of property owned by them, or of some
interest therein.
The action being in quasi in rem, The Court of First Instance of
Manila has jurisdiction over the person of the nonresident. In order to satisfy
the constitutional requirement of due process, summons has been served
upon her by publication. There is no question as to the adequacy of
publication made nor as to the mailing of the order of publication to the
petitioner's last known place of residence in the United States. But, of course,
the action being quasi in rem and notice having be made by publication, the
relief that may be granted by the Philippine court must be confined to the res,
it having no jurisdiction to render a personal judgment against the nonresident. In the amended complaint filed by Eugene Arthur Perkins, no money
judgment or other relief in personam is prayed for against the petitioner. The
only relief sought therein is that she be declared to be without any interest in
the shares in controversy and that she be excluded from any claim thereto.
Petitioner contends that the proceeding instituted against her is one
of interpleading and is therefore an action in personam. Section 120 of our
Code of Civil Procedure provides that whenever conflicting claims are or may
be made upon a person for or relating to personal property, or the
performance of anobligation or any portion thereof, so that he may be made
subject to several actions by different persons, such person may bring an
action against the conflicting claimants, disclaiming personal interest in the
controversy, and the court may order them to interplead
with one another and litigate their several claims among themselves, there
upon proceed to determine their several claims. Here, The Benguet
Consolidated Mining Company, in its answer to the complaint filed by Eugene
Arthur Perkins, averred that in connection with the shares of stock in
question, conflicting claims were being made upon it by said plaintiff, Eugene
Arthur Perkins, his wife Idonah Slade Perkins, and one named George H.
Engelhard, and prayed that these last two be made parties to the action and
served with summons by publication, so that the three claimants may litigate
their conflicting claims and settle their rights among themselves. The court
has not issued an order compelling the conflicting claimants to interplead
with one another and litigate their several claims among themselves, but

57

instead ordered the plaintiff to amend his complaint including the other two
claimants as parties defendant. The plaintiff did so, praying that the new
defendants thus joined be excluded fro any interest in the
shares in question, and it is upon this amended complaint that the court
ordered the service of the summons by publication. It is therefore, clear that
the publication of the summons was ordered not in virtue of an interpleading,
but upon the filing of the amended complaint wherein an action quasi in rem
is alleged.
Had not the complaint been amended, including the herein
petitioner as an additional defendant, and had the court, upon the filing of the
answer of the Benguet Consolidated Mining Company, issued an order under
section 120 of the Code of Civil Procedure, calling the conflicting claimants
into court and compellingthem to interplead with one another, such order
could not perhaps have validly been served by publication or otherwise, upon
the non-resident Idonah Slade Perkins, for then the proceeding would be
purely one of interpleading. Such proceeding is a personal action, for it
merely seeks to call conflicting claimants into court so that they may
interplead and litigate their several claims among themselves, and no specific
relief is prayed for against them, as the interpleader have appeared in court,
one of them pleads ownership of the personal property located in the
Philippines and seeks to exclude a non-resident claimant from any interest
therein, is a question which we do not decide not. Suffice it to say that here
the service of the summons by publication was ordered by the lower court by
virtue of an action quasi in rem against the non-resident defendant.
Respondents contend that, as the petitioner in the lower court
has
pleaded
over
the
subject-matter,
she
has
submitted herself to its jurisdiction. We have noticed, however, that these
pleas have been made not as independent grounds for relief, but merely as
additional arguments in support of her contention that the lower court had no
jurisdiction over the person. In other words, she claimed that the lower court
had
nojurisdiction
over
her
person
not
only because she is a non-resident, but also because the court had no
jurisdiction over the subject-matter of the action and that the issues
therein involved have already been decided by the New York court and
are being relitigated in the California court. Although this argument is
obviously
erroneous,
as
neither
jurisdiction
over
the
subject-matter nor res adjudicata nor lis pendens has anything to do with the
question of jurisdiction over her person, we believe and so hold that the
petitioner has not, by such erroneous argument, submitted herself to the
jurisdiction of the court. Voluntary appearance cannot be implied from either
a
mistaken
or
superflous
reasoning
but
from the nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against
petitioner.
Avancea, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.

G.R. No. 103493 June 19, 1997

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL
FINANCE LIMITED, and ATHONA HOLDINGS,
N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO
DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H.
CRAIG, respondents.

MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign
judgment upon the rights of the parties under the same cause of action
asserted in a case in our local court. Petitioners brought this case in the
Regional Trial Court of Makati, Branch 56, which, in view of the pendency at

58

the time of the foreign action, dismissed Civil Case No. 16563 on the ground
of litis pendentia, in addition to forum non conveniens. On appeal, the Court
of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat
obtained separate loans from petitioners Ayala International Finance
Limited (hereafter called AYALA) 1 and Philsec Investment Corporation
(hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares
of stock owned by Ducat with amarket value of P14,088,995.00. In order to
facilitate the payment of the loans, private respondent 1488, Inc., through its
president, private respondent Drago Daic, assumed Ducat's obligation under
an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a
Warranty Deed with Vendor's Lien by which it sold to petitioner Athona
Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County,
Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan
to ATHONA in the amount of US$2,500,000.00 as initial payment of the
purchase price. The balance of US$307,209.02 was to be paid by means of a
promissory note executed by ATHONA in favor of 1488, Inc. Subsequently,
upon
their
receipt
of
the
US$2,500,000.00
from
1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and
delivered
to
1488,
Inc.
all
the
shares
of
stock
in
their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of
US$307,209.02,
the
entire
amount
covered
by
the
note
became due and demandable. Accordingly, on October 17, 1985, private
respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in
the United States for payment of the balance of US$307,209.02 and
for
damages for breach of contract and for fraud allegedly perpetrated by
petitioners in misrepresenting the marketability of the shares of stock
delivered to 1488, Inc. under the Agreement. Originally instituted in the
UnitedStates District Court of Texas, 165th Judicial District, where it was
docketed
as
Case
No.
85-57746,
the
venue
of
the
action was later transferred to the United States District Court for the
Southern District of Texas, where 1488, Inc. filed an amended complaint,
reiterating its allegations in the original complaint. ATHONA filed an
answer
with counterclaim, impleading private respondents herein as
counterdefendants, for allegedly conspiring in selling the property at a price
over its market value. Private respondent Perlas, who had allegedly appraised
the property, was later dropped as counterdefendant. ATHONA sought the
recovery of damages and excess payment allegedly made to 1488, Inc. and,
in the alternative, the rescission of sale of the property. For their part,
PHILSEC and AYALA filed a motion to dismiss on the ground of lack of
jurisdiction over their person, but, as their motion was denied, they later filed
a joint answer with counterclaim against private respondents and Edgardo V.

Guevarra, PHILSEC's own former president, for the rescission of the sale on
the ground that the property had been overvalued. On March 13, 1990, the
United States District Court for the Southern District of Texas dismissed the
counterclaim against Edgardo V. Guevarra on the ground that it was "frivolous
and [was] brought against him simply to humiliate and embarrass him." For
this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC
and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the
United States, petitioners filed a complaint "For Sum of Money with Damages
and Writ of Preliminary Attachment" against private respondents in the
Regional
Trial
Court of Makati, where it was docketed as Civil Case No. 16563. The
complaint reiterated the allegation of petitioners in their respective
counterclaims in Civil Action No. H-86-440 of the United States District Court
of Southern Texas that private respondents committed fraud by selling the
property
at
a
price
400
percent
more
than
its true value of US$800,000.00. Petitioners claimed that, as a result of
private respondents' fraudulent misrepresentations, ATHONA, PHILSEC, and
AYALA were induced to enter into the Agreement and to purchase the
Houston property. Petitioners prayed that private respondents be ordered to
return
to
ATHONA
the
excess
payment
of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court
issued a writ of preliminary attachment against the real and personal
properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on
the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by
1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of
petitioners
PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the
alleged overpricing of the property prejudiced only petitioner ATHONA, as
buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and
whose only participation was to extend financial accommodation to ATHONA
under a separate loan agreement. On the other hand, private respondents
1488, Inc. and its president Daic filed a joint "Special Appearance and
Qualified
Motion to Dismiss," contending that the action being in personam,
extraterritorial
service
of
summons
by
publication
was ineffectual and did not vest the court with jurisdiction over 1488,
Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to
dismiss,
stating
that
"the
evidentiary
requirements
of
the controversy may be more suitably tried before the forum of the litis
pendentia
in
the
U.S.,
under
the
principle
in

59

private international law of forum non conveniens," even as it noted that

Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's
motion to dismiss. On March 9, 1988, the trial court 3 granted the motion to
dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia
considering that
the "main factual element" of the cause of action in this case which
is the validity of the sale of real property in the United States between
defendant 1488 and plaintiff ATHONA is the subject matter of the pending
case in the United States District Court which, under the doctrine of forum
non conveniens, is the better (if not exclusive) forum to litigate matters
needed to determine the assessment and/or fluctuations of the fair market
value of real estate situated in Houston, Texas, U.S.A. from the date of the
transaction in 1983 up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc.
and Daic because they were non-residents and the action was not an action in
rem or quasi in rem, so that extraterritorial service of summons was
ineffective. The trial court subsequently lifted the writ of attachment it had
earlier issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial
court erred in applying the principle of litis pendentia and forum non
conveniens and in ruling that it had no jurisdiction over the defendants,
despite the previous attachment of shares of stocks belonging to 1488, Inc.
and Daic.

with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case
No. 16563 on the ground of forum non conveniens was likewise affirmed by
the Court of Appeals on the ground that the case can be better tried and
decided by the U.S. court:
The U.S. case and the case at bar arose from only one main
transaction, and involve foreign elements, to wit: 1) the property subject
matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a nonresident foreign corporation; 3) although the buyer, Athona Holdings, a
foreign corporation which does not claim to be doing business in the
Philippines, is wholly owned by Philsec, a domestic corporation, Athona
Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty
Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN
THE SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED
UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURT'S
DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON
BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL
COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF
APPEALS
ERRED
IN
NOT
HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION,
NOT
THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION
IN
THE
CIVIL
ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE
PETITIONERS'
RIGHTS
FOR
TORTIOUS
OR
WRONGFUL
ACTS
OR
CONDUCT
PRIVATE
RESPONDENTS
(WHO
ARE
MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.
We will deal with these contentions in the order in which they are
made.
First. It is important to note in connection with the first point that
while
the
present
case
was
pending
in
the
Court
of
Appeals, the United States District Court for the Southern District of Texas
5
rendered
judgment
in
the
case
before
it.
The judgment, which was in favor of private respondents, was affirmed on
6
appeal
by
the
Circuit
Court
of
Appeals.
Thus,
the
principal issue to be resolved in this case is whether Civil Case No. 16536 is
barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be
pleaded
as
res
judicata,
a
judgment
admitting
the
foreign decision is not necessary. On the other hand, petitioners argue that

On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of

Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis
pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic,
while the defendants are Philsec, the Ayala International Finance Ltd. (BPIIFL's former name) and the Athona Holdings, NV. The case at bar involves the
same parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In
the
U.S.
case,
breach
of
contract
and the promissory note are sued upon by 1488 Inc., which likewise alleges
fraud employed by herein appellants, on the marketability of Ducat's
securities given in exchange for the Texas property.
The recovery of a sum of money and damages, for fraud purportedly
committed by appellees, in overpricing the Texas land, constitute the action
before the Philippine court, which likewise stems from the same Warranty
Deed.
The Court of Appeals also held that Civil Case No. 16563 was an
action in personam for the recovery of a sum of money for alleged tortious
acts, so that service of summons by publication did not vest the trial court

60

the
foreign
judgment
cannot
be
given
the
effect of res judicata without giving them an opportunity to impeach it on
grounds
stated
in
Rule
39,
50
of
the
Rules
of Court, to wit: "want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this Court has given the
effect of res judicata to foreign judgments in several cases, 7 it was after the
parties opposed to the judgment had been given ample opportunity to repel
them on grounds allowed under the law. 8 It is not necessary for this
purpose to initiate a separate action or proceeding for enforcement of
the foreign judgment. What is essential is that there is opportunity to
challenge the foreign judgment, in order for the court to properly determine
its efficacy. This is because in this jurisdiction, with respect to actions in
personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof
to the contrary. 9 Rule 39, 50 provides:
Sec. 50. Effect of foreign judgments. The effect of a judgment of
a tribunal of a foreign country, having jurisdiction to pronounce the judgment
is as follows:
(a) In case of a judgment upon a specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is
presumptive
evidence
of
a
right
as
between
the parties and their successors in interest by a subsequent title; but the
judgment
may
be
repelled
by
evidence of a want of jurisdiction, want of notice to the party, collusion, fraud,
or
clear
mistake
of
law
or
fact.

showing that it was vitiated by want of notice to the party, collusion, fraud or
clear mistake of law or fact. The prima facie presumption under the Rule had
not been rebutted.
In the case at bar, it cannot be said that petitioners were given the
opportunity
to
challenge
the
judgment
of
the
U.S.
court as basis for declaring it res judicata or conclusive of the rights of private
respondents.
The
proceedings
in
the
trial court were summary. Neither the trial court nor the appellate court was
even
furnished
copies
of
the
pleadings
in
the U.S. court or apprised of the evidence presented thereat, to assure a
proper
determination
of
whether
the
issues
then being litigated in the U.S. court were exactly the issues raised in this
case
such
that
the
judgment
that
might
be
rendered would constitute res judicata. As the trial court stated in its disputed
order dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of
this
case
and
the
pending
case
in
the United States are not identical, precisely the Order of January 26, 1988
never
found
that
the
causes of action of this case and the case pending before the USA Court, were
identical.
(emphasis
added)
It was error therefore for the Court of Appeals to summarily rule
that
petitioners'
action
is
barred
by
the
principle of res judicata. Petitioners in fact questioned the jurisdiction of the
U.S. court over their persons, but
their claim was brushed aside by both the trial court and the Court
of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and
Daic filed a petition for the enforcement of judgment in the Regional Trial
Court of Makati, where it was docketed as Civil Case No. 92-1070 and
assigned to Branch 134, although the proceedings were suspended because
of the pendency of this case. To sustain the appellate court's ruling that the
foreign judgment constitutes res judicata and is a bar to the claim of
petitioners would effectively preclude petitioners from repelling the judgment
in the case for enforcement. An absurdity could then arise: a foreign
judgment is not subject to challenge by the plaintiff against whom it is
invoked, if it is pleaded to resist a claim as in this case, but it may be opposed
by the defendant if the foreign judgment is sought to be enforced against him
in a separate proceeding. This is plainly untenable. It has been held therefore
that:
[A] foreign judgment may not be enforced if it is not recognized in
the
jurisdiction
where
affirmative
relief is being sought. Hence, in the interest of justice, the complaint should
be
considered
as
a
petition

Thus, in the case of General Corporation of the Philippines v. Union

10
Insurance
Society
of
Canton,
Ltd.,
which
private respondents invoke for claiming conclusive effect for the foreign
judgment in their favor, the foreign judgment was
considered res judicata because this Court found "from the
evidence as well as from appellant's own pleadings" 11 that the
foreign court did not make a "clear mistake of law or fact" or that its
judgment was void for want of jurisdiction or because of
fraud or collusion by the defendants. Trial had been previously held in the
lower
court
and
only
afterward
was
a
decision
rendered, declaring the judgment of the Supreme Court of the State of
Washington to have the effect of res judicata in the
case before the lower court. In the same vein, in Philippines
International Shipping Corp. v. Court of Appeals, 12 this Court held that the
foreign judgment was valid and enforceable in the Philippines there being no

61

for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of
the
Rules
of
Court
in
order that the defendant, private respondent herein, may present evidence of
lack of jurisdiction, notice,
collusion, fraud or clear mistake of fact and law, if applicable. 14
Accordingly, to insure the orderly administration of justice, this
case
and
Civil
Case
No.

prior to service of summons under the Order of the trial court dated April 20,
1987. 19
Fourth. As for the temporary restraining order issued by the Court
on
June
29,
1994,
to
suspend
the
proceedings
in
Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule
11
sanctions
imposed
on
the
petitioners by the U.S. court, the Court finds that the judgment sought to be
enforced
is
severable
from
the
main
judgment under consideration in Civil Case No. 16563. The separability of
Guevara's claim is not only admitted by
petitioners, 20 it appears from the pleadings that petitioners only
belatedly impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence,
the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and
Civil Case No. 16563 is REMANDED to the Regional Trial Court of Makati for
consolidation with Civil Case No. 92-1070 and for further proceedings in
accordance with this decision. The temporary restraining order issued on June
29, 1994 is hereby LIFTED.
SO ORDERED.

92-1070 should be
consolidated. 15 After all, the two have been filed in the Regional
Trial Court of Makati, albeit in different salas, this case being assigned to
Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is
pending in Branch 134 of Judge Ignacio Capulong. In such proceedings,
petitioners should have the burden of impeaching the foreign judgment and
only in the event they succeed in doing so may they proceed with their action
against private respondents.
Second. Nor is the trial court's refusal to take cognizance of the
case
justifiable
under
the
principle
of
forum
non
conveniens. First, a motion to dismiss is limited to the grounds under Rule 16,
1, which does not include forum non
conveniens. 16 The propriety of dismissing a case based on this
principle requires a factual determination, hence, it is more
properly considered a matter of defense. Second, while it is within the
discretion
of
the
trial
court
to
abstain
from
assuming
jurisdiction on this ground, it should do so only after "vital facts are
established, to determine whether special circumstances"
require the court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely
on the basis of the pleadings filed by private respondents in connection with
the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC)
is a domestic corporation and one of the defendants (Ventura Ducat) is a
Filipino, and that it was the extinguishment of the latter's debt which was the
object of the transaction under litigation. The trial court arbitrarily dismissed
the case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial
court
to
hold
that
jurisdiction
over
1488,
Inc.
and
Daic could not be obtained because this is an action in personam and
summons
were
served
by
extraterritorial
service. Rule 14, 17 on extraterritorial service provides that service of
summons
on
a
non-resident
defendant
may
be effected out of the Philippines by leave of Court where, among others, "the
property of the defendant has been
attached within the Philippines." 18 It is not disputed that the
properties, real and personal, of the private respondents had been attached

G.R.
February 26, 2008

62

No.

162894

RAYTHEON

INTERNATIONAL,

INC.,

petitioner,

Case
No.
1192-BG,
named
as
defendants herein petitioner Raytheon International, Inc. as well as
BMSI
and
RUST,
the
two
corporations
impleaded in the earlier labor case. The complaint essentially reiterated the
allegations
in
the
labor
case
that
BMSI
verbally employed respondent to negotiate the sale of services in government
projects
and
that
respondent
was
not
paid the commissions due him from the Pinatubo dredging project which he
secured
on
behalf
of
BMSI.
The
complaint also averred that BMSI and RUST as well as petitioner itself had
combined
and
functioned
as
one
company.

vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:

Before this Court is a petition for review on certiorari under Rule 45

of the 1997 Rules of Civil Procedure which seeks the reversal of the Decision 1
and Resolution2 of the Court of Appeals in CA-G.R. SP No. 67001 and the
dismissal of the civil case filed by respondent against petitioner with the trial
court.
As culled from the records of the case, the following antecedents
appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a
corporation duly organized and existing under the laws of
the State of Connecticut, United States of America, and respondent Stockton
W.
Rouzie,
Jr.,
an
American
citizen,
entered into a contract whereby BMSI hired respondent as its representative
to
negotiate
the
sale
of
services
in
several government projects in the Philippines for an agreed remuneration of
10%
of
the
gross
receipts.
On
11
March 1992, respondent secured a service contract with the Republic of the
Philippines on behalf of BMSI for the
dredging of rivers affected by the Mt. Pinatubo eruption and
mudflows.3
On 16 July 1994, respondent filed before the Arbitration
Branch
of
the
National
Labor
Relations
Commission
(NLRC) a suit against BMSI and Rust International, Inc. (RUST), Rodney C.
Gilbert and Walter G. Browning for
alleged nonpayment of commissions, illegal termination and breach
of
employment
contract.4
On
28
September
1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and
RUST to pay respondents money
claims.5 Upon appeal by BMSI, the NLRC reversed the decision of
the Labor Arbiter and dismissed respondents complaint on the ground of lack
of jurisdiction.6 Respondent elevated the case to this Court but was dismissed
in a Resolution dated 26 November 1997. The Resolution became final and
executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La Union,
instituted
an
action
for
damages
before
the
Regional
Trial Court (RTC) of Bauang, La Union. The Complaint, 7 docketed as Civil

In its Answer,8 petitioner alleged that contrary to respondents

claim,
it
was
a
foreign
corporation
duly
licensed
to
do
business in the Philippines and denied entering into any arrangement with
respondent
or
paying
the
latter
any
sum
of money. Petitioner also denied combining with BMSI and RUST for the
purpose of assuming the alleged obligation
of the said companies.9 Petitioner also referred to the NLRC
decision
which
disclosed
that
per
the
written
agreement between respondent and BMSI and RUST, denominated as
"Special Sales Representative Agreement,"
the rights and obligations of the parties shall be governed by the
laws
of
the
State
of
Connecticut. 10
Petitioner
sought the dismissal of the complaint on grounds of failure to state a cause of
action and forum non conveniens and
prayed for damages by way of compulsory counterclaim. 11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary
Hearing
Based
on
Affirmative
Defenses
and
for
Summary Judgment12 seeking the dismissal of the complaint on grounds of
forum
non
conveniens
and
failure
to
state a cause of action. Respondent opposed the same. Pending the
resolution of the omnibus motion, the
deposition of Walter Browning was taken before the Philippine
Consulate General in Chicago.13
In an Order14 dated 13 September 2000, the RTC denied petitioners
omnibus
motion.
The
trial
court
held
that
the
factual allegations in the complaint, assuming the same to be admitted, were
sufficient
for
the
trial
court
to
render
a
valid judgment thereon. It also ruled that the principle of forum non
conveniens was inapplicable because the trial

63

court could enforce judgment on petitioner, it being a foreign

corporation licensed to do business in the Philippines.15
Petitioner filed a Motion for Reconsideration 16 of the order, which
motion
was
opposed
by
respondent.17
In
an
Order dated 31 July 2001,18 the trial court denied petitioners motion. Thus, it
filed
a
Rule
65
Petition19
with
the
Court of Appeals praying for the issuance of a writ of certiorari and a writ of
injunction
to
set
aside
the
twin
orders
of
the trial court dated 13 September 2000 and 31 July 2001 and to enjoin the
trial court from conducting further
proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed
Decision21
denying
the
petition
for
certiorari
for
lack
of merit. It also denied petitioners motion for reconsideration in the assailed
Resolution issued on 10 March 2004.22
The appellate court held that although the trial court should not
have
confined
itself
to
the
allegations
in
the
complaint and should have also considered evidence aliunde in resolving
petitioners
omnibus
motion,
it
found
the
evidence presented by petitioner, that is, the deposition of Walter Browning,
insufficient
for
purposes
of
determining
whether the complaint failed to state a cause of action. The appellate court also
stated
that
it
could
not
rule
one
way
or the other on the issue of whether the corporations, including petitioner,
named
as
defendants
in
the
case
had
indeed merged together based solely on the evidence presented by respondent.
Thus, it held that the issue should
be threshed out during trial.23 Moreover, the appellate court deferred to
the discretion of the trial court when the latter decided not to desist from
assuming jurisdiction on the ground of the inapplicability of the principle of forum
non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST
RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS. 24
Incidentally, respondent failed to file a comment despite repeated
notices.
The
Ceferino
Padua
Law
Office,
counsel
on record for respondent, manifested that the lawyer handling the case, Atty.
Rogelio
Karagdag,
had
severed
relations with the law firm even before the filing of the instant petition
and that it could no longer find the
whereabouts of Atty. Karagdag or of respondent despite diligent efforts.
In a Resolution25 dated 20 November 2006, the Court resolved to dispense with
the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent
and BMSI included a valid choice of law clause, that is, that the contract shall be
governed by the laws of the State of Connecticut. It also mentions the presence

of foreign elements in the dispute - namely, the parties and witnesses involved
are American corporations and citizens and the evidence to be presented is
located outside the Philippines - that renders our local courts inconvenient
forums. Petitioner theorizes that the foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura, 26 the Court outlined three
consecutive
phases
involved
in
judicial
resolution
of
conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition
and enforcement of judgments. Thus,
in the instances27 where the Court held that the local judicial machinery
was
adequate
to
resolve
controversies
with
a foreign element, the following requisites had to be proved: (1) that the
Philippine
Court
is
one
to
which
the
parties
may conveniently resort; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and
the facts; and (3) that the Philippine Court has or is likely to have the
power to enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws problem where the
case
is
filed
in
a
Philippine
court
and
where
the court has jurisdiction over the subject matter, the parties and the res, it may
or
can
proceed
to
try
the
case
even
if the rules of conflict-of-laws or the convenience of the parties point to a foreign
forum. This is an exercise of
sovereign prerogative of the country where the case is filed.29
Jurisdiction over the nature and subject matter of an action is conferred
by
the
Constitution
and
the
law30
and
by
the
material allegations in the complaint, irrespective of whether or not the plaintiff
is entitled to recover all or some of
the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an
action for damages arising from an alleged breach of contract. Undoubtedly,
the nature of the action and the amount of damages prayed are within
the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired
jurisdiction
over
herein
respondent
(as
party
plaintiff)
upon the filing of the complaint. On the other hand, jurisdiction over the person
of petitioner (as party defendant)
was acquired by its voluntary appearance in court. 32
That the subject contract included a stipulation that the same
shall
be
governed
by
the
laws
of
the
State
of
Connecticut does not suggest that the Philippine courts, or any other foreign
tribunal for that matter, are precluded from hearing the civil action. Jurisdiction
and choice of law are two distinct concepts. Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice of law asks the further
question whether the application of a substantive law which will determine the
merits of the case is fair to both parties. 33 The choice of law stipulation will
become relevant only when the substantive issues of the instant case develop,
that is, after hearing on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-oflaws
cases,
may
refuse
impositions
on
its

jurisdiction where it is not the most "convenient" or available forum and the
parties are not precluded from seeking
remedies elsewhere.34 Petitioners averments of the foreign elements in
the instant case are not sufficient to oust the trial court of its jurisdiction over
Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of
forum
non
conveniens
requires
a
factual
determination; hence, it is more properly considered as a matter of defense.
While
it
is
within
the
discretion
of
the
trial court to abstain from assuming jurisdiction on this ground, it should do so
only after vital facts are established,
to determine whether special circumstances require the courts
desistance.35
Finding no grave abuse of discretion on the trial court, the Court of
Appeals respected its conclusion that it can assume jurisdiction over the dispute
notwithstanding its foreign elements. In the same manner, the Court defers to
the sound discretion of the lower courts because their findings are binding on this
Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG
failed
to
state
a
cause
of
action
against
petitioner. Failure to state a cause of action refers to the insufficiency of
allegation
in
the
pleading.36
As
a
general
rule, the elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true
would justify the relief demanded.37
The complaint alleged that petitioner had combined with BMSI and
RUST to function as one company. Petitioner contends that the deposition of
Walter Browning rebutted this allegation. On this score, the resolution of the
Court of Appeals is instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well
as other documents produced in the hearing shows that these evidence aliunde
are not quite sufficient for us to mete a ruling that the complaint fails to state a
cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing
and
conclusive
proofs
that
Raytheon
Engineers and Constructors, Inc. (REC) assumed the warranty obligations of
defendant
Rust
International
in
the Makar Port Project in General Santos City, after Rust International ceased to
exist
after
being
absorbed
by
REC. Other documents already submitted in evidence are likewise meager to
preponderantly
conclude
that
Raytheon International, Inc., Rust International[,] Inc. and Brand Marine Service,
Inc.
have
combined
into
one
company, so much so that Raytheon International, Inc., the surviving company (if
at
all)
may
be
held
liable
for
the obligation of BMSI to respondent Rouzie for unpaid commissions. Neither
these documents clearly speak
otherwise.38
As correctly pointed out by the Court of Appeals, the question of
whether petitioner, BMSI and RUST merged together requires the presentation of
further evidence, which only a full-blown trial on the merits can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED.

The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 120077October 13, 2000

THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD.,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA
J. DIOSANA AND MARCELO G. SANTOS, respondents.
PARDO, J.:
The case before the Court is a petition for certiorari 1 to annul the
following
orders
of
the
National
Labor
Relations
Commission (hereinafter referred to as "NLRC") for having been issued without or
with excess jurisdiction and with
grave abuse of discretion:2
(1) Order of May 31, 1993. 3 Reversing and setting aside its earlier
resolution of August 28, 1992.4 The questioned order declared that the NLRC,
not the Philippine Overseas Employment Administration (hereinafter referred
to as "POEA"), had jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994. 5 Directing petitioners to jointly
and severally pay private respondent twelve thousand and six hundred dollars
(US$ 12,600.00) representing salaries for the unexpired portion of his contract;
three thousand six hundred dollars (US$3,600.00) as extra four months salary for
the two (2) year period of his contract, three thousand six hundred dollars

(US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight

hundred dollars (US$19,800.00) or its peso equivalent and attorney's fees
amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration
of the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred
to
as
"Santos")
was
an
overseas
worker
employed as a printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently,
in
June
1988,
he
was
directly hired by the Palace Hotel, Beijing, People's Republic of China and later
terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as
"MHC") and the Manila Hotel International Company, Limited (hereinafter referred
to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned
and controlled corporation duly organized and existing under the laws of the
Philippines.
MHICL is a corporation duly organized and existing under the laws of
Hong Kong.7 MHC is an "incorporator" of MHICL, owning 50% of its capital stock.8
By virtue of a "management agreement"9 with the Palace Hotel (Wang
Fu Company Limited), MHICL10 trained the personnel and staff of the Palace Hotel
at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate
of Oman, respondent Santos received a letter dated May 2, 1988 from Mr.
Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt
informed respondent Santos that he was recommended by one Nestor Buenio, a
friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but
with a higher monthly salary and increased benefits. The position was slated to
open on October 1, 1988.11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified
his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed
a ready to sign employment contract to respondent Santos. Mr. Henk advised
respondent Santos that if the contract was acceptable, to return the same to Mr.
Henk in Manila, together with his passport and two additional pictures for his visa
to China.
On May 30, 1988, respondent Santos resigned from the Mazoon
Printing Press, effective June 30, 1988, under the pretext that he was needed at
home to help with the family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and
acknowledged Mr. Henk's letter. Respondent Santos enclosed four (4) signed
copies of the employment contract (dated June 4, 1988) and notified them that
he was going to arrive in Manila during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment
would commence September 1, 1988 for a period of two years. 12 It provided for a
monthly salary of nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year.13

On June 30, 1988, respondent Santos was deemed resigned from the
Mazoon Printing Press. On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He
started to work at the Palace Hotel.14
Subsequently, respondent Santos signed an amended "employment
agreement"
with
the
Palace
Hotel,
effective
November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The
Vice
President
(Operations
and
Development) of petitioner MHICL Miguel D. Cergueda signed the employment
agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on
vacation leave. He returned to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain
Joanna suggested in a handwritten note that respondent Santos be given one
(1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent
Santos
by
letter
signed
by
Mr.
Shmidt
that
his
employment at the Palace Hotel print shop would be terminated due to business
reverses brought about by the
political upheaval in China.15 We quote the letter:16
"After the unfortunate happenings in China and especially Beijing
(referring
to
Tiannamen
Square
incidents),
our business has been severely affected. To reduce expenses, we will not
open/operate
printshop
for
the
time
being.
"We sincerely regret that a decision like this has to be made, but rest
assured this does in no way reflect your past performance which we found up to
our expectations."
"Should a turnaround in the business happen, we will contact you
directly and give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of
respondent Santos and paid all benefits due him, including his plane fare back to
the Philippines.
On October 3, 1989, respondent Santos was repatriated to the
Philippines.
On October 24, 1989, respondent Santos, through his lawyer,
Atty. Ednave wrote Mr. Shmidt, demanding full compensation pursuant to the
employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
His service with the Palace Hotel, Beijing was not abruptly terminated
but we followed the one-month notice clause and Mr. Santos received all benefits
due him.
"For your information the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in various
departments of the hotel is going on which is a normal management practice to
control costs.
"When going through the latest performance ratings, please also be
advised that his performance was below average and a Chinese National who is
doing his job now shows a better approach.

"In closing, when Mr. Santos received the letter of notice, he hardly
showed up for work but still enjoyed free accommodation/laundry/meals up to
the day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal
dismissal with the Arbitration Branch, National Capital Region, National Labor
Relations Commission (NLRC). He prayed for an award of nineteen thousand nine
hundred and twenty three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and attorney's fees
equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL,
the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and
neither participated in the proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case
against petitioners, thus:19 "WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and
severally;
"a)
$20,820 US dollars or its equivalent in Philippine currency as unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees. "SO
ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the
POEA,
not
the
NLRC
had
jurisdiction
over
the
case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared
null and void for want of jurisdiction. Complainant is hereby enjoined to file his
complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration
of the afore-quoted resolution. He argued that the case was not cognizable by
the POEA as he was not an "overseas contract worker." 21
On May 31, 1993, the NLRC granted the motion and reversed itself. The
NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question
of whether private respondent was retrenched or dismissed. 22
On
January
13,
1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and
documentary evidence presented to and heard by him. 23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter
of the National Capital Region, Arbitration Branch, and the case was transferred
to Labor Arbiter Jose G. de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted his report. 25
He
found
that
respondent
Santos
was
illegally
dismissed from employment and recommended that he be paid actual damages
equivalent to his salaries for the

unexpired portion of his contract.26

On December 15, 1994, the NLRC ruled in favor of private respondent,
to wit:27
"WHEREFORE, finding that the report and recommendations of Arbiter
de
Vera
are
supported
by
substantial
evidence, judgment is hereby rendered, directing the respondents to jointly and
severally
pay
complainant
the
following computed contractual benefits: (1) US$12,600.00 as salaries for the
unexpired
portion
of
the
parties'
contract; (2) US$3,600.00 as extra four (4) months salary for the two (2) years
period
(sic)
of
the
parties'
contract; (3) US$3,600.00 as "14th month pay" for the aforesaid two (2) years
contract
stipulated
by
the
parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorney's fees
of
10%
of
complainant's
total
award.
"SO ORDERED."
On
February
2,
1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Vera's
recommendation had no basis in law and in fact. 28
On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion
for
the
issuance
of
a
temporary
restraining
order and/or writ of preliminary injunction and a motion for the annulment of the
entry of judgment of the NLRC
dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion.
The Court required respondents to file their respective comments, without giving
due course to the petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating
that
after
going
over
the
petition
and
its
annexes, they can not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The
Solicitor General prayed that he be excused from filing a comment on
behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor
General and required the NLRC to file its own comment to the petition. 35
On
January
7,
1997,
the
NLRC
filed
its
comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link that the
Philippines has with the case is that respondent Santos is a Filipino citizen. The
Palace Hotel and MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.

The employment contract. Respondent Santos was hired

directly
by
the
Palace
Hotel,
a
foreign
employer,
through correspondence sent to the Sultanate of Oman, where respondent
Santos was then employed. He was
hired without the intervention of the POEA or any authorized
recruitment agency of the government.36
Under the rule of forum non conveniens, a Philippine court or agency
may
assume
jurisdiction
over
the
case
if
it
chooses to do so provided: (1) that the Philippine court is one to which the
parties
may
conveniently
resort
to;
(2)
that the Philippine court is in a position to make an intelligent decision as to the
law and the facts; and (3) that the
Philippine court has or is likely to have power to enforce its decision. 37
The
conditions
are
unavailing
in
the
case
at
bar.
Not Convenient. We fail to see how the NLRC is a convenient forum
given that all the incidents of the case from the time of recruitment, to
employment to dismissal occurred outside the Philippines. The inconvenience is
compounded by the fact that the proper defendants, the Palace Hotel and
MHICL are not nationals of the Philippines. Neither .are they "doing business
in the Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are
non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent
decision
be
made
as
to
the
law
governing
the
employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex
loci contractus (the law of the place where the contract was made). 38
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter while he was in
the Republic of Oman. This letter was sent to the Palace Hotel in the People's
Republic of China.
No power to determine the facts. Neither can the NLRC determine
the facts surrounding the alleged illegal dismissal as all acts complained of took
place in Beijing, People's Republic of China. The NLRC was not in a position to
determine whether the Tiannamen Square incident truly adversely affected
operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even
assuming that a proper decision could be reached by the NLRC, such would not
have any binding effect against the employer, the Palace Hotel. The Palace Hotel
is a corporation incorporated under the laws of China and was not even served
with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to
solve
controversies
involving
foreign
employers. Neither are we saying that we do not have power over an
employment
contract
executed
in
a
foreign
country. If Santos were an "overseas contract worker", a Philippine forum,
specifically the POEA, not the NLRC,
would protect him.39 He is not an "overseas contract worker" a fact
which he admits with conviction.40
Even assuming that the NLRC was the proper forum, even on the
merits, the NLRC's decision cannot be sustained.

II. MHC Not Liable

Even if we assume two things: (1) that the NLRC had jurisdiction over
the case, and (2) that MHICL was liable for Santos' retrenchment, still MHC, as a
separate and distinct juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of
its capital stock. However, this is not enough to pierce the veil of corporate
fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is
resorted to when the corporate fiction is used to defeat public convenience,
justify wrong, protect fraud or defend a crime. 41 It is done only when a
corporation is a mere alter ego or business conduit of a person or another
corporation.
In Traders Royal Bank v. Court of Appeals, 42 we held that "the mere
ownership by a single stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced
are:
First,
the
defendant
must
have
control
or
complete domination of the other corporation's finances, policy and business
practices
with
regard
to
the
transaction
attacked. There must be proof that the other corporation had no separate mind,
will
or
existence
with
respect
the
act
complained of. Second, control must be used by the defendant to commit fraud
or wrong. Third, the aforesaid control or breach of duty must be the proximate
cause of the injury or loss complained of. The absence of any of the elements
prevents the piercing of the corporate veil.43
It is basic that a corporation has a personality separate and distinct
from
those
composing
it
as
well
as
from
that
of
any other legal entity to which it may be related. 44 Clear and convincing evidence
is
needed
to
pierce
the
veil
of
corporate fiction.45 In this case, we find no evidence to show that MHICL and MHC
are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL
"signed" his employment contract with the Palace Hotel. This fact fails to
persuade us.
First, we note that the Vice President (Operations and Development) of
MHICL, Miguel D. Cergueda signed the employment contract as a mere witness.
He merely signed under the word "noted".
When one "notes" a contract, one is not expressing his agreement or
approval, as a party would. 46 In Sichangco v. Board of Commissioners of
Immigration,47 the Court recognized that the term "noted" means that the person
so noting has merely taken cognizance of the existence of an act or
declaration, without exercising a judicious deliberation or rendering a decision
on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document.
The
"witnessing
part"
of
the
document
is
that
which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no

recitals, after the parties (emphasis ours)." 48 As opposed to a party to

a contract, a witness is simply one who, "being present, personally sees or
perceives a thing; a beholder, a spectator, or eyewitness." 49 One who "notes"
something just makes a "brief written statement" 50 a memorandum or
observation.
Second, and more importantly, there was no existing employeremployee relationship between Santos and MHICL. In determining the existence
of an employer-employee relationship, the following elements are considered: 51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned
powers.
It
did
not
select
respondent
Santos
as
an employee for the Palace Hotel. He was referred to the Palace Hotel by his
friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The
terms of employment were negotiated and finalized through correspondence
between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives
of
the Palace Hotel and not MHICL. Neither did respondent Santos adduce any proof
that MHICL had the power to control his conduct. Finally, it was the Palace Hotel,
through Mr. Schmidt and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only
contractor."52 There is no proof that MHICL "supplied" respondent Santos or even
referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL
are one and the same entity. The fact that the Palace Hotel is a member of the
"Manila Hotel Group" is not enough to pierce the corporate veil between MHICL
and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and
considering further that no employer-employee relationship existed between
MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J. Diosana clearly had
no jurisdiction over respondent's claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the
following:53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and other terms
and conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from employeremployee relations, including those of persons in domestic or household

service, involving an amount exceeding five thousand pesos (P5,000.00)

regardless of whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor
Code
is
limited
to
disputes
arising
from an employer-employee relationship which can be resolved by reference to
the Labor Code, or other labor
statutes, or their collective bargaining agreements.54
"To determine which body has jurisdiction over the present
controversy,
we
rely
on
the
sound
judicial
principle
that
jurisdiction over the subject matter is conferred by law and is determined
by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the
claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case amounts to grave
abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and
ANNULS the orders and resolutions of the National Labor Relations Commission
dated May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA
No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.

G.R. No. 133876 December 29, 1999

BANK
OF
AMERICA,
NT

and

SA,

petitioner,

vs.
AMERICAN REALTY CORPORATION and COURT OF APPEALS,
respondents.

BUENA, J.:
Does a mortgage-creditor waive its remedy to foreclose the real estate
mortgage constituted over a third party mortgagor's property situated in the
Philippines by filing an action for the collection of the principal loan before
foreign courts?
Sought to be reversed in the instant petition for review on certiorari
under Rule 45 of the Rules of Court are the decision 1 of public respondent Court
of Appeals in CA G.R. CV No. 51094, promulgated on 30 September 1997 and its
resolution, 2 dated 22 May 1998, denying petitioner's motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international
banking
and
financing
institution
duly
licensed
to
do business in the Philippines, organized and existing under and by virtue of the
laws
of
the
State
of
California,
United States of America while private respondent American Realty Corporation
(ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a
limited liability company organized and existing under the laws of England.

As borne by the records, BANTSA and BAIL on several occasions

granted
three
major
multi-million
United
States
(US) Dollar loans to the following corporate borrowers: (1) Liberian Transport
Navigation, S.A.; (2) El Challenger
S.A. and (3) Eshley Compania Naviera S.A. (hereinafter collectively
referred to as "borrowers"), all of which are existing under and by virtue of the
laws of the Republic of Panama and are foreign affiliates of private
respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA
and
the
corporate
borrowers
signed
and
entered into restructuring agreements. As additional security for the restructured
loans, private respondent ARC as
third party mortgagor executed two real estate mortgages, 4 dated 17
February 1983 and 20 July 1984, over its parcels of land including improvements
thereon, located at Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are
covered by Transfer Certificate of Title Nos. T-78759, T-78760, T-78761, T-78762
and T-78763.
Eventually, the corporate borrowers defaulted in the payment of the
restructured loans prompting petitioner BANTSA to file civil actions 5 before
foreign courts for the collection of the principal loan, to wit:
a) In England, in its High Court of Justice, Queen's Bench Division,
Commercial
Court
(1992-Folio No 2098) against Liberian Transport Navigation S.A., Eshley
Compania
Naviera S.A., El Challenger S.A., Espriona Shipping Company S.A.,
Eddie
Navigation
Corp., S.A., Eduardo Katipunan Litonjua and Aurelio Katipunan Litonjua on June
17, 1992.
b) In England, in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2245) against El Challenger S.A., Espriona
Shipping Company S.A., Eduardo Katipuan Litonjua & Aurelio Katipunan Litonjua
on July 2, 1992;
c) In Hongkong, in the Supreme Court of Hongkong High Court (Action
No.
4039
of
1992)
against Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping
Company
S.A. Pacific Navigators Corporation, Eddie Navigation Corporation
S.A., Litonjua Chartering (Edyship) Co., Inc., Aurelio Katipunan Litonjua, Jr. and
Eduardo Katipunan Litonjua on November 19, 1992; and
d) In Hongkong, in the Supreme Court of Hongkong High Court (Action
No.
4040
of
1992)
against Eshley Compania Naviera S.A., El Challenger S.A., Espriona Shipping
Company
S.A., Pacific Navigators Corporation, Eddie Navigation Corporation
S.A.,
Litonjua
Chartering (Edyship) Co., Jr. and Eduardo Katipunan Litonjua on November 21,
1992.
In the civil suits instituted before the foreign courts, private respondent
ARC, being a third party mortgagor, was private not impleaded as partydefendant.

On 16 December 1992, petitioner BANTSA filed before the Office of the

Provincial Sheriff of Bulacan, Philippines an application for extrajudicial
foreclosure 6 of real estate mortgage.
On 22 January 1993, after due publication and notice, the mortgaged
real
properties
were
sold
at
public
auction
in
an extrajudicial foreclosure sale, with Integrated Credit and Corporation Services
Co (ICCS) as the highest bidder
for the sum of Twenty four Million Pesos (P24,000.000.00). 7
On 12 February 1993, private respondent filed before the Pasig
Regional Trial Court, Branch 159, an action for damages 8 against the petitioner,
for the latter's act of foreclosing extrajudicially the real estate mortgages despite
the pendency of civil suits before foreign courts for the collection of the principal
loan.
In its answer 9 petitioner alleged that the rule prohibiting the
mortgagee from foreclosing the mortgage after an ordinary suit for collection has
been filed, is not applicable in the present case, claiming that:
a) The plaintiff, being a mere third party mortgagor and not a
party to the principal restructuring agreements, was never made a party
defendant in the civil cases filed in Hongkong and England;
b) There is actually no civil suit for sum of money filed in the
Philippines
since
the
civil
actions
were
filed in Hongkong and England. As such, any decisions (sic) which may be
rendered in the
abovementioned courts are not (sic) enforceable in the Philippines
unless a separate action to enforce the foreign judgments is first filed in the
Philippines, pursuant to Rule 39, Section 50 of the Revised Rules of Court.
c) Under English Law, which is the governing law under the principal
agreements, the mortgagee does not lose its security interest by filing civil
actions for sums of money.
On 14 December 1993, private respondent filed a motion for
suspension 10 of the redemption period on the ground that "it cannot
exercise said right of redemption without at the same time waiving or
contradicting its contentions in the case that the foreclosure of the mortgage on
its properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private
respondent's motion for suspension after which a copy of said order was duly
received by the Register of Deeds of Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties
at the foreclosure sale, consolidated its ownership over the real properties,
resulting to the issuance of Transfer Certificate of Title Nos. T-18627, T-186272, T186273, T-16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor,
ICCS
sold
the
real
properties
to
Stateland
Investment Corporation for the amount of Thirty Nine Million Pesos
12
(P39,000,000.00).
Accordingly,
Transfer
Certificate of Title Nos. T-187781(m), T-187782(m), T-187783(m), T-16653P(m)
and
T-16652P(m)
were
issued
in
the
latter's
name.

After trial, the lower court rendered a decision 13 in favor of private

respondent ARC dated 12 May 1993, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the filing in
foreign courts by the defendant of collection suits against the principal debtors
operated as a waiver of the security of the mortgages. Consequently, the
plaintiff's rights as owner and possessor of the properties then covered by
Transfer Certificates of Title Nos. T-78759, T-78762, T-78763, T-78760 and T78761, all of the Register of Deeds of Meycauayan, Bulacan, Philippines, were
violated when the defendant caused the extrajudicial foreclosure of the
mortgages constituted thereon.
Accordingly, the defendant is hereby ordered to pay the plaintiff the
following sums, all with legal interest thereon from the date of the filing of the
complaint up to the date of actual payment:
1) Actual or compensatory damages in the amount of Ninety Nine
Million Pesos (P99,000,000.00);
2) Exemplary damages in the amount of Five Million Pesos
(P5,000,000.00); and
3) Costs of suit.
SO ORDERED.
On appeal, the Court of Appeals affirmed the assailed decision of the
lower court prompting petitioner to file a motion for reconsideration which the
appellate court denied.
Hence, the instant petition for review 14 on certiorari where herein
petitioner BANTSA ascribes to the Court of Appeals the following assignment of
errors:
1. The Honorable Court of Appeals disregarded the doctrines laid down
by
this
Hon.
Supreme Court in the cases of Caltex Philippines, Inc. vs. Intermediate Appellate
Court
docketed as G.R. No. 74730 promulgated on August 25, 1989 and Philippine
Commercial
International Bank vs. IAC, 196 SCRA 29 (1991 case), although said cases were
duly
cited, extensively discussed and specifically mentioned, as one of the
issues
in
the
assignment of errors found on page 5 of the decision dated September 30, 1997.
2. The Hon. Court of Appeals acted with grave abuse of discretion
when it awarded the private respondent actual and exemplary damages totalling
P171,600,000.00, as of July 12, 1998 although such huge amount was not asked
nor prayed for in private respondent's complaint, is contrary to law and is totally
unsupported by evidence (sic).
In fine, this Court is called upon to resolve two main issues:
1. Whether or not the petitioner's act of filing a collection suit against
the principal debtors for the recovery of the loan before foreign courts
constituted a waiver of the remedy of foreclosure.
2. Whether or not the award by the lower court of actual and
exemplary damages in favor of private respondent ARC, as third-party
mortgagor, is proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that
a waiver of the remedy of foreclosure requires the concurrence of two requisites:

an ordinary civil action for collection should be filed and subsequently a final
judgment be correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect
the principal loan does not suffice; a final judgment must be secured and
obtained in the personal action so that waiver of the remedy of foreclosure may
be appreciated. To put it differently, absent any of the two requisites, the
mortgagee-creditor is deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and
upholds the jurisprudence laid down in Bachrach 15 and similar cases adjudicated
thereafter, thus:
In the absence of express statutory provisions, a mortgage creditor
may institute against the mortgage debtor either a personal action or debt or a
real action to foreclose the mortgage. In other words, he may he may pursue
either of the two remedies, but not both. By such election, his cause of action
can by no means be impaired, for each of the two remedies is complete in itself.
Thus, an election tobring a personal action will leave open to him all the
properties of the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal action and pursues his
remedy against the mortgaged property, an unsatisfied judgment thereon would
still give him the right to sue for a deficiency judgment, in which case, all the
properties
of
the
defendant,
other
than
the
mortgaged property, are again open to him for the satisfaction of the deficiency.
In either case, his remedy is complete, his cause of action undiminished, and any
advantages attendant to the pursuit of one or the other remedy are purely
accidental and are all under his right of election. On the other hand, a rule that
would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property,
would result not only in multiplicity of suits so offensive to justice (Soriano vs.
Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio vs. San Agustin,
25 Phil., 404), but also in subjecting the defendant to the vexation of being sued
in the place of his residence or of the residence of the plaintiff, and then again in
the
place
where
the property lies.
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence
enunciated in Manila Trading and Supply Co vs. Co Kim 17 and Movido vs.
RFC, 18 invariably held:
. . . The rule is now settled that a mortgage creditor may elect to waive
his security and bring, instead, an ordinary action to recover the indebtedness
with the right to execute a judgment thereon on all the properties of the debtor,
including the subject matter of the mortgage . . . , subject to the qualification
that if he fails in the remedy by him elected, he cannot pursue further the
remedy he has waived. (Emphasis Ours)
Anent real properties in particular, the Court has laid down the rule
that a mortgage creditor may institute against the mortgage debtor either a
personal action for debt or a real action to foreclose the mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are
deemed
alternative
and
not
cumulative.
Notably, an election of one remedy operates as a waiver of the other. For this
purpose, a remedy is deemed choseupon the filing of the suit for collection or

upon the filing of the complaint in an action for foreclosure of mortgage,

pursuant to the provision of Rule 68 of the of the 1997 Rules of Civil Procedure.
As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage
creditor upon filing of the petition not with any court of justice but with the Office
of the Sheriff of the province where the sale is to be made, in accordance with
the provisions of Act No. 3135, as amended by Act No. 4118.
In the case at bench, private respondent ARC constituted real estate
mortgages
over
its
properties
as
security
for
the debt of the principal debtors. By doing so, private respondent subjected itself
to
the
liabilities
of
a
third
party
mortgagor. Under the law, third persons who are not parties to a loan
may secure the latter by pledging or
mortgaging their own property. 20
Notwithstanding, there is no legal provision nor jurisprudence in our
jurisdiction
which
makes
a
third
person
who
secures the fulfillment of another's obligation by mortgaging his own
property,
to
be
solidarily
bound
with
the
principal obligor. The signatory to the principal contractloanremains to be
primarily
bound.
It
is
only
upon
default
of the latter that the creditor may have recourse on the mortgagors by
foreclosing the mortgaged properties in lieu of
an action for the recovery of the amount of the loan. 21
In the instant case, petitioner's contention that the requisites of filing
the action for collection and rendition of final judgment therein should concur, is
untenable.
Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in
said case, that the filing of a collection suit barred the foreclosure of the
mortgage:
A mortgagee who files a suit for collection abandons the remedy of
foreclosure of the chattel mortgage constituted over the personal property as
security for the debt or value of the promissory note when he seeks to recover in
the said collection suit.
. When the mortgagee elects to file a suit for collection, not
foreclosure, thereby abandoning the chattel mortgage as basis for relief, he
clearly manifests his lack of desire and interest to go after the mortgaged
property as security for the promissory note . . .
Contrary to petitioner's arguments, we therefore reiterate the rule, for
clarity and emphasis, that the mere act of filing of an ordinary action for
collection operates as a waiver of the mortgage-creditor's remedy to
foreclose the mortgage. By the mere filing of the ordinary action for collection
against the principal debtors, the petitioner in the present case is deemed to
have elected a remedy, as a result of which a waiver of the other necessarily
must arise. Corollarily, no final judgment in the collection suit is required for the
rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate-Appellate Court, 23 a
case relied upon by petitioner, supposedly to buttress its contention, this Court
had occasion to rule that the mere act of filing a collection suit for the recovery
of a debt secured by a mortgage constitutes waiver of the other remedy of
foreclosure.

In the case at bar, petitioner BANTSA only has one cause of action
which is non-payment of the debt. Nevertheless, alternative remedies are
available for its enjoyment and exercise. Petitioner then may opt to exercise only
one of two remedies so as not to violate the rule against splitting a cause of
action.
As elucidated by this Court in the landmark case of Bachrach Motor
Co., Inc, vs. Icarangal. 24
For non-payment of a note secured by mortgage, the creditor has a
single cause of action against the debtor. This single cause of action consists in
the recovery of the credit with execution of the security. In other words, the
creditor in his action may make two demands, the payment of the debt and the
foreclosure of his mortgage. But both demands arise from the same cause, the
non-payment of the debt, and for that reason, they constitute a single cause of
action. Though the debt and the mortgage constitute separate agreements, the
latter is subsidiary to the former, and both refer to one and the same obligation.
Consequently, there exists only one cause of action for a single breach of
that obligation. Plaintiff, then, by applying the rules above stated, cannot split up
his single cause of action by filing a complaint for payment of the debt, and
thereafter another complaint for foreclosureof the mortgage. If he does so, the
filing of the first complaint will bar the subsequent complaint. By allowing the
creditor to file two separate complaints simultaneously or successively, one to
recover his credit and another to foreclose his mortgage, we will, in effect, be
authorizing him plural redress for a single breach of contract at so much cost to
the courts and with so much vexation and oppression to the debtor.
Petitioner further faults the Court of Appeals for allegedly disregarding
the doctrine enunciated in Caltex wherein this High Court relaxed the application
of the general rules to wit:
In the present case, however, we shall not follow this rule to the letter
but declare that it is the collection suit which was waived and/or abandoned. This
ruling is more in harmony with the principles underlying our judicial system. It is
of no moment that the collection suit was filed ahead, what is determinative is
the fact that the foreclosure proceedings ended even before the decision in the
collection suit was rendered. . .
Notably, though, petitioner took the Caltex ruling out of context. We
must
stress
that
the
Caltex
case
was
never
intended to overrule the well-entrenched doctrine enunciated Bachrach, which to
our mind still finds applicability in cases of this sort. To reiterate, Bachrach is still
good law.
We then quote the decision

25

of the trial court, in the present case,

thus:
The aforequoted ruling in Caltex is the exception rather than the
rule, dictated by the peculiar circumstances obtaining therein. In the said case,
the Supreme Court chastised Caltex for making ". . . a mockery of our judicial
system when it initially filed a collection suit then, during the pendency thereof,
foreclosed extrajudicially the mortgaged property which secured the
indebtedness, and still pursued the collection suit to the end." Thus, to prevent a
mockery of
our
judicial
system",
the collection
suit
had
to
be nullified because the foreclosure proceedings have already been pursued to
their end and can no longer be undone.

xxx xxx xxx

In the case at bar, it has not been shown whether the defendant
pursued to the end or are still pursuing the collection suits filed in foreign courts.
There is no occasion, therefore, for this court to apply the exception laid down by
the Supreme Court in Caltex by nullifying the collection suits. Quite obviously,
too, the aforesaid collection suits are beyond the reach of this Court. Thus the
only way the court may prevent the spector of a creditor having "plural redress
for a single breach of contract" is by holding, as the Court hereby holds, that the
defendant has waived the right to foreclose the mortgages constituted by the
plaintiff on its properties originally covered by Transfer Certificates of Title Nos. T78759,
T78762, T-78760 and T-78761. (RTC Decision pp., 10-11)
In this light, the actuations of Caltex are deserving of severe criticism,
to say the least. 26
Moreover, petitioner attempts to mislead this Court by citing the case
of PCIB vs. IAC. 27 Again, petitioner tried to fit a square peg in a round hole. It
must be stressed that far from overturning the doctrine laid down in Bachrach,
this Court in PCIB buttressed its firm stand on this issue by declaring:
While the law allows a mortgage creditor to either institute a personal
action for the debt or a real action to foreclosure the mortgage, he cannot pursue
both remedies simultaneously or successively as was done by PCIB in this case.
xxx xxx xxx
Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of
the 1.3 million promissory note secured by real estate mortgages and
subsequently filed a petition for extrajudicial foreclosure, it violates the rule
against splitting a cause of action.
Accordingly, applying the foregoing rules, we hold that petitioner, by
the expediency of filing four civil suits before foreign courts, necessarily
abandoned the remedy to foreclose the real estate mortgages constituted
over the properties of third-party mortgagor and herein private respondent ARC.
Moreover, by filing the four civil actions and by eventually foreclosing
extrajudicially the mortgages, petitioner in effect transgressed the rules against
splitting a cause of action well-enshrined in jurisprudence and our statute books.
In Bachrach, this Court resolved to deny the creditor the remedy of
foreclosure
after
the
collection
suit
was
filed,
considering that the creditor should not be afforded "plural redress for a single
breach of contract." For cause of
action should not be confused with the remedy created for its
enforcement. 28
Notably, it is not the nature of the redress which is crucial but the
efficacy of the remedy chosen in addressing the creditor's cause. Hence, a suit
brought before a foreign court having competence and jurisdiction to entertain
the action is deemed, for this purpose, to be within the contemplation of the
remedy available to the mortgagee-creditor. This pronouncement would best
serve the interest of justice and fair play and further discourage the
noxious practice of splitting up a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according
to
petitioner
is
the
governing
law
with
regard
to the principal agreements, the mortgagee does not lose its security interest by
simply filing civil actions for sums of money. 29

We rule in the negative.

This argument shows desperation on the part of petitioner to rivet its
crumbling
cause.
In
the
case
at
bench,
Philippine law shall apply notwithstanding the evidence presented by petitioner
to prove the English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded
principle
in
our
jurisdiction
that
there
is
no
judicial
notice of any foreign law. A foreign law must be properly pleaded and proved as a
fact. 30 Thus, if the foreign law involved is not properly pleaded and proved, our
courts will presume that the foreign law is the same as our local or domestic or
internal law. 31 This is what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the
matter
were
properly
pleaded
and
proved
in
accordance with Section 24, Rule 132 of the Rules of Court and the jurisprudence
laid down in Yao Kee, et al. vs.Sy-Gonzales, 32 said foreign law would still not find
applicability.
Thus, when the foreign law, judgment or contract is contrary to a
sound and established public policy of the forum, the said foreign law, judgment
or order shall not be applied. 33
Additionally, prohibitive laws concerning persons, their acts or
property,
and
those
which
have
for
their
object
public
order, public policy and good customs shall not be rendered ineffective by laws
or judgments promulgated, or by
determinations or conventions agreed upon in a foreign country. 34
The public policy sought to be protected in the instant case is the
principle imbedded in our jurisdiction proscribing the splitting up of a single
cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
If two or more suits are instituted on the basis of the same cause of
action, the filing of one or a judgment upon the merits in any one is available as
a ground for the dismissal of the others.
Moreover, foreign law should not be applied when its application would
work
undeniable
injustice
to
the
citizens
or
residents of the forum. To give justice is the most important function of law;
hence, a law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 35
Clearly then, English Law is not applicable.
As to the second pivotal issue, we hold that the private
respondent
is
entitled
to
the
award
of
actual
or
compensatory damages inasmuch as the act of petitioner BANTSA in
extrajudicially
foreclosing
the
real
estate
mortgages constituted a clear violation of the rights of herein private respondent
ARC, as third-party mortgagor.
Actual or compensatory damages are those recoverable because of
pecuniary
loss
in
business,
trade,
property,
profession, job or occupation and the same must be proved, otherwise if the
proof is flimsy and non-substantial, no
damages will be given. 36 Indeed, the question of the value of property
is
always
a
difficult
one
to
settle
as
valuation
of
real
property is an imprecise process since real estate has no inherent value readily
ascertainable
by
an
appraiser
or
by
the
court.

37 The opinions of men vary so much concerning the real value of property that
the best the courts can do is hear all of the witnesses which the respective
parties desire to present, and then, by carefully weighing that testimony,
arrive at a conclusion which is just and equitable. 38
In the instant case, petitioner assails the Court of Appeals for relying
heavily on the valuation made by Philippine Appraisal Company. In effect,
BANTSA questions the act of the appellate court in giving due weight to the
appraisal report composed of twenty three pages, signed by Mr. Lauro
Marquez and submitted as evidence by private respondent. The appraisal
report, as the records would readily show, was corroborated by the testimony of
Mr. Reynaldo Flores, witness for private respondent.
On this matter, the trial court observed:
The record herein reveals that plaintiff-appellee formally offered as
evidence
the
appraisal
report
dated
March 29, 1993 (Exhibit J, Records, p. 409), consisting of twenty three (23) pages
which set out in detail the valuation of the property to determine its fair market
value (TSN, April 22, 1994, p. 4), in the amount of P99,986,592.00 (TSN, ibid., p.
5), together with the corroborative testimony of one Mr. Reynaldo F. Flores, an
appraiser and director of Philippine Appraisal Company, Inc. (TSN, ibid., p. 3).
The latter's testimony was subjected to extensive cross-examination by
counsel for defendant-appellant (TSN, April 22, 1994, pp. 6-22). 39
In the matter of credibility of witnesses, the Court reiterates the
familiar
and
well-entrenched
rule
that
the
factual
findings of the trial court should be respected. 40 The time-tested jurisprudence is
that
the
findings
and
conclusions
of
the
trial court on the credibility of witnesses enjoy a badge of respect for the reason
that trial courts have the advantage of
observing the demeanor of witnesses as they testify. 41
This Court will not alter the findings of the trial court on the credibility
of witnesses, principally because they are in a better position to assess the same
than the appellate court. 42 Besides, trial courts are in a better position to
examine real evidence as well as observe the demeanor of witnesses. 43
Similarly, the appreciation of evidence and the assessment of the
credibility of witnesses rest primarily with the trial court. 44 In the case at bar, we
see no reason that would justify this Court to disturb the factual findings of the
trial court, as affirmed by the Court of Appeals, with regard to the award of actual
damages.
In arriving at the amount of actual damages, the trial court
justified the award by presenting the following ratiocination in its assailed
decision 45, to wit:
Indeed, the Court has its own mind in the matter of valuation. The size
of the subject real properties are (sic) set forth in their individuals titles, and the
Court itself has seen the character and nature of said properties during the
ocular inspection it conducted. Based principally on the foregoing, the Court
makes the following observations:
1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San
Jose del Monte, Bulacan, which is (sic) not distant from Metro Manila the
biggest urban center in the Philippines and are easily accessible through wellpaved roads;

2. The properties are suitable for development into a subdivision for

low cost housing, as admitted by defendant's own appraiser (TSN, May 30, 1994,
p. 31);
3. The pigpens which used to exist in the property have already been
demolished.
Houses
of
strong
materials are found in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the
vicinity
is
a
growing
community. It has even been shown that the house of the Barangay Chairman is
located
adjacent
to
the property in question (Exh. 27), and the only remaining piggery (named
Cherry
Farm)
in
the
vicinity
is about 2 kilometers away from the western boundary of the property in
question (TSN, November 19,
p. 3);
4. It will not be hard to find interested buyers of the property, as
indubitably shown by the fact that on March 18, 1994, ICCS (the buyer during
the foreclosure sale) sold the consolidated real estate properties to Stateland
Investment Corporation, in whose favor new titles were issued, i.e., TCT Nos. T187781(m); T-187782(m), T-187783(m); T-16653P(m) and T-166521(m) by the
Register of Deeds of Meycauayan (sic), Bulacan;
5. The fact that ICCS was able to sell the subject properties to
Stateland
Investment
Corporation
for
Thirty Nine Million (P39,000,000.00) Pesos, which is more than triple defendant's
appraisal
(Exh.
2)
clearly shows that the Court cannot rely on defendant's aforesaid estimate
(Decision, Records, p. 603).
It is a fundamental legal aphorism that the conclusions of the trial
judge
on
the
credibility
of
witnesses
command
great respect and consideration especially when the conclusions are supported
46
by
the
evidence
on
record.
Applying the foregoing principle, we therefore hold that the trial court committed
no
palpable
error
in
giving
credence
to
the
testimony of Reynaldo Flores, who according to the records, is a licensed real
estate broker, appraiser and director of
Philippine Appraisal Company, Inc. since 1990. 47 As the records show,
Flores had been with the company for 26 years at the time of his testimony.
Of equal importance is the fact that the trial court did not confine itself
to
the
appraisal
report
dated
29
March
1993,
and the testimony given by Mr. Reynaldo Flores, in determining the fair market
value
of
the
real
property.
Above
all
these, the record would likewise show that the trial judge in order to appraise
himself
of
the
characteristics
and
condition of the property, conducted an ocular inspection where the opposing
parties
appeared
and
were
duly
represented.
Based on these considerations and the evidence submitted, we affirm
the ruling of the trial court as regards the valuation of the property
. a valuation of Ninety Nine Million Pesos (P99,000,000.00) for
the
39-hectare
properties
(sic)
translates to just about Two Hundred Fifty Four Pesos (P254.00) per square meter.
This
appears
to
be,

as the court so holds, a better approximation of the fair market value of the
subject
properties.
This
is
the amount which should be restituted by the defendant to the plaintiff
by way of actual or
compensatory
damages
.
.
.
.

48

Further, petitioner ascribes error to the lower court awarding an

amount allegedly not asked nor prayed for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory
damages by the lower court exceeded that prayed for in the complaint, the same
is nonetheless valid, subject to certain qualifications.
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
Sec. 5. Amendment to conform to or authorize presentation of
evidence. When issues not raised by the pleadings are tried with the express
or implied consent of the parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues
may be made upon motion of any party at any time, even after judgement; but
failure to amend does not affect the result of the trial of these issues. If evidence
is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the pleadings to be amended
and shall do so with liberality if the presentation of the merits of the action
and the ends of substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs.
Asociacion de Agricultures de Talisay-Silay, Inc. 49 citing Northern Cement
Corporation vs. Intermediate Appellate Court 50 is enlightening:
There have been instances where the Court has held that even without
the
necessary
amendment,
the
amount proved at the trial may be validly awarded, as in Tuazon v. Bolanos (95
Phil.
106),
where
we
said that if the facts shown entitled plaintiff to relief other than that asked for, no
amendment
to
the
complaint was necessary, especially where defendant had himself raised the
point
on
which
recovery
was based. The appellate court could treat the pleading as amended to conform
to
the
evidence
although the pleadings were actually not amended. Amendment is also
unnecessary when only clerical error or non substantial matters are involved, as
we held in Bank of the Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco vs.
Diaz (75 Phil. 672), we stressed that the rule on amendment need not be applied
rigidly, particularly where no surprise or prejudice is caused the objecting party.
And in the recent case of National Power Corporation vs. Court of Appeals (113
SCRA 556), we held that where there is a variance in the defendant's pleadings
and the evidence adduced by it at the trial, the Court may treat the pleading as
amended to conform with the evidence.
It is the view of the Court that pursuant to the above-mentioned rule
and in light of the decisions cited, the trial court should not be precluded
from awarding an amount higher than that claimed in the pleading
notwithstanding the absence of the required amendment. But it is upon the

condition that the evidence of such higher amount has been presented properly,
with full opportunity on the part of the opposing parties to support their
respective contentions and to refute each other's evidence.
The failure of a party to amend a pleading to conform to the evidence
adduced during trial does not preclude an adjudication by the court on the basis
of such evidence which may embody new issues not raised in the pleadings, or
serve as a basis for a higher award of damages. Although the pleading may not
have been amended to conform to the evidence submitted during trial, judgment
may nonetheless be rendered, not simply on the basis of the issues alleged but
also the basis of issues discussed and the assertions of fact proved in the course
of trial. The court may treat the pleading as if it had been amended to conform to
the evidence, although it had not been actually so amended. Former Chief Justice
Moran put the matter in this way:
When evidence is presented by one party, with the expressed or
implied consent of the adverse party, as to issues not alleged in the pleadings,
judgment may be rendered validly as regards those issues, which shall be
considered as if they have been raised in the pleadings. There is implied consent
to the evidence thus presented when the adverse party fails to object thereto.
Clearly, a court may rule and render judgment on the basis of the
evidence before it even though the relevant pleading had not been previously
amended, so long as no surprise or prejudice is thereby caused to the adverse
party. Put a little differently, so long as the basis requirements of fair play had
been met, as where litigants were given full opportunity to support their
respective contentions and to object to or refute each other's evidence, the court
may validly treat the pleadings as if they had been amended to conform to the
evidence and proceed to adjudicate on the basis of all the evidence before
it.
In the instant case, inasmuch as the petitioner was afforded the
opportunity to refute and object to the evidence, both documentary and
testimonial, formally offered by private respondent, the rudiments of fair play are
deemed satisfied. In fact, the testimony of Reynaldo Flores was put under
scrutiny
during
the
course
of
the
crossexamination. Under these
circumstances, the court acted within the bounds of its jurisdiction and
committed no reversible error in awarding actual damages the amount of which
is higher than that prayed for. Verily, the lower court's actuations are sanctioned
by the Rules and supported by jurisprudence.
Similarly, we affirm the grant of exemplary damages although the
amount of Five Million Pesos (P5,000,000.00) awarded, being excessive, is
subject to reduction. Exemplary or corrective damages are imposed, by
way of example or correction for the public good, in addition to the moral,
temperate,
liquidated
or
compensatory
damages.
51 Considering its purpose, it must be fair and reasonable in every case and
should not be awarded to unjustly enrich a prevailing party. 52 In our view, an
award of P50,000.00 as exemplary damages in the present case qualifies the test
of reasonableness.
WHEREFORE, premises considered, the instant petition is DENIED for
lack of merit. The decision of the Court of Appeals is hereby AFFIRMED with
MODIFICATION of the amount awarded as exemplary damages. According,
petitioner is hereby ordered
to
pay private
respondent the
sum of
P99,000,000.00 as actual or compensatory damages; P50,000.00 as exemplary
damage and the costs of suit.

SO ORDERED.
7

THIRD DIVISION
[G.R. No. 55960. November 24, 1988.]
YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN
YEN, petitioners, vs. AIDA SY-GONZALES, MANUEL SY, TERESITA SYBERNABE,
RODOLFO
SY,
and
HONORABLE
COURT
OF
APPEALS, respondents.
Montesa, Albon & Associates for petitioner.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.
SYLLABUS
DECISION
CORTES, J p:
Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City
where he was then residing, leaving behind real and personal properties here in
the Philippines worth P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and
Rodolfo Sy filed a petition for the grant of letters of administration docketed as
Special Proceedings Case No. C-699 of the then Court of First Instance of Rizal
Branch XXXIII, Caloocan City. In said petition they alleged among others that (a)
they are the children of the deceased with Asuncion Gillego; (b) to their
knowledge Sy Kiat died intestate; (c) they do not recognize Sy Kiat's marriage to
Yao Kee nor the filiation of her children to him; and, (d) they nominate Aida SyGonzales for appointment as administratrix of the intestate estate of the
deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and
Sy Yun Chen who alleged that: (a) Yao Kee is the lawful wife of Sy Kiat whom he
married on January 19, 1931 in China; (b) the other oppositors are the legitimate
children of the deceased with Yao Kee; and, (c) Sze Sook Wah is the eldest among

them and is competent, willing and desirous to become the administratrix of the
estate of Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.]
After hearing, the probate court, finding among others that:
(1)Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27;
Rollo, pp. 49-64;]
(2)Sze Sook Wah, Sze Lai Cho and Sze Chum Yen are the legitimate
children of Yao Kee with Sy Kiat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and,
(3)Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy
are the acknowledged illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI
decision, pp. 27-28; Rollo, pp. 64-65.]
held in favor of the oppositors (petitioners herein) and appointed Sze
Sook Wah as the administratrix of the intestate estate of the deceased [CFI
decision, pp. 68-69; Rollo, pp. 106.]
On appeal the Court of Appeals rendered a decision modifying that of
the probate court, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby
MODIFIED and SET ASIDE and a new judgment rendered as follows:
(1)Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita SyBernabe and Rodolfo Sy acknowledged natural children of the deceased Sy Kiat
with Asuncion Gillego, an unmarried woman with whom he lived as husband and
wife without benefit of marriage for many years:
(2)Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen,
the acknowledged natural children of the deceased Sy Kiat with his Chinese wife
Yao Kee, also known as Yui Yip, since the legality of the alleged marriage of Sy
Kiat to Yao Kee in China had not been proven to be valid to the laws of the
Chinese People's Republic of China (sic);
(3)Declaring the deed of sale executed by Sy Kiat on December 7,
1976 in favor of Tomas Sy (Exhibit "G-1", English translation of Exhibit "G") of the
Avenue Tractor and Diesel Parts Supply to be valid and accordingly, said property
should be excluded from the estate of the deceased Sy Kiat; and
(4)Affirming the appointment by the lower court of Sze Sook Wah as
judicial administratrix of the estate of the deceased. [CA decision, pp. 11-12;
Rollo, pp. 36-37.]
From said decision both parties moved for partial reconsideration,
which was however denied by respondent court. They thus interposed their
respective appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No.
56045 entitled "Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy
v. Court of Appeals, Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Chun Yen"
questioning paragraphs (3) and (4) of the dispositive portion of the Court of
Appeals' decision. The Supreme Court however resolved to deny the petition and
the motion for reconsideration. Thus on March 8, 1982 entry of judgment was
made in G.R. No. 56045. *
The instant petition, on the other hand, questions paragraphs (1) and
(2) of the dispositive portion of the decision of the Court of Appeals. This petition
was initially denied by the Supreme Court on June 22, 1981. Upon motion of the
petitioners the Court in a resolution dated September 16, 1981 reconsidered the
denial and decided to give due course to this petition.
Herein petitioners assign the following as errors:

I.RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING

THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN VALID
IN ACCORDANCE WITH LAWS OF THE PEOPLE'S REPUBLIC OF CHINA.
II.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE AND RODOLFO SY AS
NATURAL CHILDREN OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p.
6.]
I.Petitioners argue that the marriage of Sy Kiat to Yao Kee in
accordance with Chinese law and custom was conclusively proven. To buttress
this argument they rely on the following testimonial and documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as
follows:
Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in
Fookien, China; that she does not have a marriage certificate because the
practice during that time was for elders to agree upon the betrothal of their
children, and in her case, her elder brother was the one who contracted or
entered into [an] agreement with the parents of her husband; that the
agreement was that she and Sy Kiat would be married, the wedding date was
set, and invitations were sent out; that the said agreement was complied with;
that she has five children with Sy Kiat, but two of them died; that those who are
alive are Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze
Sook Wah who is already 38 years old; that Sze Sook Wah was born on November
7, 1939; that she and her husband, Sy Kiat, have been living in Fookien, China
before he went to the Philippines on several occasions; that the practice during
the time of her marriage was a written document [is exchanged] just between
the parents of the bride and the parents of the groom, or any elder for that
matter; that in China, the custom is that there is a go-between, a sort of
marriage broker who is known to both parties who would talk to the parents of
the bride-to-be; that if the parents of the bride-to-be agree to have the groom-tobe their son-in-law, then they agree on a date as an engagement day; that on
engagement day, the parents of the groom would bring some pieces of jewelry to
the parents of the bride-to-be, and then one month after that, a date would be
set for the wedding, which in her case, the wedding date to Sy Kiat was set on
January 19, 1931; that during the wedding the bridegroom brings with him a
couch (sic) where the bride would ride and on that same day, the parents of the
bride would give the dowry for her daughter and then the document would be
signed by the parties but there is no solemnizing officer as is known in the
Philippines; that during the wedding day, the document is signed only by the
parents of the bridegroom as well as by the parents of the bride; that the parties
themselves do not sign the document; that the bride would then be placed in a
carriage where she would be brought to the town of the bridegroom and before
departure the bride would be covered with a sort of a veil; that upon reaching the
town of the bridegroom, the bridegroom takes away the veil; that during her
wedding to Sy Kiat (according to said Chinese custom), there were many persons
present; that after Sy Kiat opened the door of the carriage, two old ladies helped
her go down the carriage and brought her inside the house of Sy Kiat; that during
her wedding, Sy Chiok, the eldest brother of Sy Kiat, signed the document with
her mother; that as to the whereabouts of that document, she and Sy Kiat were
married for 46 years already and the document was left in China and she doubt if
that document can still be found now; that it was left in the possession of Sy
Kiat's family; that right now, she does not know the whereabouts of that

document because of the lapse of many years and because they left it in a
certain place and it was already eaten by the termites; that after her wedding
with Sy Kiat, they lived immediately together as husband and wife, and from
then on, they lived together; that Sy Kiat went to the Philippines sometime in
March or April in the same year they were married; that she went to the
Philippines in 1970, and then came back to China; that again she went back to
the Philippines and lived with Sy Kiat as husband and wife; that she begot her
children with Sy Kiat during the several trips by Sy Kiat made back to China. [CFI
decision, pp. 13-15; Rollo, pp. 50-52.]
Second, the testimony of Gan Ching, a younger brother of Yao Kee who
stated that he was among the many people who attended the wedding of his
sister with Sy Kiat and that no marriage certificate is issued by the Chinese
government, a document signed by the parents or elders of the parties being
sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.]
Third, the statements made by Asuncion Gillego when she testified
before the trial court to the effect that (a) Sy Kiat was married to Yao Kee
according to Chinese custom; and, (b) Sy Kiat's admission to her that he has a
Chinese wife whom he married according to Chinese custom [CFI decision, p. 17;
Rollo, p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan
City on October 3, 1972 where the following entries are found: "Marital status
Married"; "If married give name of spouse Yao Kee"; "Address China"; "Date
of marriage 1931"; and "Place of marriage China" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on
January 12, 1968 where the following entries are likewise found: "Civil status
Married"; and, "If married, state name and address of spouse Yao Kee
Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the
Embassy of the People's Republic of China to the effect that "according to the
information available at the Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao
Kee alias Yui Yip also Chinese were married on January 19, 1931 in Fukien, the
People's Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between Yao
Kee and Sy Kiat. However, the same do not suffice to establish the validity of said
marriage in accordance with Chinese law or custom.
Custom is defined as "a rule of conduct formed by repetition of acts,
uniformly observed (practiced) as a social rule, legally binding and obligatory" [In
the Matter of the Petition for Authority to Continue Use of the Firm Name
"Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing
JBL Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed. Vol. 1, p. 7.] The law
requires that "a custom must be proved as a fact, according to the rules of
evidence" [Article 12, Civil Code.] On this score the Court had occasion to state
that "a local custom as a source of right can not be considered by a court of
justice unless such custom is properly established by competent evidence like
any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence,
if not one of a higher degree, should be required of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code
which states that:
Art. 71.All marriages performed outside the Philippines in accordance
with the laws in force in the country where they were performed, and valid there

as such, shall also be valid in this country, except bigamous, polygamous, or

incestuous marriages, as determined by Philippine law. (Emphasis supplied.) **
Construing this provision of law the Court has held that to establish a
valid foreign marriage two things must be proven, namely: (1) the existence of
the foreign law as a question of fact; and (2) the alleged foreign marriage by
convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of Court.
With respect to an unwritten foreign law, Rule 130 section 45 states that:
SEC. 45.Unwritten law. The oral testimony of witnesses, skilled
therein, is admissible as evidence of the unwritten law of a foreign country, as
are also printed and published books of reports of decisions of the courts of the
foreign country, if proved to be commonly admitted in such courts.
Proof of a written foreign law, on the other hand, is provided for
under Rule 132 section 25, thus:
SEC. 25.Proof of public or official record. An official record or an
entry therein, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody
of the record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the office in
which the record is kept is in a foreign country, the certificate may be made by a
secretary of embassy or legation, consul general, consul, vice consul, or consular
agent or by any officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept and authenticated by the seal of his
office.
The Court has interpreted section 25 to include competent evidence
like the testimony of a witness to prove the existence of a written foreign law
[Collector of Internal Revenue v. Fisher, 110 Phil. 686, 700-701 (1961)
citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).]
In the case at bar petitioners did not present any competent evidence
relative to the law and custom of China on marriage. The testimonies of Yao and
Gan Ching cannot be considered as proof of China's law or custom on marriage
not only because they are self-serving evidence, but more importantly, there is
no showing that they are competent to testify on the subject matter. For failure
to prove the foreign law or custom, and consequently, the validity of the
marriage in accordance with said law or custom, the marriage between Yao Kee
and Sy Kiat cannot be recognized in this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling they
are not duty bound to prove the Chinese law on marriage as judicial notice
thereof had been taken by this Court in the case of Sy Joc Lieng v. Sy Quia [16
Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the
principle that Philippine courts cannot take judicial notice of foreign laws. They
must be alleged and proved as any other fact [Yam Ka Lim v. Collector of
Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610 (1930).]
Moreover a reading of said case would show that the party alleging the
foreign marriage presented a witness, one Li Ung Bieng, to prove that
matrimonial letters mutually exchanged by the contracting parties constitute the
essential requisite for a marriage to be considered duly solemnized in China.
Based on his testimony, which as found by the Court is uniformly corroborated by
authors on the subject of Chinese marriage, what was left to be decided was the

issue of whether or not thefact of marriage in accordance with Chinese law was
duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court has
indeed taken judicial notice of the law of China on marriage in the aforecited
case, petitioners however have not shown any proof that the Chinese law or
custom obtaining at the time the Sy Joc Lieng marriage was celebrated in 1847
was still the law when the alleged marriage of Sy Kiat to Yao Kee took place in
1931 or eighty-four (84) years later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633
(1916)] as being applicable to the instant case. They aver that the judicial
pronouncement in theMemoracion case, that the testimony of one of the
contracting parties is competent evidence to show the fact of marriage, holds
true in this case.
The Memoracion case however is not applicable to the case at bar as
said case did not concern a foreign marriage and the issue posed was whether or
not the oral testimony of a spouse is competent evidence to prove the fact of
marriage in a complaint for adultery.
Accordingly, in the absence of proof of the Chinese law on marriage, it
should be presumed that it is the same as ours *** [Wong Woo Yiu v. Vivo, G.R.
No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her
testimony that there was no solemnizing officer as is known here in the
Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Kiat was
celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her
marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong
Woo Yiu v. Vivo, supra., pp. 555-556.]
II.The second issue raised by petitioners concerns the status of private
respondents.
Respondent court found the following evidence of petitioners' filiation:
(1)Sy Kiat's Master Card of Registered Alien where the following are
entered: "Children if any: give number of children Four"; and, "Name All
living in China" [Exhibit "SS-1";]
(2)the testimony of their mother Yao Kee who stated that she had five
children with Sy Kiat, only three of whom are alive namely, Sze Sook Wah Sze Lai
Chu and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and,
(3)an affidavit executed on March 22, 1961 by Sy Kiat for presentation
to the Local Civil Registrar of Manila to support Sze Sook Wah's application for a
marriage license, wherein Sy Kiat expressly stated that she is his daughter
[Exhibit "3".]
Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat
told her he has three daughters with his Chinese wife, two of whom Sook Wah
and Sze Kai Cho she knows, and one adopted son [TSN, December 6, 1977,
pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with
Sy Kiat according to the laws of China, they cannot be accorded the status of
legitimate children but only that of acknowledged natural children. Petitioners
are natural children, it appearing that at the time of their conception Yao Kee and
Sy Kiat were not disqualified by any impediment to marry one another [See Art.
269, Civil Code.] And they are acknowledged children of the deceased because of
Sy Kiat's recognition of Sze Sook Wah [Exhibit "3"] and its extension to Sze Lai
Cho and Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil
Code.]

Private respondents on the other hand are also the deceased's

acknowledged natural children with Asuncion Gillego, a Filipina with whom he
lived for twenty-five (25) years without the benefit of marriage. They have in
their favor their father's acknowledgment, evidenced by a compromise
agreement entered into by and between their parents and approved by the Court
of First Instance on February 12, 1974 wherein Sy Kiat not only acknowledged
them as his children by Asuncion Gillego but likewise made provisions for their
support and future inheritance, thus:
xxx xxx xxx
2.The parties also acknowledge that they are common-law husband
and wife and that out of such relationship, which they have likewise decided to
definitely and finally terminate effective immediately, they begot five children,
namely: Aida Sy, born on May 30, 1950; Manuel Sy, born on July 1, 1953; Teresita
Sy, born on January 28, 1955; Ricardo Sy now deceased, born on December 14,
1956; and Rodolfo Sy, born on May 7, 1958.
3.With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY . . .,
the parties mutually agree and covenant that
(a)The stocks and merchandise and the furniture and equipments . . .,
shall be divided into two equal shares between, and distributed to, Sy Kiat who
shall own one-half of the total and the other half to Asuncion Gillego who shall
transfer the same to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and
Rodolfo Sy.
(b)the business name and premises . . . shall be retained by Sy Kiat.
However, it shall be his obligation to give to the aforenamed children an amount
of One Thousand Pesos (P1,000;00) monthly out of the rental of the two doors of
the same building now occupied by Everett Construction.
xxx xxx xxx
(5)With respect to the acquisition, during the existence of the commonlaw husband-and-wife relationship between the parties, of the real estates and
properties registered and/or appearing in the name of Asuncion Gillego . . ., the
parties mutually agree and covenant that the said real estates and properties
shall be transferred in equal shares to their children, namely, Aida Sy, Manuel Sy,
Teresita Sy, and Rodolfo Sy, but to be administered by Asuncion Gillego during
her lifetime. . . . [Exhibit "D".] (Emphasis supplied.)
xxx xxx xxx
This compromise agreement constitutes a statement before a court of
record by which a child may be voluntarily acknowledged [See Art. 278, Civil
Code.]
Petitioners further argue that the questions on the validity of Sy Kiat's
marriage to Yao Kee and the paternity and filiation of the parties should have
been ventilated in the Juvenile and Domestic Relations Court.
Specifically, petitioners rely on the following provision of Republic Act
No. 5502, entitled "An Act Revising Rep. Act No. 3278, otherwise known as the
Charter of the City of Caloocan"; with regard to the Juvenile and Domestic
Relations Court:
SEC. 91-A.Creation and Jurisdiction of the Court.
xxx xxx xxx
The provisions of the Judiciary Act to the contrary notwithstanding, the
court shall have exclusive original jurisdiction to hear and decide the following
cases;
xxx xxx xxx

(2)Cases involving custody, guardianship, adoption, revocation of

adoption, paternity and acknowledgment;
(3)Annulment of marriages, relief from marital obligations legal
separation of spouses, and actions for support;
(4)Proceedings brought under the provisions of title six and title seven,
chapters one to three of the civil code;
xxx xxx xxx
and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661,
21 SCRA 1324] reiterated in Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA
307.]
With the enactment of Batas Pambansa Blg. 129, otherwise known as
the Judiciary Reorganization Act of 1980, the Juvenile and Domestic Relations
Courts were abolished. Their functions and jurisdiction are now vested with the
Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v.
Bellosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no
longer necessary to pass upon the issue of jurisdiction raised by petitioners.
Moreover, even without the enactment of Batas Pambansa Blg. 129 we
find in Rep. Act No. 5502 sec. 91-A last paragraph that:
xxx xxx xxx
If any question involving any of the above matters should arise as an
incident in any case pending in the ordinary court, said incident shall be
determined in the main case.
xxx xxx xxx
As held in the case of Divinagracia v. Rovira [G.R. No. L-42615. August
10, 1976, 72 SCRA 307]:
xxx xxx xxx
It is true that under the aforequoted section 1 of Republic Act No.
4834 **** a case involving paternity and acknowledgment may be ventilated as
an incident in the intestate or testate proceeding (See Baluyot vs. Ines Luciano,
L-42215, July 13, 1976). But that legal provision presupposes that such an
administration proceeding is pending or existing and has not been terminated.
[at pp. 313-314.] (Emphasis supplied.)
xxx xxx xxx
The reason for this rule is not only "to obviate the rendition of
conflicting rulings on the same issue by the Court of First Instance and the
Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R. No. L42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent
multiplicity of suits.
Accordingly, this Court finds no reversible error committed by
respondent court.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Fernan, C .J ., Gutierrez, Jr., Feliciano and Bidin, JJ ., concur.
||| (Yao Kee v. Sy-Gonzales, G.R. No. 55960, [November 24, 1988], 249
PHIL 681-696)

EN BANC
[G.R. No. L-6897. November 29, 1956.]
In the Matter of the Claim for Attorney's Fees. CLARO M.
RECTO, claimant-appellee, vs. ESPERANZA P. DE HARDEN and FRED M.
HARDEN,defendants-appellants.
J. W. Ferrier, Sr. and M. R. Sotelo for appellants.
Claro M. Recto for and in his own behalf.
SYLLABUS
1. ATTORNEY AND CLIENT; WIFE'S CONTRACT FOR LEGAL SERVICES
WITHOUT HUSBAND'S CONSENT; CONTINGENT FEES ON HER SHARE IN
CONJUGAL PARTNERSHIP DOES NOT BIND THE LATTER. Where the wife
executed a contract of professional services whereby she binds herself among
other things that she agrees to pay her attorney twenty (20%) per cent of the
value of the share and participation which she may receive in the funds and
properties of the conjugal partnership of herself and her husband, such contract
does not seek to bind the conjugal partnership. The wife merely bound herself
and assumed the personal obligation to pay by way of contingent fees, 20% of
her share in said partnership. The contract neither gives, nor purports to give to
her lawyer any right whatsoever, personal or real, in and to her aforesaid share.
The amount thereof is simply a basis for the computation of said fees.
2. ID.; CONTINGENT FEES NOT PROHIBITED IN THE PHILIPPINES.
Appellants contention "that article 1491 of the Civil Code of the Philippine in
effect prohibit contingent fees in untenable. Contingent fees are not prohibited in
the Philippines and are impliedly sanctioned by our Canons (No. 13) of
Professional Ethics. (See also Ulanday vs. Manila Co., 45 Phil., 540, 554).
3. ID.; WIFE'S CONTRACT FOR LEGAL SERVICES; INTERPRETED AND
CONSTRUED. Appellant's contention that the contract in question has for it
purpose to secure of divorce allegedly in violation of Articles 1305, 1352 and
1409 of the Civil Code of the Philippines is not borne out either by the language
of the contract between them or by the intent of the parties thereto. Its purpose
was not to secure a divorce or facilitate or promote the procurement of a divorce.
It merely sought to protect the interest of the wife in the conjugal partnership,
during the pendency of a divorce suit she intended to file in the United States.
What is more, inasmuch as the husband and wife are admittedly citizens of the
United States, their status and the dissolution thereof are governed pursuant
to Art. 9 of the Civil Code of Spain (which was in force in the Philippines at the
time of the execution of the contract in question) and Article 15 of the Civil Code
of the Philippines by the laws of the United States, which sanction divorce. In
short, the contract of services, between the wife and her lawyer, is not contrary
to law, morals, good customs, public order or public policy.
4. ID.; CONTRACT OF SERVICES WHEN NOT OPPRESSIVE OR
INEQUITABLE. Considering the character of the services rendered by the
attorney in the case at bar, the nature and importance of the issues in said
litigations, the amount of labor, time (1944 to 1952) and the trouble involved
therein, the skill displayed in connection with said cases, the value of the
property affected by the controversy the professional character and standing of
the lawyer, the risks assumed and the results obtained, Held: that the character
and standing of the lawyer, the risks assumed and the results obtained, Held:
that the contract of services in question is neither harsh nor oppressive or
inequitable.

5. OBLIGATIONS AND CONTRACTS; ATTORNEY AND CLIENT; WIFE'S

CONTRACT OF SERVICES; 20% CONTINGENT FEES ON HER SHARE IN CONJUGAL
PARTNERSHIP; INTENTION TO FILE SUIT FOR DIVORCE AS CONDITION; RENDERED
IMPOSSIBLE BY WIFE. The contract of services was made principally, in
contemplation of a suit for divorce which the wife intended to file before a
competent court in California, "and of the liquidation of the conjugal partnership
between' her and her husband. Had she filed said action for divorce and secure a
decree of divorce, said conjugal partnership would have been dissolved and then
liquidated and the share of the wife therein would have been fixed. However this
cannot take place, either now or in the forseeable future owing to the
agreements between the wife and her husband which were made for the evident
purpose of defeating the attorney's claim for his fees. In other words the
occurrences within the time contemplated by the parties bearing in mind the
nature of and circumstances under which they entered into, said contract of
services of the event upon which the amount of said fees depended, was
rendered impossible by the wife. Hence, whether such event be regarded as a
condition or as a period, she may not insist upon its occurrence prior to the
enforcement of the rights of the lawyer, for "the condition shall be deemed
fulfilled when the obligor voluntarily prevents its fulfillment," (Art. 1186 Civil
Code) and "the debtor shall lose every right to make use of the period" when he
"violates any undertaking in consideration of which the creditor agreed to the
period." (Art. 1198, Civil Code).
DECISION
CONCEPCION, J p:
This is an appeal taken by Esperanza P. de Harden and Fred M. Harden
from a decision of the Court of First Instance of Manila, the pertinent part of
which is of the following tenor:.
"The contingent fee to which the claimant is entitled under paragraph
3 of the contract, Exhibit JJJ or 20, is 20% of P1,920,554.85 or the sum of
P384,110.97.
"WHEREFORE, this Court hereby approves the recommendation of the
Commissioner with the above-stated modification, and finds that Attorney Claro
M. Recto is entitled to the sum of THREE HUNDRED EIGHTY-FOUR THOUSAND
ONE HUNDRED AND TEN PESOS AND NINETY-SEVEN CENTAVOS (P384,110.97),
representing 20% of Esperanza P. de Harden's share in the conjugal properties
owned by her and her husband, Fred M. Harden, as contingent fee stipulated in
paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20, and the
said Esperanza P. de Harden is hereby ordered to pay the said amount abovestated." It appears that sometime in July, 1941, appellant, Mrs. Harden, and
appellee, Claro M. Recto, executed the following:
"CONTRACT OF PROFESSIONAL SERVICES
KNOW ALL MEN BY THESE PRESENTS:
"That I, ESPERANZA PEREZ DE HARDEN, of age, married to Fred M.
Harden, and temporarily residing in the Philippines, with address at 534 Sales
Street, Manila, have engaged the services of Attorney Claro M. Recto to appear
and act as my counsel in the action which I will file against my husband, Fred M.
Harden, for the purpose of securing an increase in the amount of support being
received by me from the conjugal partnership of myself and said Fred M. Harden,
and for the purpose likewise of protecting and preserving my rights in the
properties of the said conjugal partnership, in contemplation of the divorce suit
which I intent to file against him in the competent Court of California and of the

liquidation of the conjugal partnership between us, this contract of services to be

under the following conditions:
"1. That in lieu of retainer fee, which under the circumstances I am not
in a position to pay, I hereby agree to pay Attorney Claro M. Recto, such payment
to be made monthly, during the pendency of the litigation and until the
termination of the same, twenty-five (25%) per cent of the total increase in
allowance or pension which may be awarded to me by the court over and above
the amount of P1,500.00 which I now receive monthly from defendant Fred M.
Harden out of the funds of the conjugal partnership; Provided, that should the
case be terminated or an amicable settlement thereof be arrived at by the
parties before the expiration of two years from the date of the filing of the
complaint, I shall continue to pay the said twenty-five (25%) per cent up to the
end of said period.
"2. That the aforesaid monthly payments shall be in addition to
whatever amount may be adjudged by the court against the defendant Fred M.
Harden or against the conjugal partnership by way of litis expense, that is,
attorney's fees chargeable as expenses of litigation.
"3. That as full and complete satisfaction of the fees of Attorney Claro
M. Recto in connection with the case above referred to, and said case being for
the purposes aforestated, that is, to secure an increase in the amount of support
I now receive as well as to protect and preserve my rights and interest in the
properties of the conjugal partnership, in contemplation of divorce and of the
liquidation of said partnership, I hereby agree to pay said Attorney Claro M. Recto
twenty (20%) per cent of the value of the share and participation which I may
receive in the funds and properties of the said conjugal partnership of myself and
defendant Fred M. Harden, as a result of the liquidation thereof either by death,
divorce, judicial separation, compromise or by any means or method by virtue of
which said partnership is or may be liquidated.
"4. All expenses in connection with the litigation are to be for my
account, but the same may be advanced by Attorney Claro M. Recto, to be
reimbursed to him either from the money which I receive by way of support or
from the funds of the conjugal partnership.
"5. It is hereby understood that this contract includes the services of
Attorney Claro M. Recto in connection with the securing of the liquidation of the
properties and assets of the conjugal partnership of myself and Fred M. Harden,
upon dissolution of said partnership or for any other cause mentioned in
Paragraph (3) hereof.
IN WITNESS WHEREOF, I have signed these presents in the City _____ of
Manila, Philippines this _______ day of July, 1941.
s/
Esperanza
P.
de
Harden
t/ ESPERANZA P. DE HARDEN
ACCEPTED:
s/
Claro
M.
Recto
t/ CLARO M. RECTO"
In compliance therewith, on July 12, 1941, the appellee, as counsel for
Mrs. Harden, commenced Civil Case No. 59634 of the Court of First Instance of
Manila, entitled "Esperanza P. de Harden vs. Fred M. Harden and Jose
Salumbides." In the complaint therein filed, it was prayed, among other things:
(a) that Mrs. Harden be given the exclusive administration of the business and all
properties of the conjugal partnership of Mr. and Mrs. Harden; (b) that, in the
event of denial of this prayer, the defendants be ordered to inform her "of

everything pertaining to the administration of said business and properties", as

well as to render accounts thereof and to permit her to examine the books and
records pertinent thereto; (c) that Mr. Harden be ordered to account to Mrs.
Harden, and to return to this jurisdiction, the sum of P449,015.44 allegedly
withdrawn by him from the Philippines or sent by him to Hongkong on April 1,
1941; (d) that defendant Salumbides be ordered to account for all moneys,
amounting to P285,000.00, belonging to the business and assets of said conjugal
partnership and deposited by him in a safety box, either in his name, or in that of
Antonio Wilson, from January 23 to December 23, 1940; (e) that the transfer, in
the name of Salumbides, of certain shares of stock, allegedly belonging to the
conjugal partnership, be rescinded and said defendant ordered to transfer said
shares of stock in the name of Mrs. Harden or in that of Mr. and Mrs. Harden,
should Mr. Harden be allowed to continue as administrator of said partnership;
( f ) that the transfer, made by Mr. Harden and/or by defendant Salumbides, as
his attorney-in-fact, of 36,000 shares of stock of the Angelo Mining Company, to
some residents of Hongkong, be rescinded and said shares returned to the assets
of the conjugal partnership and placed in the name of Mr. and Mrs. Harden; ( g)
that the monthly allowance of Mrs. Harden be increased from P1,500 to P15,000;
(h) that, pending final decision, Mr. Harden be ordered to increase the allowance
or pension of Mrs. Harden and their daughter Sarah Elizabeth to P10,000 a
month; and (i) that a writ of preliminary injunction be issued restraining the
defendants from disposing of the assets of the conjugal partnership in fraud of
Mrs. Harden.
By an order dated July 12, 1941, the court authorized the issuance of
said writ, upon the filing of the corresponding bond. It appears that, pursuant to
an agreement submitted by both parties, and with a view to avoiding
unnecessary embarrassment, restraint or inconvenience in the financial
operations of the business enterprises affected by said writ of preliminary
injunction, the same was amended by an order dated July 19, 1941, in the sense
that.
". . . without prejudicing in any way the rights of the parties in this
case, a separate bank account be established in the Chartered Bank of India,
Australia and China, of Manila, and all transactions in connection with the
aforesaid businesses passed through that account by Mr. Harden or his duly
authorized representative, who at present is Mr. Salumbides, without the
necessity of securing a particular order from this Court on each occasion; that
the present funds in the Philippine National Bank in the name of Plaza Lunch and
Fred M. Harden be utilized for the purpose of starting said special bank account
in the Chartered Bank of India, Australia and China; that all income from the
aforesaid businesses be deposited in this special bank account and no checks be
drawn upon the same, except to pay the necessary overhead and running
expenses including purchases of tobacco, merchandise, etc., required for the
proper operation of said businesses; that a new set of books be opened by Mr.
Harden or his duly authorized representative covering all business transactions
passed through said special bank account and the same be opened for inspection
by the plaintiff's duly authorized representative.
"The order of injunction of July 12, 1941, is modified only to the above
extent, and in all other respects is maintained."
Subsequently, the Philippines was invaded by the Japanese and placed
under military occupation. Then came the liberation, in the course of which the

records of this case were destroyed. On October 23, 1946, said records were
reconstituted at the instance of appellee herein. Thereafter, the proceedings
were resumed and, in due course, the Court of First Instance of Manila rendered,
on or about October 31, 1949, a decision the dispositive part of which we quote:
"In view of the foregoing considerations, this court finds and so holds
that
"(a) Fred M. Harden abandoned his domicile of origin in New Jersey and
established a domicile of choice in Manila, Philippines, since 1901;
"(b) The matrimonial domicile of Fred M. Harden and Esperanza P. de
Harden was established in Manila, Philippines, from the date of their marriage on
December 14, 1917;
"(c) Since they did not execute any antenuptial contract before their
marriage, all the properties, real or personal, acquired by either or both of them
on and after December 14, 1917, up to the present, over and above the sum of
P20,000.00 representing Fred M. Harden's capital, are hereby declared conjugal
properties;
"(d) The total amount of P1,944,794.37 representing deposits in safety
deposit boxes in the name of Jose Salumbides, the selling price of the house in
Los Angeles, California, and the pre-war and post-war remittances abroad of Fred
M. Harden, from which has already been deducted the sum of P160,000.00
covering payments for deficiency Federal income taxes and attorney's fees, both
in the tax case and the present one, is hereby declared chargeable to the share
of defendant Harden and deductible from whatever participation he may still
have in the said conjugal partnership upon the liquidation thereof, upon his
failure to return and deposit them in the name of the Plaza Lunch with the Manila
branch of the Chartered Bank of India, Australia and China up to the time this
decision shall become final;
"(e) A conjugal lien be annotated in the original and owner's duplicate
of Transfer Certificates of Title Nos. 24393, 52436 and 54911 of the Register of
Deeds of Manila and in Original Certificate of Title No. 2292 of Quezon Province,
and on all the certificates of shares belonging to said conjugal partnership, as
well as in the corresponding books of the companies or corporations issuing
them, whereby it will be made to appear that any subsequent alienation or
encumbrance of said properties by Fred M. Harden alone or his representative
without the consent of his wife will be deemed fraudulent and subject to
revocation or cancellation for being in fraud and prejudicial to the right of
Esperanza P. de Harden;
"( f ) Within a period of fifteen (15) days after this decision shall have
become final, Fred M. Harden and Esperanza P. de Harden are hereby ordered to
execute a document to be approved by this court creating and express active
trust upon the remaining cash assets and income of the conjugal partnership in
the Philippines, whereby the Philippine Trust Company, with offices in Manila, will
act as trustee, subject to the right of Fred M. Harden to receive therefrom the
sum of P2,500,00 a month by way of allowance and an equal amount for the
plaintiff as separate support and maintenance;
"(g) Within thirty (30) days after this decision shall have become final,
Fred M. Harden shall inform the plaintiff of all the properties and businesses of
the conjugal partnership, be they in the Philippines or abroad, and render a true
and complete accounting of the earnings and profits thereof;
"(h) The plaintiff is entitled to litis expensae in the amount of
P175,000.00 for services rendered by her counsel up to the rendition of this

judgment, which Fred M. Harden or the herein receiver is ordered to pay within a
period of fifteen (15) days after this decision has become final; and
"(i) The writ of preliminary injunction of July 12, 1941, is hereby
declared permanent and the order of receivership of November 20, 1946, is
hereby maintained, but said auxiliary remedies will be automatically lifted upon
the conclusion of the annotation of the conjugal lien and the execution of the
deed of trust above mentioned. Without costs.
"IT IS SO ORDERED."
The defendants appealed from said decision to this Court, where the
case was docketed as case No. L-3687. While the appeal was thus pending
before us, herein appellee filed a manifestation and a motion, both dated
February 20, 1952. In said "manifestation", appellee stated that Mrs. Harden had
instructed him, by letter, to "discontinue all proceedings relative to" said case,
"vacate all orders and judgments rendered therein, and abandon and nullify all
her claims to the conjugal partnership existing between her and Mr. Harden", in
accordance with several instruments dated January 29, 1952, and executed
without the knowledge, advise and consent of said appellee, as counsel for Mrs.
Harden, whereby: (1) Mr. and Mrs. Harden had purportedly agreed to settle their
differences in consideration of the sum of $5,000 paid by Mr. Harden to Mrs.
Harden, and a monthly pension of P500 to be paid by him to her; (2) Mr. Harden
had created a trust fund of $20,000 from which said monthly pension of $500
would be taken; and (3) Mr. and Mrs. Harden had mutually released and forever
discharged each other from all actions, debts, duties, accounts, demands and
claims to the conjugal partnership, in consideration of the sum of $1. It was
further asserted, in appellee's "manifestation", that the purpose of the said
instruments, executed by Mr. and Mrs. Harden, was to defeat the claim of the
former for attorney's fees, for which reason, he prayed, in his aforementioned
motion, that
"a) Pending the resolution of this motion, the receiver appointed herein
be authorized to continue holding the properties above mentioned in his custody
in order not to defeat the undersigned's inchoate lien on them;
"b) A day set aside to receive the evidence of the undersigned and
those of the plaintiff and the defendant Fred M. Harden, in order to determine the
amount of fees due to the undersigned, by the appointment of a referee or
commissioner for the reception of such
"c) After due hearing, the undersigned be declared entitled to the sum
of P400,000.00 as his fees for services rendered in behalf of the plaintiff in this
case, under paragraph 3 of the contract, Annex 'A', and to that end a charging
lien therefore be established upon the properties above-mentioned;
"d) And the receiver be ordered to pay to the undersigned the full
amount of the fees to which the latter is found to be entitled."
Counsel for the defendants-appellants, in turn, moved for the dismissal
of the case, to which appellee objected. Acting upon the issues raised in such
motion for dismissal and in appellee's motion to establish and enforce his
charging lien, as counsel for Mrs. Harden, this Court issued on July 22, 1952, a
resolution the pertinent part of which reads:
"It will be seen from the above that the defendants-appellants pray for
the complete dismissal of the above entitled case without prejudice to the
annotation of the contingent claim of Attorney Claro M. Recto on the property
under receivership, other than the 368,553 shares of the Balatoc Mining
Company which belong to Fred M. Harden. On the other hand, Attorney Claro M.

Recto agrees to the lifting of the writ of preliminary injunction, the orders of
contempt and commitment, and all other interlocutory orders which were issued
in the course of this case, with the exception of the receivership, but objects to
the dismissal of the case on the ground that, since receivership is merely an
auxiliary remedy, the present case should be allowed to remain pending for the
purpose of maintaining the receivership to safeguard his right to collect the fees
that may be due him.
"Attorney Claro M. Recto prays that a commissioner or referee be
immediately appointed by this Court to receive evidence in support of his
allegations as to his attorney's lien and its enforcement. Counsel for the
defendants-appellants does not object to this proceeding provided that the
restrictions set forth by him be observed. However, this Court does not have the
proper facilities for receiving evidence in order to determine the amount of the
fees claimed by Attorney Claro M. Recto, and it is deemed advisable that this
matter be determined by the Court of First Instance. This is specially so
considering the opposition to the claim of Attorney Claro M. Recto filed by
Attorney J. W. Ferrier, Sr. in behalf of Esperanza P. de Harden.
"In view of the foregoing, the above entitled case is hereby remanded
to the court of origin in order to determine the amount of fees claimed by
Attorney Claro M. Recto in his motion dated February 20, 1952.
"It is understood that, after said fees had been finally determined and
paid, this case will be completely dismissed as prayed for by the defendantsappellants, without prejudice to considering the claim of the receiver for
compensation as stated in his urgent motion dated July 2, 1952. "Pending the
determination of the amount of fees claimed by Attorney Claro M. Recto, the writ
of preliminary injunction, the orders of contempt and commitment, and all
interlocutory orders which were issued in the course of this case, are hereby
lifted and vacated, and with regard to the receivership, the same is hereby
dissolved, only with respect to the 368,553 shares of the Balatoc Mining
Company. As to the rest of the properties, the receivership shall be maintained."
In compliance with said resolution, the records of this case were
remanded to the lower court, which, on September 2, 1952, designated a
commissioner to receive evidence on the amount of the fees collectible by herein
appellee and to report thereon. After due hearing, said commissioner submitted,
on February 6, 1953, a report of about one hundred (100) pages of the printed
record on appeal, setting forth, in detail, the evidence introduced by both parties,
and his findings of fact, with the following conclusion and recommendation:
"Taking into consideration the value of the properties involved in this
litigation, the length of time in which claimant had handled the same for
Esperanza Harden, the volume and quality of the work performed, the
complicated legal questions involved, the responsibility assumed by the claimant
as counsel, his reputation in the bar, the difficulties encountered by him while
handling the same in which he had to work hard every inch of the way because
of the stiff oppositions filed by adverse counsel, the diligence he employed not
only in the preservation of the records in his possession during the days of
enemy occupation but also in the protection of the interests of Esperanza
Harden, his successful handling of said case and those cases growing out of it
which reached the Supreme Court, and the extra services he rendered in her
behalf in the tax and other court cases, the undersigned Commissioner
concludes that claimant is entitled to the full amount of 20% of Esperanza

Harden's share of the conjugal properties, as provided in paragraph 3 of the

Contract of Professional Services, Exhibit JJJ.
"WHEREFORE,
the
undersigned
Commissioner
respectfully
recommends that Atty. Claro M. Recto be paid the equivalent amount of 20% of
Esperanza P. de Harden's share of the conjugal properties or the sum of
P369,410.04 as his contingent fee for services rendered in her behalf."
After appropriate proceedings, the lower court rendered a decision
dated April 30, 1953, adopting substantially said report of the commissioner, but
increasing the contingent fee of appellee herein from P369,410.04, the sum
recommended in the report, to P384,110.97. Hence, this appeal taken by Mr. and
Mrs. Harden.
The first question for determination therein is the validity of the abovequoted contract of services, which the appellants assail as void, mainly, upon the
ground: (1) that Mrs. Harden cannot bind the conjugal partnership without her
husband's consent; (2) that Article 1491 of the Civil Code of the Philippines in
effect prohibits contingent fees; (3) that the contract in question has for its
purpose to secure a decree of divorce, allegedly in violation of Articles 1305,
1352 and 1409 of the Civil Code of the Philippines; and (4) that the terms of said
contract are harsh, inequitable and oppressive.
The first objection has no foundation in fact, for the contract in dispute
does not seek to bind the conjugal partnership. By virtue of said contract, Mrs.
Harden merely bound herself or assumed the personal obligation to pay, by
way of contingent fees, 20% of her share in said partnership. The contract
neither gives, nor purports to give, to the appellee any right whatsoever,
personal or real, in and to her aforesaid share. The amount thereof is simply
a basis for the computationof said fees.
For the same reason, the second objection is, likewise, untenable.
Moreover, it has already been held that contingent fees are not prohibited in the
Philippines and are impliedly sanctioned by our Cannons (No. 13) of Professional
Ethics. (see, also, Ulanday vs. Manila Railroad Co., 45 Phil., 540, 554.) Such is,
likewise, the rule in the United States (Legal Ethics by Henry S. Drinker, p. 176).
". . . in the United States, the great weight of authority recognizes the
validity of contracts for contingent fees, provided such contracts are not in
contravention of public policy, and it is only when the attorney has taken an
unfair or unreasonable advantage of his client that such a claim is condemned."
(See 5 Am. Jur. 359 et seq.; Ballentine, Law Dictionary, 2nd ed., p. 276.)
Needless to say, there is absolutely nothing in the records before us to
show that appellee herein had, in any manner, taken an unfair or unreasonable
advantage of his client Mrs. Harden.
The third objection is not borne out, either by the language of the
contract between them, or by the intent of the parties thereto. Its purpose was
not to secure a divorce, or to facilitate or promote the procurement of a divorce.
It merely sought to protect the interest of Mrs. Harden in the conjugal
partnership, during the pendency of a divorce suit she intended to file in the
United States. What is more, inasmuch as Mr. and Mrs. Harden are admittedly
citizens of the United States, their status and the dissolution thereof are
governed pursuant to Article 9 of the Civil Code of Spain (which was in force in
the Philippines at the time of the execution of the contract in question) and
Article 15 of the Civil Code of the Philippines by the laws of the United States,
which sanction divorce. In short, the contract of services, between Mrs. Harden

and herein appellee, is not contrary to law, morals, good customs, public order or
public policy.
The last objection is based upon principles of equity, but, pursuant
thereto, one who seeks equity must come with clean hands (Bastida, et
al., vs. Dy Buncio & Co., 93 Phil., 195; 30 C. J. S. 475), and appellants have not
done so, for the circumstances surrounding the case show, to our satisfaction,
that their aforementioned agreements, ostensibly for the settlement of the
differences between husband and wife, were made for the purpose of
circumventing or defeating the rights of herein appellee, under his above-quoted
contract of services with Mrs. Harden. Indeed, having secured a judgment in her
favor, acknowledging her rights to the assets of the conjugal partnership, which
turned out to be worth almost P4,000,000 in addition to litis expensae in the sum
of P175,000, it is inconceivable that Mrs. Harden would have waived such rights,
as well as the benefits of all orders and judgments in her favor, in consideration
of the paltry sum of $5,000 allegedly paid to her by Mr. Harden and the
additional sum of $20,000 to be paid by him in installments, at the rate of $500 a
month. In fact, no explanation has been given for this most unusual avowed
settlement between Mr. and Mrs. Harden. One can not even consider the
possibility of a reconciliation between the spouses, the same being inconsistent
with the monetary consideration for said alleged settlement. What is more, the
records show that the relations between said spouses which were bad indeed,
not only in July, 1941, when Mrs. Harden engaged the services of the appellee,
but, even, before, for Mr. and Mrs. Harden were separated since 1938 had
worsened considerably thereafter, as evidence by an action for divorce filed by
Mr. Harden in New Jersey, in July 1948, upon the ground of repeated acts of
infidelity allegedly committed by Mrs. Harden in 1940 and 1941.
Again, it appears that appellee had rendered, under the contract in
question, the following services, for the benefit of Mrs. Harden:
1. He succeeded in defeating defendants' motion for the dissolution of
the writ of preliminary injunction, issued by the Court on July 12, 1941, and
amended on July 19, 1941.
2. On November 12, 1946, appellee moved for the appointment of a
receiver, upon the ground that, despite said writ of preliminary injunction, the
defendants had been disposing of the properties of the conjugal partnership for
the purpose of defrauding Mrs. Harden. After due hearing, the court, by an order
dated November 20, 1946, directed the appointment of Abelardo Perez as
receiver of said properties, upon the filing of a P10,000 bond. Defendants asked,
on February 13, 1947, that the receivership be suspended, or else, that they be
allowed to file a bond for the discharge of the receivership. Appellee replied
objecting thereto, unless the defendants posted a P4,000,000 bond.
Subsequently or on March 5, 1947, the defendants sought a reconsideration of
the order of November 20, 1946, and the discharge of the receiver. By an order
dated March 21, 1947, the Court authorized said discharged upon the filing, by
the defendants, of a bond in the sum of P500,000, provided that Mr. Harden
"should bring back all the 368,553 shares of the Balatoc Mining Co., in his name
to the Philippines for deposit with the Clerk of Court, or with the Chartered Bank
of India, Australia and China, at Manila . . .
"3. On motion of the appellee dated March 4, 1947, the Court, by an
order dated April 5, 1947, directed Mr. Harden to remit to Mrs. Harden the sum of
$2,500, to be charged against her litis expensae. Upon similar motion, filed by

appellee on or about April 26, 1947, the Court ordered Mr. Harden, on May 13,
1947, to furnish Mrs. Harden the sum of $5,000, under the same conditions.
4. On June 21, 1947, the defendants instituted Civil Case No. G. R. No.
L-1499 of this Court, entitled "Fred M. Harden and Jose Salumbides vs. Emilio
Pea, Abelardo Perez and Esperanza P. Harden" for the purpose of annulling and
setting aside, by writ of certiorari, the aforementioned orders of the lower court
dated July 12, 1941, November 20, 1946, and April 5 and May 13, 1947, and to
restrain, in the meantime, the enforcement thereof. After appropriate
proceedings, in the course of which appellee appeared as counsel for Mrs.
Harden, and like counsel for the petitioners therein, filed several lengthy,
detailed pleadings and memoranda, decision was rendered on November 21,
1950, denying the writ of certiorari prayed for.
5. On or about September 9, 1947, appellee filed a motion alleging that
despite the writ of preliminary injunction above mentioned, the defendants had,
fraudulently and without judicial consent, remitted abroad several sums of
money aggregating P1,000,608.66, and praying that Mr. Harden be ordered to
return this sum to the Philippines, within a stated period, said sum to be
deposited with the account of the Plaza Lunch at the Manila Branch of the
Chartered Bank of India, Australia and China. Mr. Harden objected to said motion.
Appellee filed a rejoinder, to which Mr. Harden replied. Appellee filed a rejoinder
to the rejoinder. On October 7, 1947, the Court granted appellee's motion. Mr.
Harden sought a reconsideration, which was opposed by the appellee on October
27, 1947, and denied by an order dated November 13, 1947. Mr. Harden moved,
on November 18, 1947, for the suspension of this order, which was immediately
objected to by the appellee and then denied by the Court.
6. Inasmuch as said order of November 13, 1947 had not been
complied with, appellee filed on November 27, 1947, a motion praying that Mr.
Harden be declared in contempt of court and punished accordingly. Meanwhile,
or on November 24, 1947, Mr. Harden had instituted case G. R. No. L-1816 of this
Court against Hon. Emilio Pea, as Judge of the Court of First Instance of Manila,
and Mrs. Harden. In the petition therein filed, Mr. Harden applied for a writ of
certiorari annulling said orders of Judge Pea of October 7 and November 13,
1947, and prayed that, pending disposition of the case, a writ of preliminary
injunction be issued restraining the respondents therein from enforcing said
orders, particularly through contempt proceedings. Hence, the lower court
deferred action on the aforementioned motion of November 27, 1947. After due
hearing, this Court, in a resolution dated February 12, 1948, refused to issue the
writ of preliminary injunction prayed for. Subsequently, or on November 21,
1950, decision was rendered denying the petition for a writ of certiorari.
7. Soon after the issuance of our resolution in said case G. R. No. 1816,
dated February 12, 1948, or to be exact on March 27, 1948, the lower court
issued an order directing Mr. Harden to comply, within five (5) days from notice,
with the order of October 7, 1947. On April 6, 1948, appellee filed with the lower
court the corresponding formal charges against Mr. Harden for contempt of court.
After due hearing, Mr. Harden was, by an order of April 28, 1948, found guilty as
charged and ordered confined "until he complies with the aforementioned
orders" of October 7, 1947 and March 27, 1948. On motion of Mr. Harden, said
order of April 28, 1948 was suspended until May 4, 1948, on which date he was
arrested and placed in confinement at the New Bilibid Prison, in Muntinglupa,
Rizal. On July 10, 1948, he filed with this Court a petition for a writ of habeas

corpus against the Director of Prisons, (G. R. No. L-2349, entitled "Fred M.
Harden vs. The Director of Prisons"), which, in due course was denied in a
decision promulgated on October 22, 1948.
8. During the military occupation of the Philippines by the Japanese,
the appellee made representations with the Japanese Government to prevent the
commandeering of a business establishment belonging to Mr. and Mrs. Harden.
Moreover, he succeeded in persuading the Japanese to refrain from interning
Mrs. Harden and her daughter and to allow her to withdraw, from the former's
deposit in a local bank, from P200 to P250 a month, for their subsistence. He,
likewise, lent her money to meet her needs and spent the sum of P55,000 in the
preservation of the records and papers pertaining to the business and other
properties of the conjugal partnership of Mr. and Mrs. Harden.
9. Appellee assisted, also, the receiver, as his counsel and, in such
capacity, took all steps essential for the proper discharge of the duties of the
former. Among other things, appellee sought and obtained judicial authority for
some important acts of administration of, and disposition by, the receiver. He
(appellee) secured judicial intervention for the protection and preservation of the
assets of the conjugal partnership, including orders for the delivery of certificates
of stock, the return thereof and/or its deposit with the clerk of court. He, likewise,
represented the receiver in seeking war damage payments.
10. In civil case No. 6222 of the Court of First Instance of Manila,
entitled "Francisco Dalupan vs. Fred M. Harden" for the recovery of P113,837.17,
it was decided, through appellee's intervention, that the conjugal assets would
bear the payment of P22,767.43 only, the balance to be chargeable exclusively
against Mr. Harden's share of the conjugal partnership.
11. Appellee instituted civil case No. 6940 of the Court of First Instance
of Manila, entitled "Abelardo Perez vs. Chartered Bank of India, Australia and
China and Fred M. Harden", for the recovery of P1,000,608.66 and the return of
stock certificates of the Balatoc Mining Co., which had been sent abroad.
12. He (appellee) represented Mrs. Harden in connection with a millionpeso federal tax case against Mr. and Mrs. Harden.
13. Appellee successfully blocked Mr. Harden's attempts to withdraw:
(1) $53,000 and forward the same to the Collector of Internal Revenue of Los
Angeles, California; (2) $50,000.00, allegedly to defray expenses in resisting a
new tax assessment against him in the United States; and (3) P65,000 for his
expenses.
Then too, the conjugal partnership had varried and extensive business
interests and its assets were worth almost P4,000,000. The pleadings, motions,
oppositions, rejoinders, and memoranda filed, and the evidence introduced, in
the aforementioned cases in which appellee was pitted against one of the
most experienced and able members of the Philippine Bar were numerous,
extensive and exhaustive. For instance, the record on appeal in one of those
cases, namely, G. R. No. L-3687, consisted of 966 pages.
In short, considering the character of the services rendered by the
appellee, the nature and importance of the issues in said litigations, the amount
of labor, time (1941 to 1952) and trouble involved therein, the skill displayed in
connection with said cases, the value of the property affected by the
controversy, the professional character and standing of the appellee, the risks
assumed and the results obtained, we are of the opinion, and so hold, that the
contract of services in question is neither harsh nor oppressive or inequitable.
Under their second assignment of error, appellants maintain that:

"The lower court erred in failing to find as a fact borne out by the
evidence that the legal services of Attorney Claro M. Recto to Mrs. Esperanza P.
de Harden, payment, for which is sought by him in this case, have already been
paid by his immediate execution pending appeal of the decision in Civil Case No.
CFI-R-59634 (SC-G.R. No. L- 3687), wherein he collected the sum of P176,000.00
for all such legal services."
Said decision, however, states clearly that the aforementioned sum of
P175,000 represents litis expensae, and the contract between the appellee and
Mrs. Harden explicitly declares that said litis expensae shall be "in addition to"
appellee's share of 25% of the increase in the allowance of Mrs. Harden and his
attorney's fees of 20% of her share in the conjugal partnership. The second
assignment of error is, therefore, devoid of merit.
Appellants, further contend, that:
3. The lower court erred in holding that the inchoate share of the wife,
Esperanza P. de Harden, in the undissolved and unliquidated conjugal partnership
properties of the Harden spouses, is capable of certain valuation before such
dissolution and liquidation, and summarily assessing the value of Mrs. Harden's
share in such conjugal properties without proper evidence.
4. "The lower court erred in awarding 20% of such inchoate share to
Attorney Claro M. Recto from Mrs. Harden's interests in the Harden conjugal
properties, summarily assessing such 20% inchoate share as of a value of
P384,110.97, and ordering the payment of said sum to Attorney Recto in
pursuance of the provisions of paragraph 3 of the Contract of Professional
Services."
Appellants' arguments in support thereof may be summarized as
follows: The contract of services in question provides that appellee's contingent
fees shall be 20% of the share of Mrs. Harden in the conjugal partnership.
Pursuant to law, the share of Mrs. Harden shall be determined upon the
liquidation of said partnership, which has not taken place, as yet. What is more, it
cannot be effected until the dissolution of the marriage relation between Mr. and
Mrs. Harden. Inasmuch as this relation subsists, it follows that the amount of
attorney's fees due to appellee herein should not have been determined in the
decision appealed from.
This line of argument overlooks the fact that said contract of services
was made, principally, in contemplation of a suit for divorce that, according to
Mrs. Harden, she intended to file before a competent court in California, "and of
the liquidation of the conjugal partnership between" her and Mr. Harden. Had she
filed said action for divorce and secured a decree of divorce, said conjugal
partnership would have been dissolved and then liquidated, and the share of Mrs.
Harden therein would have been fixed. However, this cannot take place, either
now, or in the foreseeable future, owing to the aforementioned agreements
between Mr. and Mrs. Harden, which were made for the evident purpose of
defeating appellee's claim for attorney's fees. In other words, the occurrence,
within the time contemplated by the parties bearing in mind the nature of, and
the circumstances under which they entered into, said contract of services of
the event upon which the amount of said fees depended, was rendered
impossible by Mrs. Harden. Hence, whether such event be regarded as a
condition or as a period, she may not insist upon its occurrence, prior to the
enforcement of the rights of the herein appellee, for "the condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment" (Art. 1186,
Civil Code) and "the debtor shall lose every right to make use of the period"

when he "violates any undertaking, in consideration of which the creditor agreed

to the period." (Art. 1198, Civil Code.)
It should be noted, also, that the compensation agreed upon for
appellee's services, consists of three (3) parts, namely: (a) 25% of the increase in
the allowance of Mrs. Harden; (b) litis expensae; and (c) 20% of her share in the
conjugal partnership. The first part was dealt with in the first paragraph of their
contract of services. The second and third parts were the object of the second
and third paragraphs, respectively. The first paragraph limited the rights of
appellee thereunder to two (2) years, in the event of termination of the case or
amicable settlement thereof within two (2) years from the filing of the complaint.
No such limitation appears in the second and third paragraphs of said contract.
Hence, the same were intended by the parties to be fully operative under any
and all conditions.
It may not be amiss to add that the value of the properties involved
has been assessed, not summarily, but after due notice and full dress hearing, in
the course of which both parties introduced testimonial and documentary
evidence. Appellants presented Exhibits 1 to 58, whereas those of the appellee
were so numerous that, having begun with Exhibit A, his last piece of
documentary evidence was marked Exhibit 26 Y's. The transcript of the hearing,
which lasted ten (10) days, covers over 220 pages.
The other assignments of error made by appellants herein are mere
corollaries of those already disposed of, and, hence, no further discussion thereof
is necessary.
In conclusion, it appears that the assets of the conjugal partnership
between Mr. and Mrs. Harden are reasonably valued at P3,841,109.70. One-half
(1/2) thereof, representing the share of Mrs. Harden, is therefore, worth
P1,920,554.85. Twenty percentum (20%) of this sum is P384,110.97, which is the
contingent fee due to the appellee, apart from the litis expensae already paid to
him. Inasmuch as the appellee has collected, also, the sum of P80,000.00, on
account of said contingent fees, there results in his favor a balance of
P304,110.97.
Subject to this qualification, the decision appealed from is hereby
affirmed, therefore, with costs against the appellants. So ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador,
Reyes, J. B. L., Endencia and Felix, JJ., concur.
||| (In re Recto v. De Harden, G.R. No. L-6897, [November 29, 1956],
100 PHIL 427-447)

THIRD DIVISION
[G.R. No. 154830. June 8, 2007.]
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES
HOLDINGS, and PHILIP J. KLEPZIG, petitioners, vs. ANTONIO D.
TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J p:
Before the Court is a Petition for Review on Certiorari seeking to annul
and set aside the Decision 1 of the Court of Appeals (CA) dated October 31, 2000
in CA-G.R. SP No. 54155 and its Resolution 2 of August 21, 2002 denying
petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro)
filed with the Regional Trial Court (RTC) of Makati City, a complaint for Sum of
Money and Damages with Preliminary Attachment against Pioneer International
Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines
Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig
(Klepzig). 3
In his complaint, Todaro alleged that PIL is a corporation duly organized
and existing under the laws of Australia and is principally engaged in the readymix concrete and concrete aggregates business; PPHI is the company established
by PIL to own and hold the stocks of its operating company in the Philippines;
PCPI is the company established by PIL to undertake its business of ready-mix
concrete, concrete aggregates and quarrying operations in the Philippines;
McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the
President and Managing Director of PPHI and PCPI; Todaro has been the
managing director of Betonval Readyconcrete, Inc. (Betonval), a company
engaged in pre-mixed concrete and concrete aggregate production; he resigned
from Betonval in February 1996; in May 1996, PIL contacted Todaro and asked
him if he was available to join them in connection with their intention to establish
a ready-mix concrete plant and other related operations in the Philippines; Todaro
informed PIL of his availability and interest to join them; subsequently, PIL and
Todaro came to an agreement wherein the former consented to engage the
services of the latter as a consultant for two to three months, after which, he
would be employed as the manager of PIL's ready-mix concrete operations
should the company decide to invest in the Philippines; subsequently, PIL started
its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis. 4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to
dismiss the complaint on the grounds that the complaint states no cause of
action, that the RTC has no jurisdiction over the subject matter of the complaint,
as the same is within the jurisdiction of the NLRC, and that the complaint should
be dismissed on the basis of the doctrine of forum non conveniens. 5 TIDcEH
In its Order dated January 4, 1999, the RTC of Makati, Branch 147,
denied herein petitioners' respective motions to dismiss. 6 Herein petitioners, as
defendants, filed an Urgent Omnibus Motion 7 for the reconsideration of the trial
court's Order of January 4, 1999 but the trial court denied it via its Order 8 dated
June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with
the CA. 9 On October 31, 2000, the CA rendered its presently assailed Decision

denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for
Reconsideration but the CA denied it in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following
assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A
CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE
ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF EXISTENCE OF
AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THE
SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT
DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN
ACTION FOR AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE,
FALLS WITHIN THE EXCLUSIVE JURISDICTION OF THE NATIONAL LABOR
RELATIONS COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE
PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND FOR DISMISSING
A COMPLAINT. 10
In their first assigned error, petitioners contend that there was no
perfected employment contract between PIL and herein respondent. Petitioners
assert that the annexes to respondent's complaint show that PIL's offer was for
respondent to be employed as the manager only of its pre-mixed concrete
operations and not as the company's managing director or CEO. Petitioners argue
that when respondent reiterated his intention to become the manager of PIL's
overall business venture in the Philippines, he, in effect did not accept PIL's offer
of employment and instead made a counter-offer, which, however, was not
accepted by PIL. Petitioners also contend that under Article 1318 of the Civil
Code, one of the requisites for a contract to be perfected is the consent of the
contracting parties; that under Article 1319 of the same Code, consent is
manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract; that the offer must be certain and
the acceptance absolute; that a qualified acceptance constitutes a counter-offer.
Petitioners assert that since PIL did not accept respondent's counter-offer, there
never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on
the provisions of Articles 19 and 21 of the Civil Code is baseless because it was
shown that there was no perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for
breach of employment contract, petitioners contend that PCPI and PPHI, may not
also be held liable because they are juridical entities with personalities which are
separate and distinct from PIL, even if they are subsidiary corporations of the
latter. Petitioners also aver that the annexes to respondent's complaint show that
the negotiations on the alleged employment contract took place between
respondent and PIL through its office in Hongkong. In other words, PCPI and PPHI
were not privy to the negotiations between PIL and respondent for the possible
employment of the latter; and under Article 1311 of the Civil Code, a contract is
not binding upon and cannot be enforced against one who was not a party to it
even if he be aware of such contract and has acted with knowledge thereof.

Petitioners further assert that petitioner Klepzig may not be held liable
because he is simply acting in his capacity as president of PCPI and PPHI and
settled is the rule that an officer of a corporation is not personally liable for acts
done in the performance of his duties and within the bounds of the authority
conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are
held liable, respondent still has no cause of action against Klepzig because PCPI
and PPHI have personalities which are separate and distinct from those acting in
their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein
respondent's claims for actual, moral and exemplary damages are solely
premised on the alleged breach of employment contract, the present case should
be considered as falling within the exclusive jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the
principle of forum non conveniens dictates that even where exercise of
jurisdiction is authorized by law, courts may refuse to entertain a case involving
a foreign element where the matter can be better tried and decided elsewhere,
either because the main aspects of the case transpired in a foreign jurisdiction or
the material witnesses have their residence there and the plaintiff sought the
forum merely to secure procedural advantage or to annoy or harass the
defendant. Petitioners also argue that one of the factors in determining the most
convenient forum for conflicts problem is the power of the court to enforce its
decision. Petitioners contend that since the majority of the defendants in the
present case are not residents of the Philippines, they are not subject to
compulsory processes of the Philippine court handling the case for purposes of
requiring their attendance during trial. Even assuming that they can be
summoned, their appearance would entail excessive costs. Petitioners further
assert that there is no allegation in the complaint from which one can conclude
that the evidence to be presented during the trial can be better obtained in the
Philippines. Moreover, the events which led to the present controversy occurred
outside the Philippines. Petitioners conclude that based on the foregoing factual
circumstances, the case should be dismissed under the principle of forum non
conveniens. IaHCAD
In his Comment, respondent extensively quoted the assailed CA
Decision maintaining that the factual allegations in the complaint determine
whether or not the complaint states a cause of action.
As to the question of jurisdiction, respondent contends that the
complaint he filed was not based on a contract of employment. Rather, it was
based on petitioners' unwarranted breach of their contractual obligation to
employ respondent. This breach, respondent argues, gave rise to an action for
damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent
asserts that for the NLRC to acquire jurisdiction, the claim for damages must
have a reasonable causal connection with the employer-employee relationship of
petitioners and respondent.
Respondent further argues that there is a perfected contract between
him and petitioners as they both agreed that the latter shall employ him to
manage and operate their ready-mix concrete operations in the Philippines. Even
assuming that there was no perfected contract, respondent contends that his
complaint alleges an alternative cause of action which is based on the provisions
of Articles 19 and 21 of the Civil Code.

As to the applicability of the doctrine of forum non conveniens,

respondent avers that the question of whether a suit should be entertained or
dismissed on the basis of the principle of forum non conveniens depends largely
upon the facts of the particular case and is addressed to the sound discretion of
the trial judge, who is in the best position to determine whether special
circumstances require that the court desist from assuming jurisdiction over the
suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of
action as the act or omission by which a party violates a right of another. A cause
of action exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such
right; and, (3) an act or omission on the part of such defendant violative of the
right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff for which the latter may maintain an action for recovery of
damages. 11
In Hongkong and Shanghai Banking Corporation Limited v.
Catalan, 12 this Court held:
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded. Stated
otherwise, may the court render a valid judgment upon the facts alleged therein?
The inquiry is into the sufficiency, not the veracity of the material allegations. If
the allegations in the complaint furnish sufficient basis on which it can be
maintained, it should not be dismissed regardless of the defense that may be
presented by the defendants. 13
Moreover, the complaint does not have to establish or allege facts
proving the existence of a cause of action at the outset; this will have to be done
at the trial on the merits of the case. 14 To sustain a motion to dismiss for lack of
cause of action, the complaint must show that the claim for relief does not exist,
rather than that a claim has been defectively stated, or is ambiguous, indefinite
or uncertain. 15
Hence, in resolving whether or not the Complaint in the present case
states a cause of action, the trial court correctly limited itself to examining the
sufficiency of the allegations in the Complaint as well as the annexes thereto. It is
proscribed from inquiring into the truth of the allegations in the Complaint or the
authenticity of any of the documents referred or attached to the Complaint, since
these are deemed hypothetically admitted by the respondent.
This Court has reviewed respondent's allegations in its Complaint. In a
nutshell, respondent alleged that herein petitioners reneged on their contractual
obligation to employ him on a permanent basis. This allegation is sufficient to
constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between
petitioners and respondent is a matter which is not ripe for determination in the
present case; rather, this issue must be taken up during trial, considering that its
resolution would necessarily entail an examination of the veracity of the
allegations not only of herein respondent as plaintiff but also of petitioners as
defendants.
The Court does not agree with petitioners' contention that they were
not privy to the negotiations for respondent's possible employment. It is evident
from paragraphs 24 to 28 of the Complaint 16 that, on various occasions, Klepzig

conducted negotiations with respondent regarding the latter's possible

employment. In fact, Annex "H" 17of the complaint shows that it was Klepzig
who informed respondent that his company was no longer interested in
employing respondent. Hence, based on the allegations in the Complaint and the
annexes attached thereto, respondent has a cause of action against herein
petitioners.
As to the question of jurisdiction, this Court has consistently held that
where no employer-employee relationship exists between the parties and no
issue is involved which may be resolved by reference to the Labor Code, other
labor statutes or any collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction. 18In the present case, no employer-employee
relationship exists between petitioners and respondent. In fact, in his complaint,
private respondent is not seeking any relief under the Labor Code, but seeks
payment of damages on account of petitioners' alleged breach of their obligation
under their agreement to employ him. It is settled that an action for breach of
contractual obligation is intrinsically a civil dispute. 19 In the alternative,
respondent seeks redress on the basis of the provisions of Articles 19 and 21 of
the Civil Code. Hence, it is clear that the present action is within the realm of civil
law, and jurisdiction over it belongs to the regular courts. 20
With respect to the applicability of the principle of forum non
conveniens in the present case, this Court's ruling in Bank of America NT & SA v.
Court of Appeals 21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of global
forum shopping, that is to prevent non-resident litigants from choosing the forum
or place wherein to bring their suit for malicious reasons, such as to secure
procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court. In the case of Communication Materials
and Design, Inc. vs. Court of Appeals, this Court held that ". . . [a] Philippine
Court may assume jurisdiction over the case if it chooses to do so; provided, that
the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to
make an intelligent decision as to the law and the facts; and, (3) that the
Philippine Court has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs.
Court of Appeals, that the doctrine of forum non conveniens should not be
used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the
Rules of Court does not include said doctrine as a ground. This Court
further ruled that while it is within the discretion of the trial court to
abstain from assuming jurisdiction on this ground, it should do so only
after vital facts are established, to determine whether special
circumstances require the court's desistance; and that the propriety of
dismissing
a
case
based
on
this
principle
of forum
non
conveniens requires a factual determination, hence it is more properly
considered a matter of defense. 22 (emphasis supplied)

In the present case, the factual circumstances cited by petitioners

which would allegedly justify the application of the doctrine of forum non
conveniens are matters of defense, the merits of which should properly be
threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision
and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
Ynares-Santiago, Chico-Nazario and Nachura, JJ., concur.
||| (Pioneer Concrete Philippines, Inc. v. Todaro, G.R. No. 154830, [June
8, 2007], 551 PHIL 589-601)

FIRST DIVISION
[G.R. No. 125078. May 30, 2011.]
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P.
ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R. AFRICA,
BENJAMIN M. ALBAO, FELIPE ALCANTARA, NUMERIANO S. ALCARIA,
FERNANDO C. ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL,
ANTONIO B. ALVARADO, ELEANOR AMOLATA, RODOLFO P. ANCORDA,
TRIFINO F. ANDRADA, BERT B. ANOCHE, RAMON E. ANTECRISTO,
ISAGANI D. ANTINO, DOMINGO ANTOPINA, MANSUETO M. APARICIO,
HERMINIGILDO AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA,
ULYSES M. ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G.
ARINZOL, EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO, RONNIE
BACAYO, SOFRONIO BALINGIT, NELSON M. BALLENA, EMNIANO
BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI, HERMOGENES T.
BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR
BAYANI, BENIGNO BESARES, RUFINO BETITO, GERARDO A. BONIAO,
CARLO B. BUBUNGAN, FERNANDO B. BUENAVISTA, ALEJANDRINO H.
BUENO, TOMAS P. BUENO, LEONARDO M. BURDEOS, VICENTE P. BURGOS,
MARCELINO J. CABALUNA, DIOSDADO CABILING, EMETRIO C. CACHUELA,
BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B. CAJURAO, REY A.
CALISO, NORBERTO F. CALUMPAG, CELESTINO CALUMPAG, LORETO
CAMACHO, VICTORIANO CANETE, DOMINADOR P. CANTILLO, FRUCTUSO
P. CARBAJOSA, VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M.
CASSION, JAIME S. CASTAARES, FLAVIANO C. CASTAARES, ELPIDIO
CATUBAY, NATHANIEL B. CAUSANG, BEOFIL B. CAUSING, ADRIANO R.
CEJAS, CIRILO G. CERERA, SR., CRISTITUTO M. CEREZO, DANTE V.
CONCHA, ALBERT CORNELIO, CESAR CORTES, NOEL Y. CORTEZ, SERNUE
CREDO, CORNELIO A. CRESENCIO, ALEX CRUZ, ROGER CRUZ, RANSAM
CRUZ, CANUTO M. DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN,
ELISEO DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS,
GAMALLER P. DEANG, CARMELINO P. DEANG, DIOSDADO P. DEANG,
DOMINGO A. DEANG, FELIPE R. DEANG, JR., JULIETO S. DELA CRUZ,
ELIEZER
R.
DELA
TORRE,
JEFFREY
R.
DELA
TORRE,
RAUL
DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P. DENOY, RODRIGO M.
DERMIL, ROLANDO B. DIAZ, LORENZO DIEGO, JOVENCIO DIEGO,
SATURNINO DIEGO, GREGORIO DIONG, AMADO R. DIZON, FE DIZON,
VIRGILO M. DOMANTAY, LEO S. DONATO, DOMINADOR L. DOSADO,
NESTOR DUMALAG, FREDDIE DURAN, SR., MARIO C. ECHIVERE, AQUILLO
M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS, EFRAIM ENGLIS,
ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY, RODOLFO
M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A. ESPAOLA, EULOGIO
M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO D. FERNANDO,
GREGORIO S. FERNANDO, VICENTE P. FERRER, MARCELO T. FLOR,
ANTONIO M. FLORES, REDENTOR T. FLOREZA, NORBERTO J. FUENTES,
RICARDO C. GABUTAN, PEDRO D.V. GALEOS, ARNULFO F. GALEOS,
EDGARDO V. GARCESA, BERNARDO P. GENTOBA, EDUARDO P. GENTOBA,
VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L. GINGOYO,
ERNESTO GOLEZ, JUANITO G. GONZAGA, ONOFRE GONZALES, AMADO J.
GUMERE, LEONARDO M. GUSTO, ALEJANDRO G. HALILI, NOEL H.

HERCEDA, EMILIO V. HERMONDO, CLAUDIO HIPOLITO, TORIBIO S.

ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA, HERMIE L. JALICO,
ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C. JAVINAS,
ALEJANDRO S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T. JUMALON,
OSCAR JUNSAY, ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L.
LAFORTEZA, LOE LAGUMBAY, NORBETO D. LAMPERNIS, ROLANDO J. LAS
PEAS, ISMAEL LASDOCE, RENOLO L. LEBRILLA, CAMILO G. LEDRES,
ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON LOS
BAEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C.
LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P.
MAGLASANG, MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A.
MANADA, SR., RICARDO S. MANDANI, CONCHITA MANDANI, ALBERTO T.
MANGGA, ALEJANDRO A. MANSANES, RUFINO T. MANSANES, EUTIQUIO P.
MANSANES, ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO, HERNANI C.
MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N.
MILLADO, ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P.
MONDIA, JUANITO P. MONDIA, RICARDO MONTAO, RAUL T. MONTEJO,
ROGELIO MUNAR, RODOLFO E. MUEZ, CRESENCIO NARCISO, PANFILO C.
NARCISO, BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G. NICOLAS,
ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO P. OBTIAL, SR., TEODORO
B. OCRETO, BIBIANO C. ODI, ALFREDO M. OPERIO, TEOTISTO B. OPON,
IZRO M. ORACION, ALAN E. ORANAS, ELPEDIO T. OSIAS, ERNESTO M.
PABIONA, NARCISO J. PADILLA, NELSON G. PADIOS, SR., FRNACISCO G.
PAGUNTALAN, RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E.
PANILAGAO, NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR B.
PASTERA, VICENTE Q. PEDAZO, EDGAR M. PEARANDA, ILUMINIDO B.
PERACULLO, ANTONIO C. PEREZ, DOMINGO PEREZ, OSCAR C. PLEOS,
ANTONIETO POLANCOS, SERAFIN G. PRIETO, ZENAIDA PROVIDO,
FERNANDO Y. PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM
U. QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M.
RELIZAN, RAUL A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR,
EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C. ROMANCA, JACINTO
ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO L. SABIDO,
SIMON SAGNIP, TIMOTEO SALIG, ROMAN G. SALIGONAN, VICTORINO
SALOMON, GENEROSO J. SALONGKONG, RODOLFO E. SALVANI, JIMMY A.
SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE
SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO
SAYAANG, JARLO SAYSON, LEONCIO SERDONCILLO, RODOLFO C.
SERRANO, NESTOR G. SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM,
SERAFIN T. SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON,
JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO
L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S.
SUMOG-OY, MANUEL T. SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L.
TACULAD, EUFROCINO A. TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T.
TAMASE, ERNESTO TARRE, MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL
S. TERRADO, APOLINARIO B. TICO, ORLANDO TINACO, ALBERT G. TINAY,
ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO TORRES, JIMMY C.
TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL, RICARDO M. URBANO,
ERNESTO G. VAFLOR, FILOMENO E. VALENZUELA, SALORIANO VELASCO,

RODOLFO VIDAL, WALTER VILLAFAE, DANTE VILLALVA, PERIGRINO P.

VILLARAN, JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA,
HENRY C. VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R. YUNGOT,
ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA and GRACIANO
ZAMORA, petitioners, vs. HON. TEODORO A. DIZON, JR., Presiding Judge,
Regional Trial Court, Branch 37, General Santos City, SHELL OIL CO.,
DOW CHEMICAL CO., OCCIDENTAL CHEMICAL CORP., STANDARD FRUIT
CO., STANDARD FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC., DOLE
FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A., DEL MONTE
TROPICAL FRUIT CO., CHIQUITA BRANDS INTERNATIONAL, INC. and
CHIQUITA BRANDS, INC., respondents.
[G.R. No. 125598. May 30, 2011.]
THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL
CORPORATION, petitioners, vs. BERNABE L. NAVIDA, JOSE P. ABANGAN,
JR., CEFERINO P. ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA,
ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE ALCANTARA,
NUMERIANO S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N.
ALFONSO, FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR
AMOLATA, RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT B.
ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO, DOMINGO
ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO AQUINO, MARCELO
S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M. ARAS, ARSENIO ARCE,
RUPERTO G. ARINZOL, MIGUEL G. ARINZOL, EDGARADO P. ARONG,
RODRIGO D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT,
NELSON M. BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI,
SALVADOR M. BANGI, HERMOGENES T. BARBECHO, ARSENIO B.
BARBERO, DIOSDADO BARREDO, VIRGILIO BASAS, ALEJANDRO G.
BATULAN, DOMINGO A. BAUTISTA, VICTOR BAYANI, BENIGNO BESARES,
RUFINO BETITO, GERARDO A. BONIAO, CARLO B. BUBUNGAN, FERNANDO
B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P. BUENO, LEONARDO
M. BURDEOS, VICENTE P. BURGOS, MARCELINO J. CABALUNA, DIOSDADO
CABILING, EMETRIO C. CACHUELA, BRAULIO B. CADIVIDA, JR., SAMSON
C. CAEL, DANIEL B. CAJURAO, REY A. CALISO, NORBERTO F. CALUMPAG,
CELESTINO CALUMPAG, LORETO CAMACHO, VICTORIANO CANETE,
DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA, VICTORINO S.
CARLOS, VICTOR CARLOS, GEORGE M. CASSION, JAIME S. CASTAARES,
FLAVIANO C. CASTAARES, ELPIDIO CATUBAY, NATHANIEL B. CAUSANG,
BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA, SR.,
CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR
CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A. CRESENCIO,
ALEX CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO M. DADULA, ROMEO
L. DALDE, ZACARIAS DAMBAAN, ELISEO DAPROZA, VIRGILIO P. DAWAL,
TESIFREDO I. DE TOMAS, GAMALLER P. DEANG, CARMELINO P. DEANG,
DIOSDADO P. DEANG, DOMINGO A. DEANG, FELIPE R. DEANG, JR.,
JULIETO S. DELA CRUZ, ELIEZER R. DELA TORRE, JEFFREY R. DELA
TORRE, RAUL DEMONTEVERDE, FELIPE P. DENOLAN, RUBENCIO P. DENOY,
RODRIGO M. DERMIL, ROLANDO B. DIAZ, LORENZO DIEGO, JOVENCIO
DIEGO, SATURNINO DIEGO, GREGORIO DIONG, AMADO R. DIZON, FE
DIZON, VIRGILO M. DOMANTAY, LEO S. DONATO, DOMINADOR L.
DOSADO, NESTOR DUMALAG, FREDDIE DURAN, SR., MARIO C. ECHIVERE,

AQUILLO M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS, EFRAIM

ENGLIS, ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D.
ENTECOSA, AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P.
EROY, RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A.
ESPAOLA, EULOGIO M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO D.
FERNANDO, GREGORIO S. FERNANDO, VICENTE P. FERRER, MARCELO T.
FLOR, ANTONIO M. FLORES, REDENTOR T. FLOREZA, NORBERTO J.
FUENTES, RICARDO C. GABUTAN, PEDRO D.V. GALEOS, ARNULFO F.
GALEOS, EDGARDO V. GARCESA, BERNARDO P. GENTOBA, EDUARDO P.
GENTOBA, VICTORIO B. GIDO, ROLANDO V. GIMENA, EARLWIN L.
GINGOYO, ERNESTO GOLEZ, JUANITO G. GONZAGA, ONOFRE GONZALES,
AMADO J. GUMERE, LEONARDO M. GUSTO, ALEJANDRO G. HALILI, NOEL
H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO HIPOLITO, TORIBIO S.
ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA, HERMIE L. JALICO,
ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO
S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L. LAFORTEZA, LOE
LAGUMBAY, NORBETO D. LAMPERNIS, ROLANDO J. LAS PEAS, ISMAEL
LASDOCE, RENOLO L. LEBRILLA, CAMILO G. LEDRES, ANASTACIO
LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON LOS BAEZ,
CONCISO L. LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C. LUMAKIN,
PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P.
MAGLASANG, MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A.
MANADA, SR., RICARDO S. MANDANI, CONCHITA MANDANI, ALBERTO T.
MANGGA, ALEJANDRO A. MANSANES, RUFINO T. MANSANES, EUTIQUIO P.
MANSANES, ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO, HERNANI C.
MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N.
MILLADO, ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P.
MONDIA, JUANITO P. MONDIA, RICARDO MONTAO, RAUL T. MONTEJO,
ROGELIO MUNAR, RODOLFO E. MUEZ, CRESENCIO NARCISO, PANFILO C.
NARCISO, BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G. NICOLAS,
ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO P. OBTIAL, SR., TEODORO
B. OCRETO, BIBIANO C. ODI, ALFREDO M. OPERIO, TEOTISTO B. OPON,
IZRO M. ORACION, ALAN E. ORANAS, ELPEDIO T. OSIAS, ERNESTO M.
PABIONA, NARCISO J. PADILLA, NELSON G. PADIOS, SR., FRANCISCO G.
PAGUNTALAN, RENE B. PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E.
PANILAGAO, NOLITO C. PANULIN, ROMEO PARAGUAS, NESTOR B.
PASTERA, VICENTE Q. PEDAZO, EDGAR M. PEARANDA, ILUMINIDO B.
PERACULLO, ANTONIO C. PEREZ, DOMINGO PEREZ, OSCAR C. PLEOS,
ANTONIETO POLANCOS, SERAFIN G. PRIETO, ZENAIDA PROVIDO,
FERNANDO Y. PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM
U. QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M.
RELIZAN, RAUL A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR,
EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C. ROMANCA, JACINTO
ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO L. SABIDO,
SIMON SAGNIP, TIMOTEO SALIG, ROMAN B. SALIGONAN, VICTORINO
SALOMON, GENEROSO M. SALONGKONG, RODOLFO E. SALVANI, JIMMY A.
SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE
SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO

SAYAANG, JARLO SAYSON, LEONCIO SERDONCILLO, RODOLFO C.

SERRANO, NESTOR G. SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM,
SERAFIN T. SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON,
JAIME B. SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO
L. SUMAJIT, PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S.
SUMOG-OY, MANUEL T. SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L.
TACULAD, EUFROCINO A. TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T.
TAMASE, ERNESTO TARRE, MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL
S. TERRADO, APOLINARIO B. TICO, ORLANDO TINACO, ALBERT G. TINAY,
ANTONIO TOLEDO, ANTONIO M. TORREGOSA, ISABELO TORRES, JIMMY C.
TORRIBIO, EDUARDO Y. TUCLAOD, JACINTO UDAL, RICARDO M. URBANO,
ERNESTO G. VAFLOR, FILOMENO E. VALENZUELA, SALORIANO VELASCO,
RODOLFO VIDAL, WALTER VILLAFAE, DANTE VILLALVA, PERIGRINO P.
VILLARAN, JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA,
HENRY C. VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R. YUNGOT,
ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA, and GRACIANO
ZAMORA, respondents.
[G.R. No. 126654. May 30, 2011.]
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO,
CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO,
MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA,
GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS,
JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR,
DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL,
MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA, LUIS
BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO,
BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT,
BERNARDO M. COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME,
FELIMON DEBUMA, JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA,
JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO,
ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M.
GODELOSAO, HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC,
SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO
B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON, ROLANDO
LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA, FRANCISCO
LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN,
VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO
LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO
MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES, CESAR
MONAPCO, SILVANO MONCANO, EMILIO MONTAJES, CESAR B. MONTERO,
CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN,

JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.

OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO
OMOSURA, MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA,
ALFREDO P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO, ROMEO
PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL,
MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE,
GLICERIO V. ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO
SILANGAN, ROBERTO SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO
TATAPOD, ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN E. TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA,
HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO
B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, petitioners, vs. THE
HON. ROMEO D. MARASIGAN, Presiding Judge of Regional Trial Court,
Branch 16, Davao City, SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL
CHEMICAL CORP., STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP
CO., DOLE FOOD CO., INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH
PRODUCE N.A., DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS
INTERNATIONAL, INC. and CHIQUITA BRANDS, INC., respondents.
[G.R. No. 127856. May 30, 2011.]
DEL MONTE FRESH PRODUCE N.A. and DEL MONTE TROPICAL
FRUIT CO., petitioners, vs. THE REGIONAL TRIAL COURT OF DAVAO CITY,
BRANCHES 16 AND 13, CORNELIO ABELLA, JR., IRENEO AGABATU,
PRUDENCIO ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO
ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO,
MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA,
GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS,
JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR,
DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL,
MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA, LUIS
BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO,
BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT,
BERNARDO M. COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME,
FELIMON DEBUMA, JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA,
JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO,
ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M.
GODELOSAO, HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC,
SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO
B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON, ROLANDO
LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA, FRANCISCO
LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN,
VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO

LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO

MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES, CESAR
MONAPCO, SILVANO MONCANO, EMILIO MONTAJES, CESAR B. MONTERO,
CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN,
JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO
OMOSURA, MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA,
ALFREDO P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO, ROMEO
PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL,
MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE,
GLICERIO V. ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO
SILANGAN, ROBERTO SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO
TATAPOD, ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN E. TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA,
HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO
B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, respondents.
[G.R. No. 128398. May 30, 2011.]
CHIQUITA
BRANDS,
INC.,
and
CHIQUITA
BRANDS
INTERNATIONAL, INC., petitioners, vs. HON. ANITA ALFELOR-ALAGABAN, in
her capacity as Presiding Judge of the Regional Trial Court, Davao City,
Branch 13, CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO
ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO,
CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO,
MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA,
GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS,
JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR,
DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL,
MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO, CATALINO
BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA, LUIS
BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO,
BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT,
BERNARDO M. COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME,
FELIMON DEBUMA, JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA,
JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR
G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO,
ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M.
GODELOSAO, HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC,
SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO
B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON, ROLANDO
LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA, FRANCISCO
LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN,
VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO

LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO

MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO,
CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES, CESAR
MONAPCO, SILVANO MONCANO, EMILIO MONTAJES, CESAR B. MONTERO,
CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN,
JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO
OMOSURA, MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA,
ALFREDO P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO, ROMEO
PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL,
MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE,
GLICERIO V. ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO
SILANGAN, ROBERTO SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO
TATAPOD, ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN E. TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA,
HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO
B. TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, respondents.
DECISION
LEONARDO-DE CASTRO, J p:
Before
the
Court
are
consolidated
Petitions
for
Review
on Certiorari under Rule 45 of the Rules of Court, which arose out of two civil
cases that were filed in different courts but whose factual background and issues
are closely intertwined.
The petitions in G.R. Nos. 125078 1 and 125598 2 both assail the
Order 3 dated May 20, 1996 of the Regional Trial Court (RTC) of General Santos
City, Branch 37, in Civil Case No. 5617. The said Order decreed the dismissal of
the case in view of the perceived lack of jurisdiction of the RTC over the subject
matter of the complaint. The petition in G.R. No. 125598 also challenges the
Orders dated June 4, 1996 4 and July 9, 1996, 5 which held that the RTC of
General Santos City no longer had jurisdiction to proceed with Civil Case No.
5617.
On
the
other
hand,
the
petitions
in G.R.
Nos.
126654, 6 127856, 7 and 128398 8 seek the reversal of the Order 9 dated
October 1, 1996 of the RTC of Davao City, Branch 16, in Civil Case No. 24,251-96,
which also dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were
consolidated in the Resolutions dated February 10, 1997, 10 April 28,
1997 11 and March 10, 1999. 12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in
different Texas state courts by citizens of twelve foreign countries, including the
Philippines. The thousands of plaintiffs sought damages for injuries they allegedly
sustained from their exposure to dibromochloropropane (DBCP), a chemical used
to kill nematodes (worms), while working on farms in 23 foreign countries. The
cases were eventually transferred to, and consolidated in, the Federal District
Court for the Southern District of Texas, Houston Division. The cases therein that
involved plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v.

Shell Oil Co., et al.," which was docketed as Civil Action No. H-94-1359, and "Juan
Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action
No. H-95-1356. The defendants in the consolidated cases prayed for the
dismissal of all the actions under the doctrine of forum non conveniens. DEScaT
In a Memorandum and Order dated July 11, 1995, the Federal
District Court conditionally granted the defendants' motion to dismiss.
Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90
days after the entry of this Memorandum and Order provided that defendants
and third- and fourth-party defendants have:
(1)participated in expedited discovery in the United States . . .;
(2)either waived or accepted service of process and waived any other
jurisdictional defense within 40 days after the entry of this Memorandum and
Order in any action commenced by a plaintiff in these actions in his home
country or the country in which his injury occurred. Any plaintiff desiring to bring
such an action will do so within 30 days after the entry of this Memorandum and
Order;
(3)waived within 40 days after the entry of this Memorandum and
Order any limitations-based defense that has matured since the commencement
of these actions in the courts of Texas;
(4)stipulated within 40 days after the entry of this Memorandum and
Order that any discovery conducted during the pendency of these actions may
be used in any foreign proceeding to the same extent as if it had been conducted
in proceedings initiated there; and
(5)submitted within 40 days after the entry of this Memorandum and
Order an agreement binding them to satisfy any final judgment rendered in favor
of plaintiffs by a foreign court.
xxx xxx xxx
Notwithstanding the dismissals that may result from this Memorandum
and Order, in the event that the highest court of any foreign country finally
affirms the dismissal for lack of jurisdiction of an action commenced by a plaintiff
in these actions in his home country or the country in which he was injured, that
plaintiff may return to this court and, upon proper motion, the court will resume
jurisdiction over the action as if the case had never been dismissed for [forum
non conveniens]. 13
Civil Case No. 5617 before the RTC of General Santos City and
G.R. Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336
plaintiffs from General Santos City (the petitioners in G.R. No. 125078,
hereinafter referred to as NAVIDA, et al.) filed a Joint Complaint 14 in the RTC of
General Santos City on August 10, 1995. The case was docketed as Civil Case No.
5617. Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical
Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole
Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter
collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands
International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte
Tropical Fruit Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea
Bromine Co., Ltd.; Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac
Chemical Corp. (The aforementioned defendants are hereinafter collectively
referred to as defendant companies.)

NAVIDA, et al., prayed for the payment of damages in view of the

illnesses and injuries to the reproductive systems which they allegedly suffered
because of their exposure to DBCP. They claimed, among others, that they were
exposed to this chemical during the early 1970's up to the early 1980's when
they used the same in the banana plantations where they worked at; and/or
when they resided within the agricultural area where such chemical was used.
NAVIDA, et al., claimed that their illnesses and injuries were due to the fault or
negligence of each of the defendant companies in that they produced, sold
and/or otherwise put into the stream of commerce DBCP-containing products.
According to NAVIDA, et al., they were allowed to be exposed to the said
products, which the defendant companies knew, or ought to have known, were
highly injurious to the former's health and well-being.
Instead of answering the complaint, most of the defendant companies
respectively filed their Motions for Bill of Particulars. 15 During the pendency of
the motions, on March 13, 1996, NAVIDA, et al., filed an Amended Joint
Complaint, 16 excluding Dead Sea Bromine Co., Ltd., Ameribrom, Inc., Bromine
Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions
for Bill of Particulars. 17 On May 15, 1996, DOW filed an Answer with
Counterclaim. 18
On May 20, 1996, without resolving the motions filed by the parties,
the RTC of General Santos City issued an Order dismissing the complaint. First,
the trial court determined that it did not have jurisdiction to hear the case, to wit:
THE
COMPLAINT
FOR
DAMAGES
FILED
WITH
THE
REGIONAL
TRIAL
COURT
SHOULD
BE
DISMISSED
FOR
LACK OF JURISDICTION
xxx xxx xxx
The substance of the cause of action as stated in the complaint against
the defendant foreign companies cites activity on their part which took place
abroad and had occurred outside and beyond the territorial domain of the
Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the stream
of commerce.
Accordingly, the subject matter stated in the complaint and which is
uniquely particular to the present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine territory, hence, outside and
beyond the jurisdiction of Philippine Courts, including the present Regional Trial
Court. 19
Second, the RTC of General Santos City declared that the tort alleged
by NAVIDA, et al., in their complaint is a tort category that is not recognized in
Philippine laws. Said the trial court: IcaEDC
THE
TORT
ASSERTED
IN
THE
PRESENT
COMPLAINT
AGAINST
DEFENDANT
FOREIGN
COMPANIES
IS
NOT
WITHIN
THE
SUBJECT
MATTER
JURISDICTION
OF
THE
REGIONAL
TRIAL
COURT,
BECAUSE
IT
IS
NOT
A
TORT
CATEGORY
WITHIN
THE
PURVIEW OF THE PHILIPPINE LAW

The specific tort asserted against defendant foreign companies in the

present complaint is product liability tort. When the averments in the present
complaint are examined in terms of the particular categories of tort recognized in
the Philippine Civil Code, it becomes stark clear that such averments describe
and identify the category of specific tort known as product liability tort. This is
necessarily so, because it is the product manufactured by defendant foreign
companies, which is asserted to be the proximate cause of the damages
sustained by the plaintiff workers, and the liability of the defendant foreign
companies, is premised on being themanufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over
the present case, if and only if the Civil Code of the Philippines, or a suppletory
special law prescribes a product liability tort, inclusive of and comprehending the
specific tort described in the complaint of the plaintiff workers. 20
Third, the RTC of General Santos City adjudged that NAVIDA, et al.,
were coerced into submitting their case to the Philippine courts, viz.:
FILING
OF
CASES
IN
THE
PHILIPPINES
COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the
instant action, but rather were coerced to do so, merely to comply with the U.S.
District Court's Order dated July 11, 1995, and in order to keep open to the
plaintiffs the opportunity to return to the U.S. District Court. 21
Fourth, the trial court ascribed little significance to the voluntary
appearance of the defendant companies therein, thus:
THE
DEFENDANTS'
SUBMISSION
TO
JURISDICTION
IS
CONDITIONAL
AS
IT
IS ILLUSORY
Defendants have appointed their agents authorized to accept service
of summons/processes in the Philippines pursuant to the agreement in the U.S.
court that defendants will voluntarily submit to the jurisdiction of this court.
While it is true that this court acquires jurisdiction over persons of the defendants
through their voluntary appearance, it appears that such voluntary appearance
of the defendants in this case is conditional. Thus in the "Defendants' Amended
Agreement Regarding Conditions of Dismissal for Forum Non Conveniens" (Annex
to the Complaint) filed with the U.S. District Court, defendants declared that
"(t)he authority of each designated representative to accept service of process
will become effective upon final dismissal of these actions by the Court". The
decision of the U.S. District Court dismissing the case is not yet final and
executory since both the plaintiffs and defendants appealed therefrom (par. 3(h),
3(i), Amended Complaint). Consequently, since the authority of the agent of the
defendants in the Philippines is conditioned on the final adjudication of the case
pending with the U.S. courts, the acquisition of jurisdiction by this court over the
persons of the defendants is also conditional. . . . .
The appointment of agents by the defendants, being subject to a
suspensive condition, thus produces no legal effect and is ineffective at the
moment. 22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et
al., of filing the case in the Philippine courts violated the rules on forum shopping
and litis pendencia. The trial court expounded:
THE
JURISDICTION
FROWNS
UPON
AND PROHIBITS FORUM SHOPPING

This court frowns upon the fact that the parties herein are both
vigorously pursuing their appeal of the decision of the U.S. District court
dismissing the case filed thereat. To allow the parties to litigate in this court when
they are actively pursuing the same cases in another forum, violates the rule on
'forum shopping' so abhorred in this jurisdiction. . . . .
xxx xxx xxx
THE
FILING
OF
THE
CASE
IN
U.S.
DIVESTED
THIS
COURT
OF
ITS
OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of
its own jurisdiction. This court takes note that the U.S. District Court did not
decline jurisdiction over the cause of action. The case was dismissed on the
ground of forum non conveniens, which is really a matter of venue. By taking
cognizance of the case, the U.S. District Court has, in essence, concurrent
jurisdiction with this court over the subject matter of this case. It is settled that
initial acquisition of jurisdiction divests another of its own jurisdiction. . . . .
xxx xxx xxx
THIS
CASE
IS
BARRED
BY
THE
RULE
OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties,
same rights and interests, as in this case. There exists litis pendencia since there
are two cases involving the same parties and interests. The court would like to
emphasize that in accordance with the rule on litis pendencia . . .; the
subsequent case must be dismissed. Applying the foregoing [precept] to the
case-at-bar, this court concludes that since the case between the parties in the
U.S. is still pending, then this case is barred by the rule on "litis pendencia." 23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with
these proceedings, would be violative of the constitutional provision on the Bill of
Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on further proceedings with
this case, as it is now presented, might accord this court a charming appearance.
But the same insistence would actually thwart the very ends of justice which it
seeks to achieve. DcCEHI
This evaluation and action is made not on account of but rather with
due consideration to the fact that the dismissal of this case does not necessarily
deprive the parties especially the plaintiffs of their possible remedies. The
court is cognizant that the Federal Court may resume proceedings of that earlier
case between the herein parties involving the same acts or omissions as in this
case.
WHEREFORE, in view of the foregoing considerations, this case is now
considered DISMISSED. 24
On June 4, 1996, the RTC of General Santos City likewise issued
an Order, 25 dismissing DOW's Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for
reconsideration 26 of the RTC Order dated May 20, 1996, while DOW filed a
motion for reconsideration 27 of the RTC Order dated June 4, 1996.
Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
Reconsideration 28 of the RTC Order dated May 20, 1996.
In an Order 29 dated July 9, 1996, the RTC of General Santos City
declared that it had already lost its jurisdiction over the case as it took into

consideration the Manifestation of the counsel of NAVIDA, et al., which stated

that the latter had already filed a petition for review on certiorari before this
Court.
CHIQUITA and SHELL filed their motions for reconsideration 30 of the
above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review
on Certiorari in order to assail the RTC Order dated May 20, 1996, which was
docketed as G.R. No. 125078.
The RTC of General Santos City then issued an Order 31 dated August
14, 1996, which merely noted the incidents still pending in Civil Case No. 5617
and reiterated that it no longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for
Review on Certiorari, 32 challenging the orders of the RTC of General Santos City
dated May 20, 1996, June 4, 1996 and July 9, 1996. Their petition was docketed
as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General
Santos City erred in ruling that it has no jurisdiction over the subject matter of
the case as well as the persons of the defendant companies.
In a Resolution 33 dated October 7, 1996, this Court resolved to
consolidate G.R. No. 125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari, 34 which sought the
reversal of the RTC Orders dated May 20, 1996, July 9, 1996 and August 14,
1996. The petition was docketed as G.R. No. 126018. In a Resolution 35 dated
November 13, 1996, the Court dismissed the aforesaid petition for failure of
CHIQUITA to show that the RTC committed grave abuse of discretion. CHIQUITA
filed a Motion for Reconsideration, 36 but the same was denied through a
Resolution 37 dated January 27, 1997.
Civil Case No. 24,251-96 before the
RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW,
OCCIDENTAL, DOLE, DEL MONTE, and CHIQUITA was filed before Branch 16 of the
RTC of Davao City by 155 plaintiffs from Davao City. This case was docketed as
Civil Case No. 24,251-96. These plaintiffs (the petitioners in G.R. No. 126654,
hereinafter referred to as ABELLA, et al.) amended their Joint-Complaint on May
21, 1996. 38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that,
as workers in the banana plantation and/or as residents near the said plantation,
they were made to use and/or were exposed to nematocides, which contained
the chemical DBCP. According to ABELLA, et al., such exposure resulted in
"serious and permanent injuries to their health, including, but not limited to,
sterility and severe injuries to their reproductive capacities." 39 ABELLA, et
al., claimed that the defendant companies manufactured, produced, sold,
distributed, used, and/or made available in commerce, DBCP without warning the
users of its hazardous effects on health, and without providing instructions on its
proper use and application, which the defendant companies knew or ought to
have known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective
motions for bill of particulars to which ABELLA, et al., filed their opposition. DOW
and DEL MONTE filed their respective Answers dated May 17, 1996 and June 24,
1996.

The RTC of Davao City, however, junked Civil Case No. 24,251-96 in
its Order dated October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint for:
Damages filed by the plaintiffs against the defendants Shell Oil Company, DOW
Chemicals Company, Occidental Chemical Corporation, Standard Fruit Company,
Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh Fruit Company,
Chiquita Brands, Inc., Chiquita Brands International, Del Monte Fresh Produce,
N.A. and Del Monte Tropical Fruits Co., all foreign corporations with Philippine
Representatives, the Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs "would have this Honorable Court dismiss the case to
pave the way for their getting an affirmance by the Supreme Court" (#10 of
Defendants' Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co.,
Reply to Opposition dated July 22, 1996). Consider these:
1)In the original Joint Complaint, plaintiffs state that: defendants have
no properties in the Philippines; they have no agents as well (par. 18); plaintiffs
are suing the defendants for tortuous acts committed by these foreign
corporations on their respective countries, as plaintiffs, after having elected to
sue in the place of defendants' residence, are now compelled by a decision of a
Texas District Court to file cases under torts in this jurisdiction for causes of
actions which occurred abroad (par. 19); a petition was filed by same plaintiffs
against same defendants in the Courts of Texas, USA, plaintiffs seeking for
payment of damages based on negligence, strict liability, conspiracy and
international tort theories (par. 27); upon defendants' Motion to Dismiss on
Forum non [conveniens], said petition was provisionally dismissed on condition
that these cases be filed in the Philippines or before 11 August 1995 (Philippine
date; Should the Philippine Courts refuse or deny jurisdiction, the U. S. Courts will
reassume jurisdiction.)
11.In the Amended Joint Complaint, plaintiffs aver that: on 11 July
1995, the Federal District Court issued a Memorandum and Order conditionally
dismissing several of the consolidated actions including those filed by the Filipino
complainants. One of the conditions imposed was for the plaintiffs to file actions
in their home countries or the countries in which they were injured . . . .
Notwithstanding, the Memorandum and [O]rder further provided that should the
highest court of any foreign country affirm the dismissal for lack of jurisdictions
over these actions filed by the plaintiffs in their home countries [or] the countries
where they were injured, the said plaintiffs may return to that court and, upon
proper motion, the Court will resume jurisdiction as if the case had never been
dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely
on the basis of the above but because it shares the opinion of legal experts given
in the interview made by the Inquirer in its Special report "Pesticide Cause Mass
Sterility," to wit:
1.Former Justice Secretary Demetrio Demetria in a May 1995 opinion
said: The Philippines should be an inconvenient forum to file this kind of damage
suit against foreign companies since the causes of action alleged in the petition
do not exist under Philippine laws. There has been no decided case in Philippine
Jurisprudence awarding to those adversely affected by DBCP. This means there is
no available evidence which will prove and disprove the relation between sterility
and DBCP.
2.Retired Supreme Court Justice Abraham Sarmiento opined that while
a class suit is allowed in the Philippines the device has been employed strictly.

Mass sterility will not qualify as a class suit injury within the contemplation of
Philippine statute.
3.Retired High Court Justice Rodolfo Nocom stated that there is simply
an absence of doctrine here that permits these causes to be heard. No product
liability ever filed or tried here.
Case ordered dismissed. 40
Docketed as G.R. No. 126654, the petition for review, filed on
November 12, 1996 by ABELLA, et al., assails before this Court the above-quoted
order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing
Civil Case No. 24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over
the subject matter of the case since Articles 2176 and 2187 of the Civil Code are
broad enough to cover the acts complained of and to support their claims for
damages. CaEIST
ABELLA, et al., further aver that the dismissal of the case, based on the
opinions of legal luminaries reported in a newspaper, by the RTC of Davao City is
bereft of basis. According to them, their cause of action is based on quasidelict under Article 2176 of the Civil Code. They also maintain that the absence
of jurisprudence regarding the award of damages in favor of those adversely
affected by the DBCP does not preclude them from presenting evidence to prove
their allegations that their exposure to DBCP caused their sterility and/or
infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for
reconsideration of the Order dated October 1, 1996 of the RTC of Davao City. DEL
MONTE also filed its motion for reconsideration, which contained an additional
motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order 41 dated
December 2, 1996, voluntarily inhibiting himself from trying the case. Thus, the
case was re-raffled to Branch 13 of the RTC of Davao City.
In an Order 42 dated December 16, 1996, the RTC of Davao City
affirmed the Order dated October 1, 1996, and denied the respective motions for
reconsideration filed by defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997,
questioning the Orders dated October 1, 1996 and December 16, 1996 of the
RTC of Davao City. This case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in
dismissing the case motu proprio as it acquired jurisdiction over the subject
matter of the case as well as over the persons of the defendant companies which
voluntarily appeared before it. CHIQUITA also claims that the RTC of Davao City
cannot dismiss the case simply on the basis of opinions of alleged legal experts
appearing in a newspaper article.
Initially, this Court in its Resolution 43 dated July 28, 1997, dismissed
the petition filed by CHIQUITA for submitting a defective certificate against forum
shopping. CHIQUITA, however, filed a motion for reconsideration, which was
granted by this Court in the Resolution 44 dated October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review
on certiorari before this Court assailing the above-mentioned orders of the RTC of
Davao City. Its petition was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil
Case No. 24,251-96, as defined under the law and that the said court already

obtained jurisdiction over its person by its voluntary appearance and the filing of
a motion for bill of particulars and, later, an answer to the complaint. According
to DEL MONTE, the RTC of Davao City, therefore, acted beyond its authority when
it dismissed the case motu proprio or without any motion to dismiss from any of
the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March
10, 1999, this Court consolidated G.R. Nos. 125078, 125598, 126654, 127856,
and 128398.
The Consolidated Motion to Drop
DOW, OCCIDENTAL, and SHELL
as Party-Respondents filed by
NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before
this Court a Consolidated Motion (to Drop Party-Respondents). 45 The plaintiff
claimants alleged that they had amicably settled their cases with DOW,
OCCIDENTAL, and SHELL sometime in July 1997. This settlement agreement was
evidenced by facsimiles of the "Compromise Settlement, Indemnity, and Hold
Harmless Agreement," which were attached to the said motion. Pursuant to said
agreement, the plaintiff claimants sought to withdraw their petitions as against
DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as
well as the settlement entered into between the plaintiff claimants and DOW,
OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the
parties, this Court, in a Resolution dated June 22, 1998, 46 required all the
parties to submit their respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998; 47 SHELL asked
to be excused from the filing of a memorandum alleging that it had already
executed a compromise agreement with the plaintiff claimants. 48 DOLE filed its
Memorandum on October 12, 1998 49 while DEL MONTE filed on October 13,
1998. 50 NAVIDA, et al.,and ABELLA, et al., filed their Consolidated Memorandum
on February 3, 1999; 51 and DOW and OCCIDENTAL jointly filed a Memorandum
on December 23, 1999. 52
The Motion to Withdraw Petition for
Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw
Petition for Review in G.R. No. 125598, 53 explaining that the said petition "is
already moot and academic and no longer presents a justiciable controversy"
since they have already entered into an amicable settlement with NAVIDA, et
al. DOW and OCCIDENTAL added that they have fully complied with their
obligations set forth in the 1997 Compromise Agreements.
DOLE filed its Manifestation dated September 6, 2004, 54 interposing
no objection to the withdrawal of the petition, and further stating that they
maintain their position that DOW and OCCIDENTAL, as well as other settling
defendant companies, should be retained as defendants for purposes of
prosecuting the cross-claims of DOLE, in the event that the complaint below is
reinstated.
NAVIDA, et al., also filed their Comment dated September 14,
2004, 55 stating that they agree with the view of DOW and OCCIDENTAL that the

petition in G.R. No. 125598 has become moot and academic because Civil Case
No. 5617 had already been amicably settled by the parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to
Withdraw Petition for Review Filed by Petitioners in G.R. No. 125598, 56 stating
that it has no objections to the withdrawal of the petition filed by DOW and
OCCIDENTAL in G.R. No. 125598.
In a Resolution 57 dated October 11, 2004, this Court granted, among
others, the motion to withdraw petition for review filed by DOW and
OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et
al., presented the following issues for our consideration:
IN REFUTATION
I.THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.
a)The court did not simply dismiss the case because it was filed in bad
faith with petitioners intending to have the same dismissed and returned to the
Texas court.
b)The court dismissed the case because it was convinced that it did not
have jurisdiction.
IN SUPPORT OF THE PETITION
II.THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF
THE CASE.
a.The acts complained of occurred within Philippine territory.
b.Art. 2176 of the Civil Code of the Philippines is broad enough to cover
the acts complained of.
c.Assumption of jurisdiction by the U.S. District Court over petitioner[s']
claims did not divest Philippine [c]ourts of jurisdiction over the same. cICHTD
d.The Compromise Agreement and the subsequent Consolidated
Motion to Drop Party Respondents Dow, Occidental and Shell does not
unjustifiably prejudice remaining respondents Dole, Del Monte and Chiquita. 58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is
whether the RTC of General Santos City and the RTC of Davao City erred in
dismissing Civil Case Nos. 5617 and 24,251-96, respectively, for lack of
jurisdiction.
Remarkably, none of the parties to this case claims that the courts a
quo are bereft of jurisdiction to determine and resolve the above-stated cases. All
parties contend that the RTC of General Santos City and the RTC of Davao City
have jurisdiction over the action for damages, specifically for approximately P2.7
million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious
acts and/or omissions of defendant companies occurred within Philippine
territory. Specifically, the use of and exposure to DBCP that was manufactured,
distributed or otherwise put into the stream of commerce by defendant
companies happened in the Philippines. Said fact allegedly constitutes
reasonable basis for our courts to assume jurisdiction over the case.
Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the provisions of
Chapter 2 of the Preliminary Title of the Civil Code, as well as Article 2176
thereof, are broad enough to cover their claim for damages. Thus, NAVIDA, et
al.,and ABELLA, et al., pray that the respective rulings of the RTC of General

Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be
reversed and that the said cases be remanded to the courts a quo for further
proceedings.
DOLE similarly maintains that the acts attributed to defendant
companies constitute a quasi-delict, which falls under Article 2176 of the Civil
Code. In addition, DOLE states that if there were no actionable wrongs committed
under Philippine law, the courts a quo should have dismissed the civil cases on
the ground that the Amended Joint-Complaints of NAVIDA, et al., and ABELLA, et
al., stated no cause of action against the defendant companies. DOLE also
argues that if indeed there is no positive law defining the alleged acts of
defendant companies as actionable wrong, Article 9 of the Civil Code dictates
that a judge may not refuse to render a decision on the ground of insufficiency of
the law. The court may still resolve the case, applying the customs of the place
and, in the absence thereof, the general principles of law. DOLE posits that the
Philippines is the situs of the tortious acts allegedly committed by defendant
companies as NAVIDA, et al., and ABELLA, et al., point to their alleged exposure
to DBCP which occurred in the Philippines, as the cause of the sterility and other
reproductive system problems that they allegedly suffered. Finally, DOLE adds
that the RTC of Davao City gravely erred in relying upon newspaper reports in
dismissing Civil Case No. 24,251-96 given that newspaper articles are hearsay
and without any evidentiary value. Likewise, the alleged legal opinions cited in
the newspaper reports were taken judicial notice of, without any notice to the
parties. DOLE, however, opines that the dismissal of Civil Case Nos. 5617 and
24,251-96 was proper, given that plaintiff claimants merely prosecuted the cases
with the sole intent of securing a dismissal of the actions for the purpose of
convincing the U.S. Federal District Court to re-assume jurisdiction over the
cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction
over the subject matter of the cases filed before them. The Amended JointComplaints sought approximately P2.7 million in damages for each plaintiff
claimant, which amount falls within the jurisdiction of the RTC. CHIQUITA avers
that the pertinent matter is the place of the alleged exposure to DBCP, not the
place of manufacture, packaging, distribution, sale, etc., of the said chemical.
This is in consonance with the lex loci delicti commisi theory in determining
the situs of a tort, which states that the law of the place where the alleged wrong
was committed will govern the action. CHIQUITA and the other defendant
companies also submitted themselves to the jurisdiction of the RTC by making
voluntary appearances and seeking for affirmative reliefs during the course of
the proceedings. None of the defendant companies ever objected to the exercise
of jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for
the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos
City and the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have
jurisdiction over Civil Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations in the complaint and the
character of the relief sought, irrespective of whether the plaintiffs are entitled to
all or some of the claims asserted therein. 59 Once vested by law, on a particular
court or body, the jurisdiction over the subject matter or nature of the action
cannot be dislodged by anybody other than by the legislature through the
enactment of a law.

At the time of the filing of the complaints, the jurisdiction of the RTC in
civil cases under Batas Pambansa Blg. 129, as amended by Republic Act No.
7691, was:
SEC. 19.Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxx xxx xxx
(8)In all other cases in which the demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses, and costs or the
value of the property in controversy exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the abovementioned items exceeds Two hundred thousand pesos
(P200,000.00). 60
Corollary thereto, Supreme Court Administrative Circular No. 09-94,
states:
2.The exclusion of the term "damages of whatever kind" in determining
the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129,
as amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes of
action, the amount of such claim shall be considered in determining the
jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarlyworded Amended Joint-Complaints filed before the courts a quo, the following
prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that
after hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a)TO PAY EACH PLAINTIFF moral damages in the amount of One Million
Five Hundred Thousand Pesos (P1,500,000.00);
b)TO PAY EACH PLAINTIFF nominal damages in the amount of Four
Hundred Thousand Pesos (P400,000.00) each;
c)TO PAY EACH PLAINTIFF exemplary damages in the amount of Six
Hundred Thousand Pesos (P600,000.00);
d)TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand
Pesos (P200,000.00); and
e)TO PAY THE COSTS of the suit. 61
From the foregoing, it is clear that the claim for damages is the main
cause of action and that the total amount sought in the complaints is
approximately P2.7 million for each of the plaintiff claimants. The RTCs
unmistakably have jurisdiction over the cases filed in General Santos City and
Davao City, as both claims by NAVIDA, et al.,and ABELLA, et al., fall within the
purview of the definition of the jurisdiction of the RTC under Batas Pambansa Blg.
129. EaIDAT
Moreover, the allegations in both Amended Joint-Complaints narrate
that:
THE CAUSES OF ACTION
4.The Defendants manufactured, sold, distributed, used, AND/OR MADE
AVAILABLE
IN
COMMERCE
nematocides
containing
the
chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS USED
AGAINST the parasite known as the nematode, which plagued banana

plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT, DBCP not

only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF
PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well.
5.The plaintiffs were exposed to DBCP in the 1970s up to the
early 1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such exposure, the
plaintiffs suffered serious and permanent injuries TO THEIR HEALTH, including,
but not limited to, STERILITY and severe injuries to their reproductive capacities.
6.THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN
THAT THEY MANUFACTURED, produced, sold, and/or USED DBCP and/or
otherwise, PUT THE SAME into the stream of commerce, WITHOUT
INFORMING THE USERS OF ITS HAZARDOUS EFFECTS ON HEALTH
AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing
materials which THEY knew, or in the exercise of ordinary care and prudence
ought to have known, were highly harmful and injurious to the Plaintiffs' health
and well-being.
7.The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM OF COMMERCE
were negligent OR AT FAULT in that they, AMONG OTHERS:
a.Failed to adequately warn Plaintiffs of the dangerous characteristics
of DBCP, or to cause their subsidiaries or affiliates to so warn plaintiffs;
b.Failed to provide plaintiffs with information as to what should be
reasonably safe and sufficient clothing and proper protective equipment and
appliances, if any, to protect plaintiffs from the harmful effects of exposure to
DBCP, or to cause their subsidiaries or affiliates to do so;
c.Failed to place adequate warnings, in a language understandable to
the worker, on containers of DBCP-containing materials to warn of the dangers to
health of coming into contact with DBCP, or to cause their subsidiaries or
affiliates to do so;
d.Failed to take reasonable precaution or to exercise reasonable care to
publish, adopt and enforce a safety plan and a safe method of handling and
applying DBCP, or to cause their subsidiaries or affiliates to do so;
e.Failed to test DBCP prior to releasing these products for sale, or to
cause their subsidiaries or affiliates to do so; and
f.Failed to reveal the results of tests conducted on DBCP to each
plaintiff, governmental agencies and the public, or to cause their subsidiaries or
affiliate to do so.
8.The illnesses and injuries of each plaintiff are also due to the FAULT
or negligence of defendants Standard Fruit Company, Dole Fresh Fruit Company,
Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita Brands International,
Inc. in that they failed to exercise reasonable care to prevent each plaintiff's
harmful exposure to DBCP-containing products which defendants knew or should
have known were hazardous to each plaintiff in that they, AMONG OTHERS:
a.Failed to adequately supervise and instruct Plaintiffs in the safe and
proper application of DBCP-containing products;
b.Failed to implement proper methods and techniques of application of
said products, or to cause such to be implemented;
c.Failed to warn Plaintiffs of the hazards of exposure to said products or
to cause them to be so warned;

d.Failed to test said products for adverse health effects, or to cause

said products to be tested;
e.Concealed from Plaintiffs information concerning the observed effects
of said products on Plaintiffs;
f.Failed to monitor the health of plaintiffs exposed to said products;
g.Failed to place adequate labels on containers of said products to
warn them of the damages of said products; and
h.Failed to use substitute nematocides for said products or to cause
such substitutes to [be] used. 62 (Emphasis supplied and words in brackets
ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of
NAVIDA, et al., and ABELLA, et al., attribute to defendant companies certain acts
and/or omissions which led to their exposure to nematocides containing the
chemical DBCP. According to NAVIDA, et al., and ABELLA, et al., such exposure to
the said chemical caused ill effects, injuries and illnesses, specifically to their
reproductive system.
Thus, these allegations in the complaints constitute the cause of action
of plaintiff claimants a quasi-delict, which under the Civil Code is defined as an
act, or omission which causes damage to another, there being fault or
negligence. To be precise, Article 2176 of the Civil Code provides:
Article 2176.Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et
al., and ABELLA, et al., point to the acts and/or omissions of the defendant
companies in manufacturing, producing, selling, using, and/or otherwise putting
into the stream of commerce, nematocides which contain DBCP, "without
informing the users of its hazardous effects on health and/or without instructions
on its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals, 64 this Court has always
reminded that jurisdiction of the court over the subject matter of the action is
determined by the allegations of the complaint, irrespective of whether or not
the plaintiffs are entitled to recover upon all or some of the claims asserted
therein. The jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the
question of jurisdiction would almost entirely depend upon the defendants. What
determines the jurisdiction of the court is the nature of the action pleaded as
appearing from the allegations in the complaint. The averments therein and the
character of the relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant
companies constitute a quasi-delict which is the basis for the claim for damages
filed by NAVIDA, et al., and ABELLA, et al., with individual claims of approximately
P2.7 million for each plaintiff claimant, which obviously falls within the purview of
the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and
ABELLA, et al., allegedly suffered resulted from their exposure to DBCP while they
were employed in the banana plantations located in the Philippines or while they
were residing within the agricultural areas also located in the Philippines. The
factual allegations in the Amended Joint-Complaints all point to their cause of
action, which undeniably occurred in the Philippines. The RTC of General

Santos City and the RTC of Davao City obviously have reasonable basis to
assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they
dismissed the cases on the ground of lack of jurisdiction on the mistaken
assumption that the cause of action narrated by NAVIDA, et al., and ABELLA, et
al., took place abroad and had occurred outside and beyond the territorial
boundaries of the Philippines, i.e., "the manufacture of the pesticides, their
packaging in containers, their distribution through sale or other disposition,
resulting in their becoming part of the stream of commerce," 65 and, hence,
outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or
the situs of the act complained of, would be determinative of jurisdiction and
venue for trial of cases. In personal civil actions, such as claims for payment of
damages, the Rules of Court allow the action to be commenced and tried in the
appropriate court, where any of the plaintiffs or defendants resides, or in the
case of a non-resident defendant, where he may be found, at the election of the
plaintiff. 66 HCDAcE
In a very real sense, most of the evidence required to prove the claims
of NAVIDA, et al., and ABELLA, et al., are available only in the Philippines. First,
plaintiff claimants are all residents of the Philippines, either in General Santos
City or in Davao City. Second, the specific areas where they were allegedly
exposed to the chemical DBCP are within the territorial jurisdiction of the
courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims
for damages. Third, the testimonial and documentary evidence from important
witnesses, such as doctors, co-workers, family members and other members of
the community, would be easier to gather in the Philippines. Considering the
great number of plaintiff claimants involved in this case, it is not far-fetched to
assume that voluminous records are involved in the presentation of evidence to
support the claim of plaintiff claimants. Thus, these additional factors, coupled
with the fact that the alleged cause of action of NAVIDA, et al., and ABELLA, et
al., against the defendant companies for damages occurred in the
Philippines, demonstrate that, apart from the RTC of General Santos City and
the RTC of Davao City having jurisdiction over the subject matter in the instant
civil cases, they are, indeed, the convenient fora for trying these cases. 67
The RTC of General Santos City
and the RTC of Davao City validly
acquired jurisdiction over the
persons of all the defendant
companies
It is well to stress again that none of the parties claims that the
courts a quo lack jurisdiction over the cases filed before them. All parties are one
in asserting that the RTC of General Santos City and the RTC of Davao City have
validly acquired jurisdiction over the persons of the defendant companies in the
action below. All parties voluntarily, unconditionally and knowingly appeared and
submitted themselves to the jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that
"[t]he defendant's voluntary appearance in the action shall be equivalent to
service of summons." In this connection, all the defendant companies designated
and authorized representatives to receive summons and to represent them in the
proceedings before the courts a quo. All the defendant companies submitted
themselves to the jurisdiction of the courts a quo by making several voluntary

appearances, by praying for various affirmative reliefs, and by actively

participating during the course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the
Philippines v. Sandiganbayan, 68 held that jurisdiction over the person of the
defendant in civil cases is acquired either by his voluntary appearance in court
and his submission to its authority or by service of summons. Furthermore, the
active participation of a party in the proceedings is tantamount to an invocation
of the court's jurisdiction and a willingness to abide by the resolution of the case,
and will bar said party from later on impugning the court or body's
jurisdiction. 69
Thus, the RTC of General Santos City and the RTC of Davao City have
validly acquired jurisdiction over the persons of the defendant companies, as well
as over the subject matter of the instant case. What is more, this jurisdiction,
which has been acquired and has been vested on the courts a quo, continues
until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from
the "exercise of jurisdiction." Jurisdiction refers to the authority to decide a case,
not the orders or the decision rendered therein. Accordingly, where a court has
jurisdiction over the persons of the defendants and the subject matter, as in the
case of the courts a quo,the decision on all questions arising therefrom is but an
exercise of such jurisdiction. Any error that the court may commit in the exercise
of its jurisdiction is merely an error of judgment, which does not affect its
authority to decide the case, much less divest the court of the jurisdiction over
the case. 70
Plaintiffs' purported bad faith in
filing the subject civil cases in
Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their
cases in bad faith merely to procure a dismissal of the same and to allow them to
return to the forum of their choice, this Court finds such argument much too
speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations
that are unsupported by evidence on record. This Court does not rule on
allegations which are manifestly conjectural, as these may not exist at all. This
Court deals with facts, not fancies; on realities, not appearances. When this Court
acts on appearances instead of realities, justice and law will be shortlived. 71 This is especially true with respect to allegations of bad faith, in line
with the basic rule that good faith is always presumed and bad faith must be
proved. 72
In sum, considering the fact that the RTC of General Santos City and
the RTC of Davao City have jurisdiction over the subject matter of the amended
complaints filed by NAVIDA, et al., and ABELLA, et al., and that the courts a
quo have also acquired jurisdiction over the persons of all the defendant
companies, it therefore, behooves this Court to order the remand of Civil Case
Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao
City, respectively.
On the issue of the dropping of
DOW, OCCIDENTAL and SHELL
as respondents in view of their
amicable settlement with NAVIDA,
et al., and ABELLA, et al.

NAVIDA, et al., and ABELLA, et al., are further praying that DOW,
OCCIDENTAL and SHELL be dropped as respondents in G.R. Nos. 125078 and
126654, as well as in Civil Case Nos. 5617 and 24,251-96. The non-settling
defendants allegedly manifested that they intended to file their cross-claims
against their co-defendants who entered into compromise agreements.
NAVIDA, et al., and ABELLA, et al., argue that the non-settling defendants did not
aver any cross-claim in their answers to the complaint and that they
subsequently sought to amend their answers to plead their cross-claims only
after the settlement between the plaintiff claimants and DOW, OCCIDENTAL, and
SHELL were executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that
the cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above
motion of NAVIDA, et al., and ABELLA, et al., since the latter's Amended
Complaints cited several instances of tortious conduct that were allegedly
committed jointly and severally by the defendant companies. This solidary
obligation on the part of all the defendants allegedly gives any co-defendant the
statutory right to proceed against the other co-defendants for the payment of
their respective shares. Should the subject motion of NAVIDA, et al., and
ABELLA, et al., be granted, and the Court subsequently orders the remand of the
action to the trial court for continuance, CHIQUITA and DOLE would allegedly be
deprived of their right to prosecute their cross-claims against their other codefendants. Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA
and DOLE similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to
drop DOW, SHELL and OCCIDENTAL as respondents in G.R. Nos. 125078 and
126654, as well as in Civil Case Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their
respective memoranda, DEL MONTE filed a Manifestation and Motion 73 before
the Court, stating that similar settlement agreements were allegedly executed by
the plaintiff claimants with DEL MONTE and CHIQUITA sometime in 1999.
Purportedly included in the agreements were Civil Case Nos. 5617 and 24,25196. Attached to the said manifestation were copies of the Compromise
Settlement, Indemnity, and Hold Harmless Agreement between DEL MONTE and
the settling plaintiffs, as well as the Release in Full executed by the latter. 74 DEL
MONTE specified therein that there were "only four (4) plaintiffs in Civil Case No.
5617 who are claiming against the Del Monte parties" 75 and that the latter have
executed amicable settlements which completely satisfied any claims against
DEL MONTE. In accordance with the alleged compromise agreements with the
four plaintiffs in Civil Case No. 5617, DEL MONTE sought the dismissal of the
Amended Joint-Complaint in the said civil case. Furthermore, in view of the above
settlement agreements with ABELLA, et al., in Civil Case No. 24,251-96, DEL
MONTE stated that it no longer wished to pursue its petition in G.R. No. 127856
and accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be
remanded to the RTC of General Santos City and the RTC of Davao City,
respectively, the Court deems that the Consolidated Motions (to Drop PartyRespondents) filed by NAVIDA, et al., and ABELLA, et al., should likewise be
referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract
whereby the parties, by making reciprocal concessions, avoid a litigation or put
an end to one already commenced." Like any other contract, an extrajudicial

compromise agreement is not excepted from rules and principles of a contract. It

is a consensual contract, perfected by mere consent, the latter being manifested
by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. 76 Judicial approval is not required for its
perfection. 77 A compromise has upon the parties the effect and authority of res
judicata 78 and this holds true even if the agreement has not been judicially
approved. 79 In addition, as a binding contract, a compromise agreement
determines the rights and obligations of only the parties to it. 80
In light of the foregoing legal precepts, the RTC of General Santos City
and the RTC of Davao City should first receive in evidence and examine all of the
alleged compromise settlements involved in the cases at bar to determine the
propriety of dropping any party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop PartyRespondents) that was filed by NAVIDA, et al., and ABELLA, et al., only pertained
to DOW, OCCIDENTAL and SHELL in view of the latter companies' alleged
compromise agreements with the plaintiff claimants. However, in subsequent
developments, DEL MONTE and CHIQUITA supposedly reached their own
amicable settlements with the plaintiff claimants, but DEL MONTE qualified that it
entered into a settlement agreement with only four of the plaintiff claimants in
Civil Case No. 5617. These four plaintiff claimants were allegedly the only ones
who were asserting claims against DEL MONTE. However, the said allegation of
DEL MONTE was simply stipulated in their Compromise Settlement, Indemnity,
and Hold Harmless Agreement and its truth could not be verified with certainty
based on the records elevated to this Court. Significantly, the 336 plaintiff
claimants in Civil Case No. 5617 jointly filed a complaint without individually
specifying their claims against DEL MONTE or any of the other defendant
companies. Furthermore, not one plaintiff claimant filed a motion for the removal
of either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and
24,251-96. IaDcTC
There is, thus, a primary need to establish who the specific parties to
the alleged compromise agreements are, as well as their corresponding rights
and obligations therein. For this purpose, the courts a quo may require the
presentation of additional evidence from the parties. Thereafter, on the basis of
the records of the cases at bar and the additional evidence submitted by the
parties, if any, the trial courts can then determine who among the defendants
may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of
two or more persons who are liable for the same quasi-delict is solidary. A
solidary obligation is one in which each of the debtors is liable for the entire
obligation, and each of the creditors is entitled to demand the satisfaction of the
whole obligation from any or all of the debtors. 81
In solidary obligations, the paying debtor's right of reimbursement is
provided for under Article 1217 of the Civil Code, to wit:
Art. 1217.Payment made by one of the solidary debtors extinguishes
the obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest for the
intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency,

reimburse his share to the debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the
corresponding liability of the co-debtors to reimburse, will only arise, however, if
a solidary debtor who is made to answer for an obligation actually delivers
payment to the creditor. As succinctly held in Lapanday Agricultural
Development Corporation v. Court of Appeals, 82 "[p]ayment, which means not
only the delivery of money but also the performance, in any other manner, of the
obligation, is the operative fact which will entitle either of the solidary debtors to
seek reimbursement for the share which corresponds to each of the [other]
debtors." 83
In the cases at bar, there is no right of reimbursement to speak
of as yet. A trial on the merits must necessarily be conducted first in
order to establish whether or not defendant companies are liable for
the claims for damages filed by the plaintiff claimants, which would
necessarily give rise to an obligation to pay on the part of the
defendants.
At the point in time where the proceedings below were prematurely
halted, no cross-claims have been interposed by any defendant against another
defendant. If and when such a cross-claim is made by a non-settling defendant
against a settling defendant, it is within the discretion of the trial court to
determine the propriety of allowing such a cross-claim and if the settling
defendant must remain a party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v.
Court of Appeals, 84 the Court had the occasion to state that "where there are,
along with the parties to the compromise, other persons involved in the litigation
who have not taken part in concluding the compromise agreement but are
adversely affected or feel prejudiced thereby, should not be precluded from
invoking in the same proceedings an adequate relief therefor." 85
Relevantly,
in Philippine
International
Surety
Co.,
Inc.
v.
Gonzales, 86 the Court upheld the ruling of the trial court that, in a joint and
solidary obligation, the paying debtor may file a third-party complaint and/or a
cross-claim to enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement
in the above situation, if proper, is not affected by the compromise agreements
allegedly entered into by NAVIDA, et al., and ABELLA, et al., with some of the
defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review
on certiorari in G.R. Nos. 125078, 126654, and 128398. We REVERSE and SET
ASIDE the Order dated May 20, 1996 of the Regional Trial Court of General
Santos City, Branch 37, in Civil Case No. 5617, and the Order dated October 1,
1996 of the Regional Trial Court of Davao City, Branch 16, and its subsequent
Order dated December 16, 1996 denying reconsideration in Civil Case No.
24,251-96, and REMAND the records of this case to the respective Regional Trial
Courts of origin for further and appropriate proceedings in line with the ruling
herein that said courts have jurisdiction over the subject matter of the amended
complaints in Civil Case Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw
its petition in G.R. No. 127856. In view of the previous grant of the motion to

withdraw the petition in G.R. No. 125598, both G.R. Nos. 127856 and 125598 are
considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Peralta * and Perez, JJ., concur.
||| (Navida v. Dizon, G.R. No. 125078, 125598, 126654, 127856 &
128398, [May 30, 2011], 664 PHIL 283-336)

THIRD DIVISION
[G.R. No. 149177. November 23, 2007.]
KAZUHIRO
HASEGAWA
and
NIPPON
ENGINEERING
CONSULTANTS CO., LTD., petitioners, vs. MINORU KITAMURA, respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of
the Rules of Court assailing the April 18, 2001 Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution 2 denying the
motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd.
(Nippon), a Japanese consultancy firm providing technical and management
support in the infrastructure projects of foreign governments, 3 entered into an
Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a
Japanese national permanently residing in the Philippines. 4 The agreement
provides that respondent was to extend professional services to Nippon for a
year starting on April 1, 1999. 5Nippon then assigned respondent to work as the
project manager of the Southern Tagalog Access Road (STAR) Project in the
Philippines, following the company's consultancy contract with the Philippine
Government. 6
When the STAR Project was near completion, the Department of Public
Works and Highways (DPWH) engaged the consultancy services of Nippon, on
January 28, 2000, this time for the detailed engineering and construction
supervision
of
the
Bongabon-Baler
Road
Improvement
(BBRI)
Project. 7 Respondent was named as the project manager in the contract's
Appendix 3.1. 8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general
manager for its International Division, informed respondent that the company
had no more intention of automatically renewing his ICA. His services would be
engaged by the company only up to the substantial completion of the STAR
Project on March 31, 2000, just in time for the ICA's expiry. 9 cDSAEI
Threatened with impending unemployment, respondent, through his
lawyer, requested a negotiation conference and demanded that he be assigned
to the BBRI project. Nippon insisted that respondent's contract was for a fixed
term that had already expired, and refused to negotiate for the renewal of the
ICA. 10
As he was not able to generate a positive response from the
petitioners, respondent consequently initiated on June 1, 2000 Civil Case No. 000264 for specific performance and damages with the Regional Trial Court of Lipa
City. 11
For their part, petitioners, contending that the ICA had been perfected
in Japan and executed by and between Japanese nationals, moved to dismiss the
complaint for lack of jurisdiction. They asserted that the claim for improper pretermination of respondent's ICA could only be heard and ventilated in the proper
courts of Japan following the principles of lex loci celebrationis and lex
contractus. 12
In the meantime, on June 20, 2000, the DPWH approved Nippon's
request for the replacement of Kitamura by a certain Y. Kotake as project
manager of the BBRI Project.13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
Frank 14 that matters connected with the performance of contracts are

regulated by the law prevailing at the place of performance, 15 denied the

motion to dismiss. 16 The trial court subsequently denied petitioners' motion for
reconsideration, 17 prompting them to file with the appellate court, on August
14, 2000, their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP
No. 60205]. 18 On August 23, 2000, the CA resolved to dismiss the petition on
procedural grounds for lack of statement of material dates and for insufficient
verification and certification against forum shopping. 19 An Entry of Judgment
was later issued by the appellate court on September 20, 2000. 20
Aggrieved by this development, petitioners filed with the CA, on
September 19, 2000, still within the reglementary period, a second Petition
for Certiorari under Rule 65 already stating therein the material dates and
attaching thereto the proper verification and certification. This second petition,
which substantially raised the same issues as those in the first, was docketed as
CA-G.R. SP No. 60827. 21 DTESIA
Ruling on the merits of the second petition, the appellate court
rendered the assailed April 18, 2001 Decision 22 finding no grave abuse of
discretion in the trial court's denial of the motion to dismiss. The CA ruled,
among others, that the principle of lex loci celebrationis was not applicable to the
case, because nowhere in the pleadings was the validity of the written
agreement put in issue. The CA thus declared that the trial court was correct in
applying instead the principle of lex loci solutionis. 23
Petitioners' motion for reconsideration was subsequently denied by the
CA in the assailed July 25, 2001 Resolution. 24
Remaining steadfast in their stance despite the series of denials,
petitioners instituted the instant Petition for Review on Certiorari 25 imputing the
following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT
CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF
THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE
NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN
TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE
OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE
INTERNATIONAL LAWS. 26
The pivotal question that this Court is called upon to resolve is whether
the subject matter jurisdiction of Philippine courts in civil cases for specific
performance and damages involving contracts executed outside the country by
foreign nationals may be assailed on the principles of lex loci celebrationis, lex
contractus, the "state of the most significant relationship rule," or forum non
conveniens.
However, before ruling on this issue, we must first dispose of the
procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's decision in
CA-G.R. SP No. 60205 has already barred the filing of the second petition
docketed as CA-G.R. SP No. 60827 (fundamentally raising the same issues as
those in the first one) and the instant petition for review thereof. cDEICH
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on
account of the petition's defective certification of non-forum shopping, it was a
dismissal without prejudice. 27 The same holds true in the CA's dismissal of the

said case due to defects in the formal requirement of verification 28 and in the
other requirement in Rule 46 of the Rules of Court on the statement of the
material dates. 29 The dismissal being without prejudice, petitioners can re-file
the petition, or file a second petition attaching thereto the appropriate
verification and certification as they, in fact did and stating therein the
material dates, within the prescribed period 30 in Section 4, Rule 65 of the said
Rules. 31
The dismissal of a case without prejudice signifies the absence of a
decision on the merits and leaves the parties free to litigate the matter in a
subsequent action as though the dismissed action had not been commenced. In
other words, the termination of a case not on the merits does not bar another
action involving the same parties, on the same subject matter and theory. 32
Necessarily, because the said dismissal is without prejudice and has
no res judicata effect, and even if petitioners still indicated in the verification and
certification of the second certiorari petition that the first had already been
dismissed on procedural grounds, 33 petitioners are no longer required by the
Rules to indicate in their certification of non-forum shopping in the instant
petition for review of the second certiorari petition, the status of the aforesaid
first petition before the CA. In any case, an omission in the certificate of nonforum shopping about any event that will not constitute res judicata and litis
pendentia, as in the present case, is not a fatal defect. It will not warrant the
dismissal and nullification of the entire proceedings, considering that the evils
sought to be prevented by the said certificate are no longer present. 34
The Court also finds no merit in respondent's contention that petitioner
Hasegawa is only authorized to verify and certify, on behalf of Nippon,
the certiorari petition filed with the CA and not the instant petition. True, the
Authorization 35 dated September 4, 2000, which is attached to the
second certiorari petition and which is also attached to the instant petition for
review, is limited in scope its wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company only in the petition filed
with the appellate court, and that authority cannot extend to the instant petition
for review. 36 In a plethora of cases, however, this Court has liberally applied the
Rules or even suspended its application whenever a satisfactory explanation and
a subsequent fulfillment of the requirements have been made. 37Given that
petitioners herein sufficiently explained their misgivings on this point and
appended to their Reply 38 an updated Authorization 39 for Hasegawa to act on
behalf of the company in the instant petition, the Court finds the same as
sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the
defect in the verification and certification. As respondent pointed out, and to
which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in
this case. The aforesaid September 4, 2000 Authorization and even the
subsequent August 17, 2001 Authorization were issued only by Nippon's
president and chief executive officer, not by the company's board of directors. In
not a few cases, we have ruled that corporate powers are exercised by the board
of directors; thus, no person, not even its officers, can bind the corporation, in
the absence of authority from the board. 40Considering that Hasegawa verified
and certified the petition only on his behalf and not on behalf of the other
petitioner, the petition has to be denied pursuant toLoquias v. Office of the
Ombudsman. 41 Substantial compliance will not suffice in a matter that
demands strict observance of the Rules. 42 While technical rules of procedure

are designed not to frustrate the ends of justice, nonetheless, they are intended
to effect the proper and orderly disposition of cases and effectively prevent the
clogging of court dockets. 43 CSTDIE
Further, the Court has observed that petitioners incorrectly filed a Rule
65 petition to question the trial court's denial of their motion to dismiss. It is a
well-established rule that an order denying a motion to dismiss is interlocutory,
and
cannot
be
the
subject
of
the
extraordinary
petition
for certiorari or mandamus. The appropriate recourse is to file an answer and to
interpose as defenses the objections raised in the motion, to proceed to trial,
and, in case of an adverse decision, to elevate the entire case by appeal in due
course. 44 While there are recognized exceptions to this rule, 45 petitioners'
case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners
question its jurisdiction to hear and resolve the civil case for specific
performance and damages filed by the respondent. The ICA subject of the
litigation was entered into and perfected in Tokyo, Japan, by Japanese nationals,
and written wholly in the Japanese language. Thus, petitioners posit that local
courts have no substantial relationship to the parties 46 following the [state of
the] most significant relationship rule in Private International Law. 47
The Court notes that petitioners adopted an additional but different
theory when they elevated the case to the appellate court. In the Motion to
Dismiss 48 filed with the trial court, petitioners never contended that the RTC is
an inconvenient forum. They merely argued that the applicable law which will
determine the validity or invalidity of respondent's claim is that of Japan,
following the principles of lex loci celebrationis and lex contractus. 49 While not
abandoning this stance in their petition before the appellate court, petitioners
on certiorari significantly invoked the defense of forum non conveniens. 50 On
petition for review before this Court, petitioners dropped their other arguments,
maintained the forum non conveniens defense, and introduced their new
argument that the applicable principle is the [state of the] most significant
relationship rule. 51
Be that as it may, this Court is not inclined to deny this petition merely
on the basis of the change in theory, as explained in Philippine Ports Authority v.
City of Iloilo. 52We only pointed out petitioners' inconstancy in their arguments
to emphasize their incorrect assertion of conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three
consecutive phases are involved: jurisdiction, choice of law, and recognition and
enforcement of judgments. Corresponding to these phases are the following
questions: (1) Where can or should litigation be initiated? (2) Which law will the
court apply? and (3) Where can the resulting judgment be enforced? 53 HDTISa
Analytically, jurisdiction and choice of law are two distinct
concepts. 54 Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question whether the
application of a substantive law which will determine the merits of the case is fair
to both parties. The power to exercise jurisdiction does not automatically give a
state constitutional authority to apply forum law. While jurisdiction and the
choice of the lex fori will often coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts" for the other. 55 The
question of whether the law of a state can be applied to a transaction is different

from the question of whether the courts of that state have jurisdiction to enter a
judgment. 56
In this case, only the first phase is at issue jurisdiction. Jurisdiction,
however, has various aspects. For a court to validly exercise its power to
adjudicate a controversy, it must have jurisdiction over the plaintiff or the
petitioner, over the defendant or the respondent, over the subject matter, over
the issues of the case and, in cases involving property, over the res or the thing
which is the subject of the litigation. 57 In assailing the trial court's jurisdiction
herein, petitioners are actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred
by the sovereign authority which establishes and organizes the court. It is given
only by law and in the manner prescribed by law. 58 It is further determined by
the allegations of the complaint irrespective of whether the plaintiff is entitled to
all or some of the claims asserted therein. 59 To succeed in its motion for the
dismissal of an action for lack of jurisdiction over the subject matter of the
claim, 60 the movant must show that the court or tribunal cannot act on the
matter submitted to it because no law grants it the power to adjudicate the
claims. 61
In the instant case, petitioners, in their motion to dismiss, do not claim
that the trial court is not properly vested by law with jurisdiction to hear the
subject controversy for, indeed, Civil Case No. 00-0264 for specific performance
and damages is one not capable of pecuniary estimation and is properly
cognizable by the RTC of Lipa City.62 What they rather raise as grounds to
question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the "state of the most significant
relationship rule."
The Court finds the invocation of these grounds unsound. DCASIT
Lex loci celebrationis relates to the "law of the place of the
ceremony" 63 or the law of the place where a contract is made. 64 The doctrine
of lex contractus or lex loci contractus means the "law of the place where a
contract is executed or to be performed." 65 It controls the nature, construction,
and validity of the contract 66 and it may pertain to the law voluntarily agreed
upon by the parties or the law intended by them either expressly or
implicitly. 67 Under the "state of the most significant relationship rule," to
ascertain what state law to apply to a dispute, the court should determine which
state has the most substantial connection to the occurrence and the parties. In a
case involving a contract, the court should consider where the contract was
made, was negotiated, was to be performed, and the domicile, place of business,
or place of incorporation of the parties. 68 This rule takes into account several
contacts and evaluates them according to their relative importance with respect
to the particular issue to be resolved. 69
Since these three principles in conflict of laws make reference to the
law applicable to a dispute, they are rules proper for the second phase, the
choice of law. 70 They determine which state's law is to be applied in resolving
the substantive issues of a conflicts problem. 71 Necessarily, as the only issue in
this case is that of jurisdiction, choice-of-law rules are not only inapplicable but
also not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is
exposed by the fact that they have not yet pointed out any conflict between the
laws of Japan and ours. Before determining which law should apply, first there
should exist a conflict of laws situation requiring the application of the conflict of

laws rules. 72 Also, when the law of a foreign country is invoked to provide the
proper rules for the solution of a case, the existence of such law must be pleaded
and proved. 73
It should be noted that when a conflicts case, one involving a foreign
element, is brought before a court or administrative agency, there are three
alternatives open to the latter in disposing of it: (1) dismiss the case, either
because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2)
assume jurisdiction over the case and apply the internal law of the forum; or (3)
assume jurisdiction over the case and take into account or apply the law of some
other State or States. 74 The court's power to hear cases and controversies is
derived from the Constitution and the laws. While it may choose to recognize
laws of foreign nations, the court is not limited by foreign sovereign law short of
treaties or other formal agreements, even in matters regarding rights provided
by foreign sovereigns. 75 EASIHa
Neither can the other ground raised, forum non conveniens, 76 be
used to deprive the trial court of its jurisdiction herein. First, it is not a proper
basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court
does not include it as a ground. 77 Second, whether a suit should be entertained
or dismissed on the basis of the said doctrine depends largely upon the facts of
the particular case and is addressed to the sound discretion of the trial
court. 78 In this case, the RTC decided to assume jurisdiction. Third, the
propriety of dismissing a case based on this principle requires a factual
determination; hence, this conflicts principle is more properly considered a
matter of defense. 79
Accordingly, since the RTC is vested by law with the power to entertain
and hear the civil case filed by respondent and the grounds raised by petitioners
to assail that jurisdiction are inappropriate, the trial and appellate courts
correctly denied the petitioners' motion to dismiss.
WHEREFORE, premises considered, the petition for review
on certiorari is DENIED.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Chico-Nazario and Reyes, JJ., concur
||| (Hasegawa v. Kitamura, G.R. No. 149177, [November 23, 2007], 563
PHIL 572-590)

FIRST DIVISION
[G.R. No. 136804. February 19, 2003.]
MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL
BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent.
Sycip Salazar Hernandez and Gatmaitan for petitioners.
P.C. Nolasco & Associates for respondent.
SYNOPSIS
Respondent filed a complaint for damages against petitioner bank for
illegally withholding taxes charged against interest on his checking account,
returning a check due to signature verification problems, and unauthorized
conversion of his account. In answer thereto, petitioner alleged that the issue
should be limited to actual damages as respondent's account is governed by the
New York law. In support thereof, petitioner presented the authenticated affidavit
of New York Attorney Alyssa Walden. Thus, petitioner filed a motion for partial
summary judgment. ATICcS
Petitioner's motion for summary judgment is not proper as it does not
demonstrate that respondent's claims are sham, fictitious, or contrived. There
can be no summary judgment where material allegations of the pleadings are in
dispute and can be resolved only by trial on the merits. On the alleged foreign
law applicable, the Walden affidavit and attached US court decisions therein are
not proper substantiation thereof for failure to comply with Sec. 24, Rule 132 on
proof of foreign laws, records, and decisions.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMARY JUDGMENT; WHEN
PROPER. A court may grant a summary judgment to settle expeditiously a
case if, on motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved, except
the amount of damages. In such event, the moving party is entitled to a
judgment as a matter of law. In a motion for summary judgment, the crucial
question is: are the issues raised in the pleadings genuine, sham or fictitious, as
shown by affidavits, depositions or admissions accompanying the motion? A
genuine issue means an issue of fact which calls for the presentation of evidence
as distinguished from an issue which is fictitious or contrived so as not to
constitute a genuine issue for trial. There can be no summary judgment where
questions of fact are in issue or where material allegations of the pleadings are in
dispute.
2. ID.; EVIDENCE; PROOF OF OFFICIAL RECORDS; ON FOREIGN LAWS.
The resolution of whether a foreign law allows only the recovery of actual
damages is a question of fact as far as the trial court is concerned since foreign
laws do not prove themselves in our courts. Foreign laws are not a matter of
judicial notice. Like any other fact, they must be alleged and proven. Certainly,
the conflicting allegations as to whether New York law or Philippine law applies to
Guerrero's claims present a clear dispute on material allegations which can be
resolved only by a trial on the merits. Under Section 24 of Rule 132, the record of
public documents of a sovereign authority or tribunal may be proved by (1)
an official publication thereof or (2) a copy attested by the officer having the
legal custody thereof. Such official publication or copy must be accompanied, if
the record is not kept in the Philippines, with a certificate that the attesting
officer has the legal custody thereof. The certificate may be issued by any of the
authorized Philippine embassy or consular officials stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office.

The attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under the
official seal of the attesting officer.
3. ID.; ID.; ID.; ID.; EXCEPTIONS; NOT APPLICABLE IN CASE AT BAR.
Certain exceptions to Rule 24 of Rule 132 were recognized in Asiavest Limited v.
Court of Appeals. The Bank, however, cannot rely thereon to support its cause.
These cases involved attorneys testifying in open court during the trial in the
Philippines and quoting the particular foreign laws sought to be established. On
the other hand, the Walden affidavit was taken abroad ex parte and the affiant
never testified in open court. The Walden affidavit cannot be considered as proof
of New York law on damages not only because it is self-serving but also because
it does not state the specific New York law on damages.
4. ID.; CIVIL PROCEDURE; PLEADINGS; OPPOSING AFFIDAVIT; NOT
MANDATORY. The Bank makes much of Guerrero's failure to submit an
opposing affidavit to the Walden affidavit. However, the pertinent provision of
Section 3, Rule 35 of the old Rules of Court did not make the submission of an
opposing affidavit mandatory. Thus: the adverse party prior to the day of
hearing may serve opposing affidavits. It is axiomatic that the term "may" as
used in remedial law, is only permissive and not mandatory. Guerrero cannot be
said to have admitted the averments in the Bank's motion for partial summary
judgment and the Walden affidavit just because he failed to file an opposing
affidavit. Guerrero opposed the motion for partial summary judgment, although
he did not present an opposing affidavit. Guerrero may not have presented an
opposing affidavit, as there was no need for one, because the Walden affidavit
did not establish what the Bank intended to prove. Certainly, Guerrero did not
admit, expressly or impliedly, the veracity of the statements in the Walden
affidavit. The Bank still had the burden of proving New York law and
jurisprudence even if Guerrero did not present an opposing affidavit. As the party
moving for summary judgment, the Bank has the burden of clearly
demonstrating the absence of any genuine issue of fact and that any doubt as to
the existence of such issue is resolved against the movant. DaIACS
DECISION
CARPIO, J p:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set
aside the Court of Appeals 1 Decision of August 24, 1998 and Resolution of
December 14, 1998 in CA-G.R. SP No. 42310 2 affirming the trial court's denial of
petitioners' motion for partial summary judgment.
The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero ("Guerrero" for
brevity) filed a complaint for damages against petitioner Manufacturers Hanover
Trust Co. and/or Chemical Bank ("the Bank" for brevity) with the Regional Trial
Court of Manila ("RTC" for brevity). Guerrero sought payment of damages
allegedly for (1) illegally withheld taxes charged against interests on his checking
account with the Bank; (2) a returned check worth US$18,000.00 due to
signature verification problems; and (3) unauthorized conversion of his account.
Guerrero amended his complaint on April 18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia,
that by stipulation Guerrero's account is governed by New York law and this law
does not permit any of Guerrero's claims except actual damages. Subsequently,
the Bank filed a Motion for Partial Summary Judgment seeking the dismissal of

Guerrero's claims for consequential, nominal, temperate, moral and exemplary

damages as well as attorney's fees on the same ground alleged in its Answer.
The Bank contended that the trial should be limited to the issue of actual
damages. Guerrero opposed the motion.
The affidavit of Alyssa Walden, a New York attorney, supported the
Bank's Motion for Partial Summary Judgment. Alyssa Walden's affidavit ("Walden
affidavit" for brevity) stated that Guerrero's New York bank account stipulated
that the governing law is New York law and that this law bars all of Guerrero's
claims except actual damages. The Philippine Consular Office in New York
authenticated the Walden affidavit. STHAaD
The RTC denied the Bank's Motion for Partial Summary Judgment and
its motion for reconsideration on March 6, 1996 and July 17, 1996, respectively.
The Bank filed a petition for certiorari and prohibition with the Court of Appeals
assailing the RTC Orders. In its Decision dated August 24, 1998, the Court of
Appeals dismissed the petition. On December 14, 1998, the Court of Appeals
denied the Bank's motion for reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for
partial summary judgment. The Court of Appeals ruled that the Walden affidavit
does not serve as proof of the New York law and jurisprudence relied on by the
Bank to support its motion. The Court of Appeals considered the New York law
and jurisprudence as public documents defined in Section 19, Rule 132 of the
Rules on Evidence, as follows:
"SEC. 19. Classes of Documents. For the purpose of their
presentation in evidence, documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and public officers, whether of
the Philippines, or of a foreign country;
xxx xxx xxx."
The Court of Appeals opined that the following procedure outlined in
Section 24, Rule 132 should be followed in proving foreign law:
"SEC. 24. Proof of official record. The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any purpose, may
be evidenced by an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that
such officer has the custody. If the office in which the record is kept is in a foreign
country, the certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office."
The Court of Appeals likewise rejected the Bank's argument that
Section 2, Rule 34 of the old Rules of Court allows the Bank to move with the
supporting Walden affidavit for partial summary judgment in its favor. The Court
of Appeals clarified that the Walden affidavit is not the supporting affidavit
referred to in Section 2, Rule 34 that would prove the lack of genuine issue
between the parties. The Court of Appeals concluded that even if the Walden
affidavit is used for purposes of summary judgment, the Bank must still comply
with the procedure prescribed by the Rules to prove the foreign law.

The Issues
The Bank contends that the Court of Appeals committed reversible
error in
". . . HOLDING THAT [THE BANK'S] PROOF OF FACTS TO SUPPORT ITS
MOTION FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;
. . . HOLDING THAT [THE BANK'S] AFFIDAVIT, WHICH PROVES FOREIGN
LAW AS A FACT, IS "HEARSAY" AND THEREBY 'CANNOT SERVE AS PROOF OF THE
NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR SUMMARY
JUDGMENT . . . .'" 3
First, the Bank argues that in moving for partial summary judgment, it
was entitled to use the Walden affidavit to prove that the stipulated foreign law
bars the claims for consequential, moral, temperate, nominal and exemplary
damages and attorney's fees. Consequently, outright dismissal by summary
judgment of these claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the
requirements of Rule 35 on summary judgments and those of a trial on the
merits in considering the Walden affidavit as "hearsay." The Bank points out that
the Walden affidavit is not hearsay since Rule 35 expressly permits the use of
affidavits.
Lastly, the Bank argues that since Guerrero did not submit any
opposing affidavit to refute the facts contained in the Walden affidavit, he failed
to show the need for a trial on his claims for damages other than actual.
The Court's Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to
Section 2, Rule 34 of the old Rules of Court which reads:
"Section 2. Summary judgment for defending party. A party against
whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting affidavits for a summary
judgment in his favor as to all or any part thereof."
A court may grant a summary judgment to settle expeditiously a case
if, on motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved, except
the amount of damages. In such event, the moving party is entitled to a
judgment as a matter of law. 4
In a motion for summary judgment, the crucial question is: are the
issues raised in the pleadings genuine, sham or fictitious, as shown by
affidavits, depositions or admissions accompanying the motion? 5
A genuine issue means an issue of fact which calls for the presentation
of evidence as distinguished from an issue which is fictitious or contrived so as
not to constitute a genuine issue for trial. 6
A perusal of the parties' respective pleadings would show that there
are genuine issues of fact that necessitate formal trial. Guerrero's complaint
before the RTC contains a statement of the ultimate facts on which he relies for
his claim for damages. He is seeking damages for what he asserts as "illegally
withheld taxes charged against interests on his checking account with the Bank,
a returned check worth US$18,000.00 due to signature verification problems, and
unauthorized conversion of his account." In its Answer, the Bank set up its
defense that the agreed foreign law to govern their contractual relation bars the
recovery of damages other than actual. Apparently, facts are asserted in

Guerrero's complaint while specific denials and affirmative defenses are set out
in the Bank's answer. aHSTID
True, the court can determine whether there are genuine issues in a
case based merely on the affidavits or counter-affidavits submitted by the parties
to the court. However, as correctly ruled by the Court of Appeals, the Bank's
motion for partial summary judgment as supported by the Walden affidavit does
not demonstrate that Guerrero's claims are sham, fictitious or contrived. On the
contrary, the Walden affidavit shows that the facts and material allegations as
pleaded by the parties are disputed and there are substantial triable issues
necessitating a formal trial.
There can be no summary judgment where questions of fact are in
issue or where material allegations of the pleadings are in dispute. 7 The
resolution of whether a foreign law allows only the recovery of actual damages is
a question of fact as far as the trial court is concerned since foreign laws do not
prove themselves in our courts. 8 Foreign laws are not a matter of judicial
notice. 9 Like any other fact, they must be alleged and proven. Certainly, the
conflicting allegations as to whether New York law or Philippine law applies to
Guerrero's claims present a clear dispute on material allegations which can be
resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a
sovereign authority or tribunal may be proved by (1) an official
publication thereof or (2) a copy attested by the officer having the legal
custody thereof. Such official publication or copy must be accompanied, if the
record is not kept in the Philippines, with a certificate that the attesting officer
has the legal custody thereof. The certificate may be issued by any of the
authorized Philippine embassy or consular officials stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office.
The attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under the
official seal of the attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v.
Court of Appeals 10 which held that:
"xxx xxx xxx:
Although it is desirable that foreign law be proved in accordance with
the above rule, however, the Supreme Court held in the case of Willamette Iron
and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of the
Revised Rules of Court) does not exclude the presentation of other competent
evidence to prove the existence of a foreign law. In that case, the Supreme Court
considered the testimony under oath of an attorney-at-law of San Francisco,
California, who quoted verbatim a section of California Civil Code and who stated
that the same was in force at the time the obligations were contracted, as
sufficient evidence to establish the existence of said law. Accordingly, in line with
this view, the Supreme Court in the Collector of Internal Revenue v. Fisher, et al.,
upheld the Tax Court in considering the pertinent law of California as proved by
the respondents' witness. In that case, the counsel for respondent "testified that
as an active member of the California Bar since 1951, he is familiar with the
revenue and taxation laws of the State of California. When asked by the lower
court to state the pertinent California law as regards exemption of intangible
personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the
California Internal and Revenue Code as published in Derring's California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full

quotation of the cited section was offered in evidence by respondents." Likewise,

in several naturalization cases, it was held by the Court that evidence of the law
of a foreign country on reciprocity regarding the acquisition of citizenship,
although not meeting the prescribed rule of practice, may be allowed and used
as basis for favorable action, if, in the light of all the circumstances, the Court is
"satisfied of the authenticity of the written proof offered." Thus, in a number of
decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law." (Italics
supplied)
The Bank, however, cannot rely on Willamete Iron and Steel Works
v. Muzzal or Collector of Internal Revenue v. Fisher to support its cause.
These cases involved attorneys testifying in open court during the trial in the
Philippines and quoting the particular foreign laws sought to be established. On
the other hand, the Walden affidavit was taken abroad ex parte and the affiant
never testified in open court. The Walden affidavit cannot be considered as proof
of New York law on damages not only because it is self-serving but also because
it does not state the specific New York law on damages. We reproduce portions of
the Walden affidavit as follows:
"3. In New York, "[n]ominal damages are damages in name only, trivial
sums such as six cents or $1. Such damages are awarded both in tort and
contract cases when the plaintiff establishes a cause of action against the
defendant, but is unable to prove" actual damages. Dobbs, Law of Remedies,
3.32 at 294 (1993). Since Guerrero is claiming for actual damages, he cannot ask
for nominal damages.
4. There is no concept of temperate damages in New York law. I have
reviewed Dobbs, a well-respected treatise, which does not use the phrase
"temperate damages" in its index. I have also done a computerized search for
the phrase in all published New York cases, and have found no cases that use it. I
have never heard the phrase used in American law.
5. The Uniform Commercial Code ("UCC") governs many aspects of a
Bank's relationship with its depositors. In this case, it governs Guerrero's claim
arising out of the non-payment of the $18,000 check. Guerrero claims that this
was a wrongful dishonor. However, the UCC states that "justifiable refusal to pay
or accept" as opposed to dishonor, occurs when a bank refuses to pay a check
for reasons such as a missing indorsement, a missing or illegible signature or a
forgery, 3-510, Official Comment 2. . . . to the Complaint, MHT returned the
check because it had no signature card on . . . and could not verify Guerrero's
signature. In my opinion, consistent with the UCC, that is a legitimate and
justifiable reason not to pay.
6. Consequential damages are not available in the ordinary case of a
justifiable refusal to pay. UCC 1-106 provides that "neither consequential or
special or punitive damages may be had except as specifically provided in the
Act or by other rule of law." UCC 4-103 further provides that consequential
damages can be recovered only where there is bad faith. This is more restrictive
than the New York common law, which may allow consequential damages in a
breach of contract case (as does the UCC where there is a wrongful dishonor).
7. Under New York law, requests for lost profits, damage to reputation
and mental distress are considered consequential damages. Kenford Co., Inc. v.
Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif
Construction Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d 868,

869-70 (4th Dep't 1975) damage to reputation); Dobbs, Law of Remedies

12.4(1) at 63 (emotional distress).
8. As a matter of New York law, a claim for emotional distress cannot
be recovered for a breach of contract. Geler v. National Westminster Bank U.S.A.,
770 F. Supp. 210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes, Ltd., 150
A.D.2d 860, 540 N.Y.S.2d 387, 390 (3d Dep't 1989) Martin v. Donald Park Acres,
54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dep't 1976). Damage to reputation is
also not recoverable for a contract. Motif Construction Corp. v. Buffalo Savings
Bank, 374 N.Y.S.2d at 869-70.
9. In cases where the issue is the breach of a contract to purchase
stock, New York courts will not take into consideration the performance of the
stock after the breach. Rather, damages will be based on the value of the stock
at the time of the breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559
(4th Dep't 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023
(1983). TADaCH
10. Under New York law, a party can only get consequential damages if
they were the type that would naturally arise from the breach and if they were
"brought within the contemplation of parties as the probable result of the breach
at the time of or prior to contracting." Kenford Co., Inc. v. Country of Erie, 73
N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo, 223 N.Y.
32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys' fees
unless they are provided by contract or statute. E.g., Geler v. National
Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing
Mach, Inc. v. F.M. Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dep't
1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281
(1st Dep't 1991). There is no statute that permits attorney's fees in a case of this
type.
12. Exemplary, or punitive damages are not allowed for a breach of
contract, even where the plaintiff claims the defendant acted with malice. Geler
v. National Westminster Bank, 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Catalogue
Service of . . . chester 11 v. Insurance Co. of North America, 74 A.D.2d 837, 838,
425 N.Y.S.2d 635, 637 (2d Dep't 1980); Senior v. Manufacturers Hanover Trust
Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dep't 1985).
13. Exemplary or punitive damages may be recovered only where it is
alleged and proven that the wrong supposedly committed by defendant amounts
to a fraud aimed at the public generally and involves a high moral
culpability. Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488
(1961).
14. Furthermore, it has been consistently held under New York law that
exemplary damages are not available for a mere breach of contract for in such a
case, as a matter of law, only a private wrong and not a public right is
involved. Thaler v. The North Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66
(1st Dep't 1978)." 12
The Walden affidavit states conclusions from the affiant's personal
interpretation and opinion of the facts of the case vis a vis the alleged laws and
jurisprudence without citing any law in particular. The citations in the Walden
affidavit of various U.S. court decisions do not constitute proof of the official
records or decisions of the U.S. courts. While the Bank attached copies of some
of the U.S. court decisions cited in the Walden affidavit, these copies do not

comply with Section 24 of Rule 132 on proof of official records or decisions of

foreign courts.
The Bank's intention in presenting the Walden affidavit is to prove New
York law and jurisprudence. However, because of the failure to comply with
Section 24 of Rule 132 on how to prove a foreign law and decisions of foreign
courts, the Walden affidavit did not prove the current state of New York law and
jurisprudence. Thus, the Bank has only alleged, but has not proved, what New
York law and jurisprudence are on the matters at issue.
Next, the Bank makes much of Guerrero's failure to submit an opposing
affidavit to the Walden affidavit. However, the pertinent provision of Section 3,
Rule 35 of the old Rules of Court did not make the submission of an opposing
affidavit mandatory, thus:
"SEC. 3. Motion and proceedings thereon. The motion shall be
served at least ten (10) days before the time specified for the hearing. The
adverse party prior to the day of hearing may serve opposing affidavits. After the
hearing, the judgment sought shall be rendered forthwith if the pleadings,
depositions and admissions on file, together with the affidavits, show that, except
as to the amount of damages, there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law." (Italics
supplied)
It is axiomatic that the term "may" as used in remedial law, is only
permissive and not mandatory. 13
Guerrero cannot be said to have admitted the averments in the Bank's
motion for partial summary judgment and the Walden affidavit just because he
failed to file an opposing affidavit. Guerrero opposed the motion for partial
summary judgment, although he did not present an opposing affidavit. Guerrero
may not have presented an opposing affidavit, as there was no need for one,
because the Walden affidavit did not establish what the Bank intended to prove.
Certainly, Guerrero did not admit, expressly or impliedly, the veracity of the
statements in the Walden affidavit. The Bank still had the burden of proving New
York law and jurisprudence even if Guerrero did not present an opposing affidavit.
As the party moving for summary judgment, the Bank has the burden of clearly
demonstrating the absence of any genuine issue of fact and that any doubt as to
the existence of such issue is resolved against the movant. 14
Moreover, it would have been redundant and pointless for Guerrero to
submit an opposing affidavit considering that what the Bank seeks to be opposed
is the very subject matter of the complaint. Guerrero need not file an opposing
affidavit to the Walden affidavit because his complaint itself controverts the
matters set forth in the Bank's motion and the Walden affidavit. A party should
not be made to deny matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a
quo correctly denied the Bank's motion for partial summary judgment. There is a
need to determine by presentation of evidence in a regular trial if the Bank is
guilty of any wrongdoing and if it is liable for damages under the applicable
laws. DTEScI
This case has been delayed long enough by the Bank's resort to a
motion for partial summary judgment. Ironically, the Bank has successfully
defeated the very purpose for which summary judgments were devised in our
rules, which is, to aid parties in avoiding the expense and loss of time involved in
a trial.

WHEREFORE, the petition is DENIED for lack of merit. The Decision

dated August 24, 1998 and the Resolution dated December 14, 1998 of the Court
of Appeals in CA-G.R. SP No. 42310 is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., took no part.
||| (Manufacturers Hanover Trust Co. v. Guerrero, G.R. No. 136804,
[February 19, 2003], 445 PHIL 770-783)

SECOND DIVISION
[G.R. No. 183622. February 8, 2012.]
MEROPE ENRIQUEZ VDA. DE CATALAN, petitioner, vs. LOUELLA A.
CATALAN-LEE, respondent.
RESOLUTION
SERENO, J p:
Before us is a Petition for Review assailing the Court of Appeals (CA)
Decision 1 and Resolution 2 regarding the issuance of letters of administration of
the intestate estate of Orlando B. Catalan.
The facts are as follows:
Orlando B. Catalan was a naturalized American citizen. After allegedly
obtaining a divorce in the United States from his first wife, Felicitas Amor, he
contracted a second marriage with petitioner herein.
On 18 November 2004, Orlando died intestate in the Philippines.
Thereafter, on 25 February 2005, petitioner filed with the Regional Trial
Court (RTC) of Burgos, Pangasinan a Petition for the issuance of letters of
administration for her appointment as administratrix of the intestate estate of
Orlando. The case was docketed as Special Proceedings (Spec. Proc.) No. 228.
On 3 March 2005, while Spec. Proc. No. 228 was pending, respondent
Louella A. Catalan-Lee, one of the children of Orlando from his first marriage,
filed a similar petition with the RTC docketed as Spec. Proc. No. 232.
The two cases were subsequently consolidated.
Petitioner prayed for the dismissal of Spec. Proc. No. 232 on the ground
of litis pendentia, considering that Spec. Proc. No. 228 covering the same estate
was already pending. HcaDIA
On the other hand, respondent alleged that petitioner was not
considered an interested person qualified to file a petition for the issuance of
letters of administration of the estate of Orlando. In support of her contention,
respondent alleged that a criminal case for bigamy was filed against petitioner
before Branch 54 of the RTC of Alaminos, Pangasinan, and docketed as Crim.
Case No. 2699-A.
Apparently, Felicitas Amor filed a Complaint for bigamy, alleging that
petitioner contracted a second marriage to Orlando despite having been married
to one Eusebio Bristol on 12 December 1959.
On 6 August 1998, the RTC had acquitted petitioner of bigamy. 3 The
trial court ruled that since the deceased was a divorced American citizen, and
since that divorce was not recognized under Philippine jurisdiction, the marriage
between him and petitioner was not valid.
Furthermore, it took note of the action for declaration of nullity then
pending action with the trial court in Dagupan City filed by Felicitas Amor against
the deceased and petitioner. It considered the pending action to be a prejudicial
question in determining the guilt of petitioner for the crime of bigamy.
Finally, the trial court found that, in the first place, petitioner had never
been married to Eusebio Bristol.
On 26 June 2006, Branch 70 of the RTC of Burgos, Pangasinan
dismissed the Petition for the issuance of letters of administration filed by
petitioner and granted that of private respondent. Contrary to its findings in
Crim. Case No. 2699-A, the RTC held that the marriage between petitioner and
Eusebio Bristol was valid and subsisting when she married Orlando. Without
expounding, it reasoned further that her acquittal in the previous bigamy case
was fatal to her cause. Thus, the trial court held that petitioner was not an

interested party who may file a petition for the issuance of letters of
administration. 4
After the subsequent denial of her Motion for Reconsideration,
petitioner elevated the matter to the Court of Appeals (CA) via her Petition
for Certiorari, alleging grave abuse of discretion on the part of the RTC in
dismissing her Petition for the issuance of letters of administration. HCEcaT
Petitioner reiterated before the CA that the Petition filed by respondent
should have been dismissed on the ground of litis pendentia. She also insisted
that, while a petition for letters of administration may have been filed by an
"uninterested person," the defect was cured by the appearance of a real party-ininterest. Thus, she insisted that, to determine who has a better right to
administer the decedent's properties, the RTC should have first required the
parties to present their evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed Decision. First, it
held that petitioner undertook the wrong remedy. She should have instead filed a
petition for review rather than a petition for certiorari. Nevertheless, since the
Petition for Certiorari was filed within the fifteen-day reglementary period for
filing a petition for review under Sec. 4 of Rule 43, the CA allowed the Petition
and continued to decide on the merits of the case. Thus, it ruled in this wise:
As to the issue of litis pendentia, we find it not applicable in the case.
For litis pendentia to be a ground for the dismissal of an action, there must be:
(a) identity of the parties or at least such as to represent the same interest in
both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same acts, and (c) the identity in the two cases should be such
that the judgment which may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other. A petition for letters of
administration is a special proceeding. A special proceeding is an application or
proceeding to establish the status or right of a party, or a particular fact. And, in
contrast to an ordinary civil action, a special proceeding involves no defendant or
respondent. The only party in this kind of proceeding is the petitioner of the
applicant. Considering its nature, a subsequent petition for letters of
administration can hardly be barred by a similar pending petition involving the
estate of the same decedent unless both petitions are filed by the same person.
In the case at bar, the petitioner was not a party to the petition filed by the
private respondent, in the same manner that the latter was not made a party to
the petition filed by the former. The first element of litis pendentia is wanting.
The contention of the petitioner must perforce fail.
Moreover, to yield to the contention of the petitioner would render
nugatory the provision of the Rules requiring a petitioner for letters of
administration to be an "interested party," inasmuch as any person, for that
matter, regardless of whether he has valid interest in the estate sought to be
administered, could be appointed as administrator for as long as he files his
petition ahead of any other person, in derogation of the rights of those
specifically mentioned in the order of preference in the appointment of
administrator under Rule 78, Section 6 of the Revised Rules of Court, which
provides:
xxx xxx xxx
The petitioner, armed with a marriage certificate, filed her petition for
letters of administration. As a spouse, the petitioner would have been preferred
to administer the estate of Orlando B. Catalan. However, a marriage certificate,
like any other public document, is only prima facie evidence of the facts stated

therein. The fact that the petitioner had been charged with bigamy and
was acquitted has not been disputed by the petitioner. Bigamy is an
illegal marriage committed by contracting a second or subsequent marriage
before the first marriage has been dissolved or before the absent spouse has
been declared presumptively dead by a judgment rendered in a proper
proceedings. The deduction of the trial court that the acquittal of the
petitioner in the said case negates the validity of her subsequent
marriage with Orlando B. Catalan has not been disproved by her. There
was not even an attempt from the petitioner to deny the findings of the
trial court. There is therefore no basis for us to make a contrary finding. Thus,
not being an interested party and a stranger to the estate of Orlando B. Catalan,
the dismissal of her petition for letters of administration by the trial court is in
place.
xxx xxx xxx
WHEREFORE, premises considered, the petition is DISMISSED for
lack of merit. No pronouncement as to costs. AacDHE
SO ORDERED. 5 (Emphasis supplied)
Petitioner moved for a reconsideration of this Decision. 6 She alleged
that the reasoning of the CA was illogical in stating, on the one hand, that she
was acquitted of bigamy, while, on the other hand, still holding that her marriage
with Orlando was invalid. She insists that with her acquittal of the crime of
bigamy, the marriage enjoys the presumption of validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special proceedings failed to
appreciate the finding of the RTC in Crim. Case No. 2699-A that petitioner was
never married to Eusebio Bristol. Thus, the trial court concluded that, because
petitioner was acquitted of bigamy, it follows that the first marriage with Bristol
still existed and was valid. By failing to take note of the findings of fact on the
nonexistence of the marriage between petitioner and Bristol, both the RTC and
CA held that petitioner was not an interested party in the estate of Orlando.
Second, it is imperative to note that at the time the bigamy case in
Crim. Case No. 2699-A was dismissed, we had already ruled that under the
principles of comity, our jurisdiction recognizes a valid divorce obtained by a
spouse of foreign nationality. This doctrine was established as early as 1985
in Van Dorn v. Romillo, Jr. 7 wherein we said:
It is true that owing to the nationality principle embodied in Article 15
of the Civil Code, only Philippine nationals are covered by the policy against
absolute divorces[,] the same being considered contrary to our concept of public
policy and morality. However, aliens may obtain divorces abroad, which
may be recognized in the Philippines, provided they are valid according
to their national law. In this case, the divorce in Nevada released
private respondent from the marriage from the standards of American
law, under which divorce dissolves the marriage. . . .
We reiterated this principle in Llorente v. Court of Appeals, 8 to wit:
In Van Dorn v. Romillo, Jr. we held that owing to the nationality
principle embodied in Article 15 of the Civil Code, only Philippine nationals are
covered by the policy against absolute divorces, the same being considered
contrary to our concept of public policy and morality. In the same case, the
Court ruled that aliens may obtain divorces abroad, provided they are
valid according to their national law. CaTcSA

Citing this landmark case, the Court held in Quita v. Court of

Appeals, that once proven that respondent was no longer a Filipino
citizen when he obtained the divorce from petitioner, the ruling in Van
Dorn would become applicable and petitioner could "very well lose her
right to inherit" from him.
In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the
respondent in his country, the Federal Republic of Germany. There, we stated
that divorce and its legal effects may be recognized in the Philippines
insofar as respondent is concerned in view of the nationality principle in
our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals
must be reversed. We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and recognized in this
jurisdiction as a matter of comity. . . .
Nonetheless, the fact of divorce must still first be proven as we have
enunciated in Garcia v. Recio, 9 to wit:
Respondent is getting ahead of himself. Before a foreign judgment is
given presumptive evidentiary value, the document must first be presented and
admitted in evidence. A divorce obtained abroad is proven by the divorce decree
itself. Indeed the best evidence of a judgment is the judgment itself. The
decree purports to be a written act or record of an act of an official body or
tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or
document may be proven as a public or official record of a foreign country by
either (1) an official publication or (2) a copy thereof attested by the officer
having legal custody of the document. If the record is not kept in the Philippines,
such copy must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by the seal of
his office.
The divorce decree between respondent and Editha Samson appears to
be an authentic one issued by an Australian family court. However, appearance
is not sufficient; compliance with the aforementioned rules on evidence
must be demonstrated. TCaADS
Fortunately for respondent's cause, when the divorce decree of May
18, 1989 was submitted in evidence, counsel for petitioner objected, not to its
admissibility, but only to the fact that it had not been registered in the Local Civil
Registry of Cabanatuan City. The trial court ruled that it was admissible, subject
to petitioner's qualification. Hence, it was admitted in evidence and accorded
weight by the judge. Indeed, petitioner's failure to object properly rendered the
divorce decree admissible as a written act of the Family Court of Sydney,
Australia.
Compliance with the quoted articles (11, 13 and 52) of the Family Code
is not necessary; respondent was no longer bound by Philippine personal laws
after he acquired Australian citizenship in 1992. Naturalization is the legal act of
adopting an alien and clothing him with the political and civil rights belonging to
a citizen. Naturalized citizens, freed from the protective cloak of their former
states, don the attires of their adoptive countries. By becoming an Australian,
respondent severed his allegiance to the Philippines and the vinculum juris that
had tied him to Philippine personal laws.
Burden of Proving Australian Law

Respondent contends that the burden to prove Australian divorce law

falls upon petitioner, because she is the party challenging the validity of a
foreign judgment. He contends that petitioner was satisfied with the original of
the divorce decree and was cognizant of the marital laws of Australia, because
she had lived and worked in that country for quite a long time. Besides, the
Australian divorce law is allegedly known by Philippine courts; thus, judges may
take judicial notice of foreign laws in the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the "party
who alleges the existence of a fact or thing necessary in the
prosecution or defense of an action." In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those
are denied by the answer; and defendants have the burden of proving
the material allegations in their answer when they introduce new
matters. Since the divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law validating it falls
squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take
judicial notice of foreign laws. Like any other facts, they must be
alleged and proved. Australian marital laws are not among those
matters that judges are supposed to know by reason of their judicial
function. The power of judicial notice must be exercised with caution,
and every reasonable doubt upon the subject should be resolved in the
negative. (Emphasis supplied) aTIEcA
It appears that the trial court no longer required petitioner to prove the
validity of Orlando's divorce under the laws of the United States and the
marriage between petitioner and the deceased. Thus, there is a need to remand
the proceedings to the trial court for further reception of evidence to establish
the fact of divorce.
Should petitioner prove the validity of the divorce and the subsequent
marriage, she has the preferential right to be issued the letters of administration
over the estate. Otherwise, letters of administration may be issued to
respondent, who is undisputedly the daughter or next of kin of the deceased, in
accordance with Sec. 6 of Rule 78 of the Revised Rules of Court.
This is consistent with our ruling in San Luis v. San Luis, 10 in which we
said:
Applying the above doctrine in the instant case, the divorce decree
allegedly obtained by Merry Lee which absolutely allowed Felicisimo to remarry,
would have vested Felicidad with the legal personality to file the present petition
as Felicisimo's surviving spouse. However, the records show that there is
insufficient evidence to prove the validity of the divorce obtained by
Merry Lee as well as the marriage of respondent and Felicisimo under
the laws of the U.S.A. In Garcia v. Recio, the Court laid down the specific
guidelines for pleading and proving foreign law and divorce judgments. It held
that presentation solely of the divorce decree is insufficient and that proof of its
authenticity and due execution must be presented. Under Sections 24 and 25 of
Rule 132, a writing or document may be proven as a public or official record of a
foreign country by either (1) an official publication or (2) a copy thereof attested
by the officer having legal custody of the document. If the record is not kept in
the Philippines, such copy must be (a) accompanied by a certificate issued by the
proper diplomatic or consular officer in the Philippine foreign service stationed in

the foreign country in which the record is kept and (b) authenticated by the seal
of his office.
With regard to respondent's marriage to Felicisimo allegedly
solemnized in California, U.S.A., she submitted photocopies of the Marriage
Certificate and the annotated text of the Family Law Act of California which
purportedly show that their marriage was done in accordance with the said law.
As stated in Garcia, however, the Court cannot take judicial notice of foreign laws
as they must be alleged and proved.
Therefore, this case should be remanded to the trial court for
further reception of evidence on the divorce decree obtained by Merry
Lee and the marriage of respondent and Felicisimo. (Emphasis supplied)
Thus, it is imperative for the trial court to first determine the validity of
the divorce to ascertain the rightful party to be issued the letters of
administration over the estate of Orlando B. Catalan.
WHEREFORE, premises considered, the Petition is hereby PARTIALLY
GRANTED. The Decision dated 18 October 2007 and the Resolution dated 20
June 2008 of the Court of Appeals are hereby REVERSED and SET ASIDE. Let
this case be REMANDED to Branch 70 of the Regional Trial Court of Burgos,
Pangasinan for further proceedings in accordance with this Decision. DcSEHT
SO ORDERED.
Carpio, Brion, Perez and Reyes, JJ., concur.
||| (Vda. de Catalan v. Catalan-Lee, G.R. No. 183622, [February 8,
2012], 681 PHIL 493-502)

THIRD DIVISION
[G.R. No. 133743. February 6, 2007.]
EDGAR SAN LUIS, petitioner, vs. FELICIDAD SAN LUIS, respondent.
[G.R. No. 134029. February 6, 2007]
RODOLFO SAN LUIS, petitioner, vs. FELICIDAD SAGALONGOS
alias FELICIDAD SAN LUIS, respondent.
DECISION
YNARES-SANTIAGO, J p:
Before us are consolidated petitions for review assailing the February
4, 1998 Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647, which
reversed and set aside the September 12, 1995 2 and January 31,
1996 3 Resolutions of the Regional Trial Court of Makati City, Branch 134 in SP.
Proc. No. M-3708; and its May 15, 1998 Resolution 4 denying petitioners' motion
for reconsideration.
The instant case involves the settlement of the estate of Felicisimo T.
San Luis (Felicisimo), who was the former governor of the Province of Laguna.
During his lifetime, Felicisimo contracted three marriages. His first marriage was
with Virginia Sulit on March 17, 1942 out of which were born six children, namely:
Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia
predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin,
with whom he had a son, Tobias. However, on October 15, 1971, Merry Lee, an
American citizen, filed a Complaint for Divorce 5 before the Family Court of the
First Circuit, State of Hawaii, United States of America (U.S.A.), which issued a
Decree Granting Absolute Divorce and Awarding Child Custody on December 14,
1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis,
then surnamed Sagalongos, before Rev. Fr. William Meyer, Minister of the United
Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had no
children with respondent but lived with her for 18 years from the time of their
marriage up to his death on December 18, 1992.
Thereafter, respondent sought the dissolution of their conjugal
partnership assets and the settlement of Felicisimo's estate. On December 17,
1993, she filed a petition for letters of administration 8 before the Regional Trial
Court of Makati City, docketed as SP. Proc. No. M-3708 which was raffled to
Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the
time of his death, the decedent was residing at 100 San Juanico Street, New
Alabang Village, Alabang, Metro Manila; that the decedent's surviving heirs are
respondent as legal spouse, his six children by his first marriage, and son by his
second marriage; that the decedent left real properties, both conjugal and
exclusive, valued at P30,304,178.00 more or less; that the decedent does not
have any unpaid debts. Respondent prayed that the conjugal partnership assets
be liquidated and that letters of administration be issued to her. TAaIDH
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of
Felicisimo by his first marriage, filed a motion to dismiss 9 on the grounds of
improper venue and failure to state a cause of action. Rodolfo claimed that the
petition for letters of administration should have been filed in the Province of
Laguna because this was Felicisimo's place of residence prior to his death. He
further claimed that respondent has no legal personality to file the petition

because she was only a mistress of Felicisimo since the latter, at the time of his
death, was still legally married to Merry Lee.
On February 15, 1994, Linda invoked the same grounds and joined her
brother Rodolfo in seeking the dismissal 10 of the petition. On February 28,
1994, the trial court issued an Order 11 denying the two motions to dismiss.
Unaware of the denial of the motions to dismiss, respondent filed on
March 5, 1994 her opposition 12 thereto. She submitted documentary evidence
showing that while Felicisimo exercised the powers of his public office in Laguna,
he regularly went home to their house in New Alabang Village, Alabang, Metro
Manila which they bought sometime in 1982. Further, she presented the decree
of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii
to prove that the marriage of Felicisimo to Merry Lee had already been dissolved.
Thus, she claimed that Felicisimo had the legal capacity to marry her by virtue of
paragraph 2, 13 Article 26 of theFamily Code and the doctrine laid down in Van
Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis,
separately filed motions for reconsideration from the Order denying their motions
to dismiss. 15 They asserted that paragraph 2, Article 26 of the Family
Code cannot be given retroactive effect to validate respondent's bigamous
marriage with Felicisimo because this would impair vested rights in derogation of
Article 256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first
marriage, filed a motion to disqualify Acting Presiding Judge Anthony E. Santos
from hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the
motions for reconsideration. It ruled that respondent, as widow of the decedent,
possessed the legal standing to file the petition and that venue was properly laid.
Meanwhile, the motion for disqualification was deemed moot and
academic 18 because then Acting Presiding Judge Santos was substituted by
Judge Salvador S. Tensuan pending the resolution of said motion.
Mila filed a motion for inhibition 19 against Judge Tensuan on
November 16, 1994. On even date, Edgar also filed a motion for
reconsideration 20 from the Order denying their motion for reconsideration
arguing that it does not state the facts and law on which it was based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting
the motion for inhibition. The case was re-raffled to Branch 134 presided by
Judge Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their
respective position papers on the twin issues of venue and legal capacity of
respondent to file the petition. On May 5, 1995, Edgar manifested 23 that he is
adopting the arguments and evidence set forth in his previous motion for
reconsideration as his position paper. Respondent and Rodolfo filed their position
papers on June 14, 24 and June 20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for
letters of administration. It held that, at the time of his death, Felicisimo was the
duly elected governor and a resident of the Province of Laguna. Hence, the
petition should have been filed in Sta. Cruz, Laguna and not in Makati City. It also
ruled that respondent was without legal capacity to file the petition for letters of
administration because her marriage with Felicisimo was bigamous, thus, void ab
initio. It found that the decree of absolute divorce dissolving Felicisimo's
marriage to Merry Lee was not valid in the Philippines and did not bind Felicisimo

who was a Filipino citizen. It also ruled that paragraph 2, Article 26 of the Family
Code cannot be retroactively applied because it would impair the vested rights of
Felicisimo's legitimate children. CDTHSI
Respondent
moved
for
reconsideration 26 and
for
the
disqualification 27 of Judge Arcangel but said motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set
aside the orders of the trial court in its assailed Decision dated February 4, 1998,
the dispositive portion of which states:
WHEREFORE, the Orders dated September 12, 1995 and January 31,
1996 are hereby REVERSED and SET ASIDE; the Orders dated February 28 and
October 24, 1994 are REINSTATED; and the records of the case is REMANDED to
the trial court for further proceedings. 29
The appellate court ruled that under Section 1, Rule 73 of the Rules of
Court, the term "place of residence" of the decedent, for purposes of fixing the
venue of the settlement of his estate, refers to the personal, actual or physical
habitation, or actual residence or place of abode of a person as distinguished
from legal residence or domicile. It noted that although Felicisimo discharged his
functions as governor in Laguna, he actually resided in Alabang, Muntinlupa.
Thus, the petition for letters of administration was properly filed in Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to
marry respondent by virtue of paragraph 2, Article 26 of the Family Code and the
rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that
the marriage between Felicisimo and Merry Lee was validly dissolved by virtue of
the decree of absolute divorce issued by the Family Court of the First Circuit,
State of Hawaii. As a result, under paragraph 2, Article 26, Felicisimo was
capacitated to contract a subsequent marriage with respondent. Thus
With the well-known rule express mandate of paragraph 2, Article
26, of the Family Code of the Philippines, the doctrines in Van Dorn, Pilapil, and
the reason and philosophy behind the enactment of E.O. No. 227, there is no
justiciable reason to sustain the individual view sweeping statement of
Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes the
basic policy of our state against divorce in any form whatsoever." Indeed, courts
cannot deny what the law grants. All that the courts should do is to give force
and effect to the express mandate of the law. The foreign divorce having
been obtained by the Foreigner on December 14, 1992, 32 the Filipino divorcee,
"shall . . . have capacity to remarry under Philippine laws". For this reason, the
marriage between the deceased and petitioner should not be denominated as "a
bigamous marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the
surviving spouse can institute the judicial proceeding for the settlement of the
estate of the deceased. . . . 33
Edgar,
Linda,
and
Rodolfo
filed
separate
motions
for
reconsideration 34 which were denied by the Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition
for review on certiorari. 35 Rodolfo later filed a manifestation and motion to
adopt the said petition which was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the
venue of the subject petition for letters of administration was improperly laid
because at the time of his death, Felicisimo was a resident of Sta. Cruz, Laguna.
They contend that pursuant to our rulings in Nuval v. Guray 37 and Romualdez v.

RTC, Br. 7, Tacloban City, 38"residence" is synonymous with "domicile" which

denotes a fixed permanent residence to which when absent, one intends to
return. They claim that a person can only have one domicile at any given time.
Since Felicisimo never changed his domicile, the petition for letters of
administration should have been filed in Sta. Cruz, Laguna.
Petitioners also contend that respondent's marriage to Felicisimo was
void and bigamous because it was performed during the subsistence of the
latter's marriage to Merry Lee. They argue that paragraph 2, Article 26 cannot be
retroactively applied because it would impair vested rights and ratify the void
bigamous marriage. As such, respondent cannot be considered the surviving wife
of Felicisimo; hence, she has no legal capacity to file the petition for letters of
administration.
The issues for resolution: (1) whether venue was properly laid, and (2)
whether respondent has legal capacity to file the subject petition for letters of
administration. DScTaC
The petition lacks merit.
Under Section 1, 39 Rule 73 of the Rules of Court, the petition for
letters of administration of the estate of Felicisimo should be filed in the Regional
Trial Court of the province "in which he resides at the time of his death." In the
case of Garcia Fule v. Court of Appeals, 40 we laid down the doctrinal rule for
determining the residence as contradistinguished from domicile of the
decedent for purposes of fixing the venue of the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides," like the
terms "residing" and "residence," is elastic and should be interpreted in the light
of the object or purpose of the statute or rule in which it is employed. In the
application of venue statutes and rules Section 1, Rule 73 of the Revised Rules
of Court is of such nature residence rather than domicile is the significant
factor. Even where the statute uses the word "domicile" still it is construed as
meaning residence and not domicile in the technical sense. Some cases make a
distinction between the terms "residence" and "domicile" but as generally used
in statutes fixing venue, the terms are synonymous, and convey the same
meaning as the term "inhabitant." In other words, "resides" should be viewed or
understood in its popular sense, meaning, the personal, actual or physical
habitation of a person, actual residence or place of abode. It signifies
physical presence in a place and actual stay thereat. In this popular sense, the
term means merely residence, that is, personal residence, not legal residence
or domicile. Residence simply requires bodily presence as an inhabitant in a
given place, while domicile requires bodily presence in that place and also an
intention to make it one's domicile. No particular length of time of residence is
required
though;
however,
the
residence
must
be
more
than
temporary. 41 (Emphasis supplied) STIcEA
It is incorrect for petitioners to argue that "residence," for purposes of
fixing the venue of the settlement of the estate of Felicisimo, is synonymous with
"domicile." The rulings in Nuval and Romualdez are inapplicable to the instant
case because they involve election cases. Needless to say, there is a distinction
between "residence" for purposes of election laws and "residence" for purposes
of fixing the venue of actions. In election cases, "residence" and "domicile" are
treated as synonymous terms, that is, the fixed permanent residence to which
when absent, one has the intention of returning. 42 However, for purposes of
fixing venue under the Rules of Court, the "residence" of a person is his personal,

actual or physical habitation, or actual residence or place of abode, which may

not necessarily be his legal residence or domicile provided he resides therein
with continuity and consistency. 43 Hence, it is possible that a person may have
his residence in one place and domicile in another.
In the instant case, while petitioners established that Felicisimo was
domiciled in Sta. Cruz, Laguna, respondent proved that he also maintained a
residence in Alabang, Muntinlupa from 1982 up to the time of his death.
Respondent submitted in evidence the Deed of Absolute Sale 44 dated January
5, 1983 showing that the deceased purchased the aforesaid property. She also
presented billing statements 45 from the Philippine Heart Center and Chinese
General Hospital for the period August to December 1992 indicating the address
of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa." Respondent also
presented proof of membership of the deceased in the Ayala Alabang Village
Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from 1988 to
1990 sent by the deceased's children to him at his Alabang address, and the
deceased's calling cards 49 stating that his home/city address is at "100 San
Juanico, Ayala Alabang Village, Muntinlupa" while his office/provincial address is
in "Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang,
Muntinlupa for purposes of fixing the venue of the settlement of his estate.
Consequently, the subject petition for letters of administration was validly filed in
the Regional Trial Court 50 which has territorial jurisdiction over Alabang,
Muntinlupa. The subject petition was filed on December 17, 1993. At that time,
Muntinlupa was still a municipality and the branches of the Regional Trial Court of
the National Capital Judicial Region which had territorial jurisdiction over
Muntinlupa were then seated in Makati City as per Supreme Court Administrative
Order No. 3. 51 Thus, the subject petition was validly filed before the Regional
Trial Court of Makati City.
Anent the issue of respondent Felicidad's legal personality to file the
petition for letters of administration, we must first resolve the issue of whether a
Filipino who is divorced by his alien spouse abroad may validly remarry under the
Civil Code, considering that Felicidad's marriage to Felicisimo was solemnized on
June 20, 1974, or before the Family Code took effect on August 3, 1988. In
resolving this issue, we need not retroactively apply the provisions of the Family
Code, particularly Art. 26, par. (2) considering that there is sufficient
jurisprudential basis allowing us to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a
foreigner and his Filipino wife, which marriage was subsequently dissolved
through a divorce obtained abroad by the latter. Claiming that the divorce was
not valid under Philippine law, the alien spouse alleged that his interest in the
properties from their conjugal partnership should be protected. The Court,
however, recognized the validity of the divorce and held that the alien spouse
had no interest in the properties acquired by the Filipino wife after the divorce.
Thus:
In this case, the divorce in Nevada released private respondent from
the marriage from the standards of American law, under which divorce dissolves
the marriage. As stated by the Federal Supreme Court of the United States in
Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of
matrimony by a competent jurisdiction are to change the existing status or
domestic relation of husband and wife, and to free them both from the bond. The

marriage tie, when thus severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband, is unknown to the law.
When the law provides, in the nature of a penalty, that the guilty party shall not
marry again, that party, as well as the other, is still absolutely freed from the
bond of the former marriage."
Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below as
petitioner's husband entitled to exercise control over conjugal assets. As he is
bound by the Decision of his own country's Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is estopped
by his own representation before said Court from asserting his right over the
alleged conjugal property. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that
she should no longer be considered married to the alien spouse. Further, she
should not be required to perform her marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws,
petitioner has to be considered still married to private respondent and
still subject to a wife's obligations under Article 109, et. seq. of the Civil
Code cannot be just. Petitioner should not be obliged to live together with,
observe respect and fidelity, and render support to private respondent. The latter
should not continue to be one of her heirs with possible rights to conjugal
property. She should not be discriminated against in her own country if
the ends of justice are to be served. 54 (Emphasis added) AcaEDC
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where
the Court recognized the validity of a divorce obtained abroad. In the said case, it
was held that the alien spouse is not a proper party in filing the adultery suit
against his Filipino wife. The Court stated that "the severance of the marital bond
had the effect of dissociating the former spouses from each other, hence the
actuations of one would not affect or cast obloquy on the other." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a
Filipino is divorced by his naturalized foreign spouse, the ruling in Van
Dorn applies. 58 Although decided on December 22, 1998, the divorce in the
said case was obtained in 1954 when the Civil Code provisions were still in effect.
The significance of the Van Dorn case to the development of limited
recognition of divorce in the Philippines cannot be denied. The ruling has long
been interpreted as severing marital ties between parties in a mixed marriage
and capacitating the Filipino spouse to remarry as a necessary consequence of
upholding the validity of a divorce obtained abroad by the alien spouse. In his
treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that "if the foreigner
obtains a valid foreign divorce, the Filipino spouse shall have capacity to remarry
under Philippine law." 59 In Garcia v. Recio, 60 the Court likewise cited the
aforementioned case in relation to Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical
background and legislative intent behind paragraph 2, Article 26 of the Family
Code were discussed, to wit:
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into
law Executive Order No. 209, otherwise known as the "Family Code," which took
effect on August 3, 1988. Article 26 thereof states:

All marriages solemnized outside the Philippines in accordance with the

laws in force in the country where they were solemnized, and valid there as such,
shall also be valid in this country, except those prohibited under Articles 35, 37,
and 38.
On July 17, 1987, shortly after the signing of the original Family
Code, Executive Order No. 227 was likewise signed into law, amending Articles
26, 36, and 39 of theFamily Code. A second paragraph was added to Article 26.
As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under Articles
35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)
xxx xxx xxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed
that the intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy,
a member of theCivil Code Revision Committee, is to avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the
1985 case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a
marriage between a Filipino citizen and a foreigner. The Court held
therein that a divorce decree validly obtained by the alien spouse is
valid in the Philippines, and consequently, the Filipino spouse is
capacitated to remarry under Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation
where a divorce is validly obtained abroad by the alien spouse. With the
enactment of the Family Code and paragraph 2, Article 26 thereof, our
lawmakers
codified
the
law
already
established
through
judicial
precedent. HAaECD
Indeed, when the object of a marriage is defeated by rendering its
continuance intolerable to one of the parties and productive of no possible good
to the community, relief in some way should be obtainable. 64 Marriage, being a
mutual and shared commitment between two parties, cannot possibly be
productive of any good to the society where one is considered released from the
marital bond while the other remains bound to it. Such is the state of affairs
where the alien spouse obtains a valid divorce abroad against the Filipino spouse,
as in this case.
Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating
that the divorce is void under Philippine law insofar as Filipinos are concerned.
However, in light of this Court's rulings in the cases discussed above, the Filipino
spouse should not be discriminated against in his own country if the ends of
justice are to be served. 67 InAlonzo v. Intermediate Appellate Court, 68 the
Court stated:
But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking the
meaning of the law, the first concern of the judge should be to discover in its

provisions the intent of the lawmaker. Unquestionably, the law should never be
interpreted in such a way as to cause injustice as this is never within the
legislative intent. An indispensable part of that intent, in fact, for we presume the
good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we must keep
them so. To be sure, there are some laws that, while generally valid, may seem
arbitrary when applied in a particular case because of its peculiar circumstances.
In such a situation, we are not bound, because only of our nature and functions,
to apply them just the same, in slavish obedience to their language. What we do
instead is find a balance between the word and the will, that justice may be done
even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly
apply the law as it is worded, yielding like robots to the literal command without
regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are warned, by Justice Holmes again, "where
these words import a policy that goes beyond them."
xxx xxx xxx
More than twenty centuries ago, Justinian defined justice "as the
constant and perpetual wish to render every one his due." That wish continues to
motivate this Court when it assesses the facts and the law in every case brought
to it for decision. Justice is always an essential ingredient of its decisions. Thus
when the facts warrants, we interpret the law in a way that will render justice,
presuming that it was the intention of the lawmaker, to begin with, that the law
be dispensed with justice. 69
Applying the above doctrine in the instant case, the divorce decree
allegedly obtained by Merry Lee which absolutely allowed Felicisimo to remarry,
would have vested Felicidad with the legal personality to file the present petition
as Felicisimo's surviving spouse. However, the records show that there is
insufficient evidence to prove the validity of the divorce obtained by Merry Lee as
well as the marriage of respondent and Felicisimo under the laws of the U.S.A.
In Garcia v. Recio, 70 the Court laid down the specific guidelines for pleading and
proving foreign law and divorce judgments. It held that presentation solely of the
divorce decree is insufficient and that proof of its authenticity and due execution
must be presented. Under Sections 24 and 25 of Rule 132, a writing or document
may be proven as a public or official record of a foreign country by either (1) an
official publication or (2) a copy thereof attested by the officer having legal
custody of the document. If the record is not kept in the Philippines, such copy
must be (a) accompanied by a certificate issued by the proper diplomatic or
consular officer in the Philippine foreign service stationed in the foreign country
in which the record is kept and (b) authenticated by the seal of his office. 71
With regard to respondent's marriage to Felicisimo allegedly
solemnized in California, U.S.A., she submitted photocopies of the Marriage
Certificate and the annotated text 72 of the Family Law Act of California which
purportedly show that their marriage was done in accordance with the said law.
As stated in Garcia, however, the Court cannot take judicial notice of foreign laws
as they must be alleged and proved. 73
Therefore, this case should be remanded to the trial court for further
reception of evidence on the divorce decree obtained by Merry Lee and the
marriage of respondent and Felicisimo.

Even assuming that Felicisimo was not capacitated to marry

respondent in 1974, nevertheless, we find that the latter has the legal
personality to file the subject petition for letters of administration, as she may be
considered the co-owner of Felicisimo as regards the properties that were
acquired through their joint efforts during their cohabitation. TIEHDC
Section 6, 74 Rule 78 of the Rules of Court states that letters of
administration may be granted to the surviving spouse of the decedent.
However, Section 2, Rule 79 thereof also provides in part:
SEC. 2. Contents of petition for letters of administration. A petition
for letters of administration must be filed by an interested person and must
show, as far as known to the petitioner: . . . .
An "interested person" has been defined as one who would be
benefited by the estate, such as an heir, or one who has a claim against the
estate, such as a creditor. The interest must be material and direct, and not
merely indirect or contingent. 75
In the instant case, respondent would qualify as an interested person
who has a direct interest in the estate of Felicisimo by virtue of their
cohabitation, the existence of which was not denied by petitioners. If she proves
the validity of the divorce and Felicisimo's capacity to remarry, but fails to prove
that her marriage with him was validly performed under the laws of the U.S.A.,
then she may be considered as a co-owner under Article 144 76 of the Civil
Code. This provision governs the property relations between parties who live
together as husband and wife without the benefit of marriage, or their marriage
is void from the beginning. It provides that the property acquired by either or
both of them through their work or industry or their wages and salaries shall be
governed by the rules on co-ownership. In a co-ownership, it is not necessary
that the property be acquired through their joint labor, efforts and industry. Any
property acquired during the union is prima faciepresumed to have been
obtained through their joint efforts. Hence, the portions belonging to the coowners shall be presumed equal, unless the contrary is proven. 77
Meanwhile, if respondent fails to prove the validity of both the divorce
and the marriage, the applicable provision would be Article 148 of the Family
Code which has filled the hiatus in Article 144 of the Civil Code by expressly
regulating the property relations of couples living together as husband and wife
but are incapacitated to marry. 78 In Saguid v. Court of Appeals, 79 we held that
even if the cohabitation or the acquisition of property occurred before the Family
Code took effect, Article 148 governs. 80 The Court described the property
regime under this provision as follows:
The regime of limited co-ownership of property governing the union of
parties who are not legally capacitated to marry each other, but who nonetheless
live together as husband and wife, applies to properties acquired during said
cohabitation in proportion to their respective contributions. Co-ownership will
only be up to the extent of the proven actual contribution of money, property or
industry. Absent proof of the extent thereof, their contributions and
corresponding shares shall be presumed to be equal.
xxx xxx xxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which
involved the issue of co-ownership of properties acquired by the parties to a
bigamous marriage and an adulterous relationship, respectively, we ruled that
proof of actual contribution in the acquisition of the property is essential. . . .

As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an affirmative
issue. Contentions must be proved by competent evidence and reliance must be
had on the strength of the party's own evidence and not upon the weakness of
the opponent's defense. . . . 81
In view of the foregoing, we find that respondent's legal capacity to file
the subject petition for letters of administration may arise from her status as the
surviving wife of Felicisimo or as his co-owner under Article 144 of the Civil Code
or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals reinstating and affirming the February 28, 1994 Order of the Regional
Trial Court which denied petitioners' motion to dismiss and its October 24, 1994
Order which dismissed petitioners' motion for reconsideration is AFFIRMED. Let
this case be REMANDED to the trial court for further proceedings.
SO ORDERED.
Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
||| (San Luis v. San Luis, G.R. Nos. 133743 & 134029, [February 6,
2007], 543 PHIL 275-298)

G.R. No. 196049

MINORU

June 26, 2013

FUJIKI, PETITIONER,

vs.
MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL
REGISTRAR OF QUEZON CITY, AND THE ADMINISTRATOR AND CIVIL
REGISTRAR
GENERAL
OF
THE
NATIONAL
STATISTICS
OFFICE,RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This is a direct recourse to this Court from the Regional Trial Court
(RTC), Branch 107, Quezon City, through a petition for review on certiorari under
Rule 45 of the Rules of Court on a pure question of law. The petition assails the
Order1 dated 31 January 2011 of the RTC in Civil Case No. Q-11-68582 and its
Resolution dated 2 March 2011 denying petitioners Motion for Reconsideration.
The RTC dismissed the petition for "Judicial Recognition of Foreign Judgment (or
Decree of Absolute Nullity of Marriage)" based on improper venue and the lack of
personality of petitioner, Minoru Fujiki, to file the petition.
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married
respondent Maria Paz Galela Marinay (Marinay) in the Philippines 2 on 23 January
2004. The marriage did not sit well with petitioners parents. Thus, Fujiki could
not bring his wife to Japan where he resides. Eventually, they lost contact with
each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara).
Without the first marriage being dissolved, Marinay and Maekara were married
on 15 May 2008 in Quezon City, Philippines. Maekara brought Marinay to Japan.
However, Marinay allegedly suffered physical abuse from Maekara. She left
Maekara and started to contact Fujiki.3
Fujiki and Marinay met in Japan and they were able to reestablish their
relationship. In 2010, Fujiki helped Marinay obtain a judgment from a family court
in Japan which declared the marriage between Marinay and Maekara void on the
ground of bigamy.4 On 14 January 2011, Fujiki filed a petition in the RTC entitled:
"Judicial Recognition of Foreign Judgment (or Decree of Absolute Nullity of
Marriage)." Fujiki prayed that (1) the Japanese Family Court judgment be
recognized; (2) that the bigamous marriage between Marinay and Maekara be
declared void ab initio under Articles 35(4) and 41 of the Family Code of the
Philippines;5 and (3) for the RTC to direct the Local Civil Registrar of Quezon City
to annotate the Japanese Family Court judgment on the Certificate of Marriage
between Marinay and Maekara and to endorse such annotation to the Office of
the Administrator and Civil Registrar General in the National Statistics Office
(NSO).6
The Ruling of the Regional Trial Court
A few days after the filing of the petition, the RTC immediately issued
an Order dismissing the petition and withdrawing the case from its active civil
docket.7 The RTC cited the following provisions of the Rule on Declaration of
Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No.
02-11-10-SC):
Sec. 2. Petition for declaration of absolute nullity of void marriages.
(a) Who may file. A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife.

xxxx
Sec. 4. Venue. The petition shall be filed in the Family Court of the
province or city where the petitioner or the respondent has been residing for at
least six months prior to the date of filing, or in the case of a non-resident
respondent, where he may be found in the Philippines, at the election of the
petitioner. x x x
The RTC ruled, without further explanation, that the petition was in
"gross violation" of the above provisions. The trial court based its dismissal on
Section 5(4) of A.M. No. 02-11-10-SC which provides that "[f]ailure to comply with
any of the preceding requirements may be a ground for immediate dismissal of
the petition."8 Apparently, the RTC took the view that only "the husband or the
wife," in this case either Maekara or Marinay, can file the petition to declare their
marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No.
02-11-10-SC contemplated ordinary civil actions for declaration of nullity and
annulment of marriage. Thus, A.M. No. 02-11-10-SC does not apply. A petition for
recognition of foreign judgment is a special proceeding, which "seeks to establish
a status, a right or a particular fact," 9 and not a civil action which is "for the
enforcement or protection of a right, or the prevention or redress of a
wrong."10 In other words, the petition in the RTC sought to establish (1) the status
and concomitant rights of Fujiki and Marinay as husband and wife and (2) the
fact of the rendition of the Japanese Family Court judgment declaring the
marriage between Marinay and Maekara as void on the ground of bigamy. The
petitioner contended that the Japanese judgment was consistent with Article
35(4) of the Family Code of the Philippines 11on bigamy and was therefore entitled
to recognition by Philippine courts.12
In any case, it was also Fujikis view that A.M. No. 02-11-10-SC applied
only to void marriages under Article 36 of the Family Code on the ground of
psychological incapacity.13 Thus, Section 2(a) of A.M. No. 02-11-10-SC provides
that "a petition for declaration of absolute nullity of void marriages may be filed
solely by the husband or the wife." To apply Section 2(a) in bigamy would be
absurd because only the guilty parties would be permitted to sue. In the words of
Fujiki, "[i]t is not, of course, difficult to realize that the party interested in having
a bigamous marriage declared a nullity would be the husband in the prior, preexisting marriage."14 Fujiki had material interest and therefore the personality to
nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the
Civil Registry) of the Rules of Court is applicable. Rule 108 is the "procedural
implementation" of the Civil Register Law (Act No. 3753) 15 in relation to Article
413 of the Civil Code.16 The Civil Register Law imposes a duty on the "successful
petitioner for divorce or annulment of marriage to send a copy of the final decree
of the court to the local registrar of the municipality where the dissolved or
annulled marriage was solemnized."17 Section 2 of Rule 108 provides that entries
in the civil registry relating to "marriages," "judgments of annulments of
marriage" and "judgments declaring marriages void from the beginning" are
subject to cancellation or correction. 18 The petition in the RTC sought (among
others) to annotate the judgment of the Japanese Family Court on the certificate
of marriage between Marinay and Maekara.
Fujikis motion for reconsideration in the RTC also asserted that the trial
court "gravely erred" when, on its own, it dismissed the petition based on
improper venue. Fujiki stated that the RTC may be confusing the concept of

venue with the concept of jurisdiction, because it is lack of jurisdiction which

allows a court to dismiss a case on its own. Fujiki cited Dacoycoy v. Intermediate
Appellate Court19 which held that the "trial court cannot pre-empt the
defendants prerogative to object to the improper laying of the venue by motu
proprio dismissing the case." 20Moreover, petitioner alleged that the trial court
should not have "immediately dismissed" the petition under Section 5 of A.M. No.
02-11-10-SC because he substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioners motion for
reconsideration. In its Resolution, the RTC stated that A.M. No. 02-11-10-SC
applies because the petitioner, in effect, prays for a decree of absolute nullity of
marriage.21 The trial court reiterated its two grounds for dismissal, i.e. lack of
personality to sue and improper venue under Sections 2(a) and 4 of A.M. No. 0211-10-SC. The RTC considered Fujiki as a "third person" 22 in the proceeding
because he "is not the husband in the decree of divorce issued by the Japanese
Family Court, which he now seeks to be judicially recognized, x x x." 23 On the
other hand, the RTC did not explain its ground of impropriety of venue. It only
said that "[a]lthough the Court cited Sec. 4 (Venue) x x x as a ground for
dismissal of this case[,] it should be taken together with the other ground cited
by the Court x x x which is Sec. 2(a) x x x." 24
The RTC further justified its motu proprio dismissal of the petition
based on Braza v. The City Civil Registrar of Himamaylan City, Negros
Occidental.25 The Court in Braza ruled that "[i]n a special proceeding for
correction of entry under Rule 108 (Cancellation or Correction of Entries in the
Original Registry), the trial court has no jurisdiction to nullify marriages x x
x."26 Braza emphasized that the "validity of marriages as well as legitimacy and
filiation can be questioned only in a direct action seasonably filed by the proper
party, and not through a collateral attack such as [a] petition [for correction of
entry] x x x."27
The RTC considered the petition as a collateral attack on the validity of
marriage between Marinay and Maekara. The trial court held that this is a
"jurisdictional ground" to dismiss the petition.28 Moreover, the verification and
certification against forum shopping of the petition was not authenticated as
required under Section 529 of A.M. No. 02-11-10-SC. Hence, this also warranted
the "immediate dismissal" of the petition under the same provision.
The Manifestation and Motion of the Office of the Solicitor
General and the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment
on the petition for review.30 The public respondents, the Local Civil Registrar of
Quezon City and the Administrator and Civil Registrar General of the NSO,
participated through the Office of the Solicitor General. Instead of a comment,
the Solicitor General filed a Manifestation and Motion.31
The Solicitor General agreed with the petition. He prayed that the
RTCs "pronouncement that the petitioner failed to comply with x x x A.M. No. 0211-10-SC x x x be set aside" and that the case be reinstated in the trial court for
further proceedings.32 The Solicitor General argued that Fujiki, as the spouse of
the first marriage, is an injured party who can sue to declare the bigamous
marriage between Marinay and Maekara void. The Solicitor General cited JulianoLlave v. Republic33 which held that Section 2(a) of A.M. No. 02-11-10-SC does not
apply in cases of bigamy. In Juliano-Llave, this Court explained:
[t]he subsequent spouse may only be expected to take action if he or
she had only discovered during the connubial period that the marriage was

bigamous, and especially if the conjugal bliss had already vanished. Should
parties in a subsequent marriage benefit from the bigamous marriage, it would
not be expected that they would file an action to declare the marriage void and
thus, in such circumstance, the "injured spouse" who should be given a legal
remedy is the one in a subsisting previous marriage. The latter is clearly the
aggrieved party as the bigamous marriage not only threatens the financial and
the property ownership aspect of the prior marriage but most of all, it causes an
emotional burden to the prior spouse. The subsequent marriage will always be a
reminder of the infidelity of the spouse and the disregard of the prior marriage
which sanctity is protected by the Constitution. 34
The Solicitor General contended that the petition to recognize the
Japanese Family Court judgment may be made in a Rule 108
proceeding.35 In Corpuz v. Santo Tomas,36 this Court held that "[t]he recognition
of the foreign divorce decree may be made in a Rule 108 proceeding itself, as the
object of special proceedings (such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a particular
fact."37 WhileCorpuz concerned a foreign divorce decree, in the present case the
Japanese Family Court judgment also affected the civil status of the parties,
especially Marinay, who is a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the
procedure to record "[a]cts, events and judicial decrees concerning the civil
status of persons" in the civil registry as required by Article 407 of the Civil Code.
In other words, "[t]he law requires the entry in the civil registry of judicial
decrees that produce legal consequences upon a persons legal capacity and
status x x x."38 The Japanese Family Court judgment directly bears on the civil
status of a Filipino citizen and should therefore be proven as a fact in a Rule 108
proceeding.
Moreover, the Solicitor General argued that there is no jurisdictional
infirmity in assailing a void marriage under Rule 108, citing De Castro v. De
Castro39 and Nial v. Bayadog40 which declared that "[t]he validity of a void
marriage may be collaterally attacked."41
Marinay and Maekara individually sent letters to the Court to comply
with the directive for them to comment on the petition. 42 Maekara wrote that
Marinay concealed from him the fact that she was previously married to
Fujiki.43Maekara also denied that he inflicted any form of violence on
Marinay.44 On the other hand, Marinay wrote that she had no reason to oppose
the petition.45 She would like to maintain her silence for fear that anything she
say might cause misunderstanding between her and Fujiki. 46
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration of Absolute Nullity of Void
Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is
applicable.
(2) Whether a husband or wife of a prior marriage can file a petition to
recognize a foreign judgment nullifying the subsequent marriage between his or
her spouse and a foreign citizen on the ground of bigamy.
(3) Whether the Regional Trial Court can recognize the foreign
judgment in a proceeding for cancellation or correction of entries in the Civil
Registry under Rule 108 of the Rules of Court.
The Ruling of the Court
We grant the petition.

The Rule on Declaration of Absolute Nullity of Void Marriages and

Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a
petition to recognize a foreign judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign country. Moreover, in JulianoLlave v. Republic,47 this Court held that the rule in A.M. No. 02-11-10-SC that only
the husband or wife can file a declaration of nullity or annulment of marriage
"does not apply if the reason behind the petition is bigamy." 48
I.
For Philippine courts to recognize a foreign judgment relating to the
status of a marriage where one of the parties is a citizen of a foreign country, the
petitioner only needs to prove the foreign judgment as a fact under the Rules of
Court. To be more specific, a copy of the foreign judgment may be admitted in
evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation to
Rule 39, Section 48(b) of the Rules of Court. 49 Petitioner may prove the Japanese
Family Court judgment through (1) an official publication or (2) a certification or
copy attested by the officer who has custody of the judgment. If the office which
has custody is in a foreign country such as Japan, the certification may be made
by the proper diplomatic or consular officer of the Philippine foreign service in
Japan and authenticated by the seal of office. 50
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition
of foreign judgment would mean that the trial court and the parties should follow
its provisions, including the form and contents of the petition, 51 the service of
summons,52 the investigation of the public prosecutor, 53 the setting of pretrial,54 the trial55 and the judgment of the trial court.56 This is absurd because it
will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues." 57 The
interpretation of the RTC is tantamount to relitigating the case on the merits.
In Mijares v. Raada,58 this Court explained that "[i]f every judgment of a foreign
court were reviewable on the merits, the plaintiff would be forced back on his/her
original cause of action, rendering immaterial the previously concluded
litigation."59
A foreign judgment relating to the status of a marriage affects the civil
status, condition and legal capacity of its parties. However, the effect of a foreign
judgment is not automatic. To extend the effect of a foreign judgment in the
Philippines, Philippine courts must determine if the foreign judgment is
consistent with domestic public policy and other mandatory laws. 60 Article 15 of
the Civil Code provides that "[l]aws relating to family rights and duties, or to the
status, condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad." This is the rule of lex nationalii in private
international law. Thus, the Philippine State may require, for effectivity in the
Philippines, recognition by Philippine courts of a foreign judgment affecting its
citizen, over whom it exercises personal jurisdiction relating to the status,
condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void
does not require relitigation under a Philippine court of the case as if it were a
new petition for declaration of nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the jurisdiction of another state.
Thus, Philippine courts can only recognize the foreign judgment as a
fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign

judgment or final order against a person creates a "presumptive evidence of a
right as between the parties and their successors in interest by a subsequent
title." Moreover, Section 48 of the Rules of Court states that "the judgment or
final order may be repelled by evidence of a want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact." Thus, Philippine
courts exercise limited review on foreign judgments. Courts are not allowed to
delve into the merits of a foreign judgment. Once a foreign judgment is admitted
and proven in a Philippine court, it can only be repelled on grounds external to its
merits, i.e. , "want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact." The rule on limited review embodies the policy of
efficiency and the protection of party expectations, 61 as well as respecting the
jurisdiction of other states.62
Since 1922 in Adong v. Cheong Seng Gee, 63 Philippine courts have
recognized foreign divorce decrees between a Filipino and a foreign citizen if they
are successfully proven under the rules of evidence. 64 Divorce involves the
dissolution of a marriage, but the recognition of a foreign divorce decree does
not involve the extended procedure under A.M. No. 02-11-10-SC or the rules of
ordinary trial. While the Philippines does not have a divorce law, Philippine courts
may, however, recognize a foreign divorce decree under the second paragraph of
Article 26 of the Family Code, to capacitate a Filipino citizen to remarry when his
or her foreign spouse obtained a divorce decree abroad.65
There is therefore no reason to disallow Fujiki to simply prove as a fact
the Japanese Family Court judgment nullifying the marriage between Marinay
and Maekara on the ground of bigamy. While the Philippines has no divorce law,
the Japanese Family Court judgment is fully consistent with Philippine public
policy, as bigamous marriages are declared void from the beginning under Article
35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised
Penal Code. Thus, Fujiki can prove the existence of the Japanese Family Court
judgment in accordance with Rule 132, Sections 24 and 25, in relation to Rule 39,
Section 48(b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact
of the judgment, it may be made in a special proceeding for cancellation or
correction of entries in the civil registry under Rule 108 of the Rules of Court.
Rule 1, Section 3 of the Rules of Court provides that "[a] special proceeding is a
remedy by which a party seeks to establish a status, a right, or a particular fact."
Rule 108 creates a remedy to rectify facts of a persons life which are recorded
by the State pursuant to the Civil Register Law or Act No. 3753. These are facts
of public consequence such as birth, death or marriage, 66 which the State has an
interest in recording. As noted by the Solicitor General, in Corpuz v. Sto.
Tomas this Court declared that "[t]he recognition of the foreign divorce decree
may be made in a Rule 108 proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the Rules of Court) is precisely to
establish the status or right of a party or a particular fact." 67
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. Any person interested in any act,
event, order or decree concerning the civil status of persons which has
been recorded in the civil register, may file a verified petition for the
cancellation or correction of any entry relating thereto, with the Regional Trial

Court of the province where the corresponding civil registry is located. (Emphasis
supplied)
Fujiki has the personality to file a petition to recognize the Japanese
Family Court judgment nullifying the marriage between Marinay and Maekara on
the ground of bigamy because the judgment concerns his civil status as married
to Marinay. For the same reason he has the personality to file a petition under
Rule 108 to cancel the entry of marriage between Marinay and Maekara in the
civil registry on the basis of the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material
interest in maintaining the integrity of the marriage he contracted and the
property relations arising from it. There is also no doubt that he is interested in
the cancellation of an entry of a bigamous marriage in the civil registry, which
compromises the public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve, in limited
instances68) his most intimate human relation, but also to protect his property
interests that arise by operation of law the moment he contracts
marriage.69 These property interests in marriage include the right to be
supported "in keeping with the financial capacity of the family" 70 and preserving
the property regime of the marriage.71
Property rights are already substantive rights protected by the
Constitution,72 but a spouses right in a marriage extends further to relational
rights recognized under Title III ("Rights and Obligations between Husband and
Wife") of the Family Code. 73 A.M. No. 02-11-10-SC cannot "diminish, increase, or
modify" the substantive right of the spouse to maintain the integrity of his
marriage.74 In any case, Section 2(a) of A.M. No. 02-11-10-SC preserves this
substantive right by limiting the personality to sue to the husband or the wife of
the union recognized by law.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a
subsisting marriage to question the validity of a subsequent marriage on the
ground of bigamy. On the contrary, when Section 2(a) states that "[a] petition for
declaration of absolute nullity of void marriage may be filed solely by the
husband or the wife"75it refers to the husband or the wife of the subsisting
marriage. Under Article 35(4) of the Family Code, bigamous marriages are void
from the beginning. Thus, the parties in a bigamous marriage are neither the
husband nor the wife under the law. The husband or the wife of the prior
subsisting marriage is the one who has the personality to file a petition for
declaration of absolute nullity of void marriage under Section 2(a) of A.M. No. 0211-10-SC.
Article 35(4) of the Family Code, which declares bigamous marriages
void from the beginning, is the civil aspect of Article 349 of the Revised Penal
Code,76 which penalizes bigamy. Bigamy is a public crime. Thus, anyone can
initiate prosecution for bigamy because any citizen has an interest in the
prosecution and prevention of crimes.77If anyone can file a criminal action which
leads to the declaration of nullity of a bigamous marriage, 78 there is more reason
to confer personality to sue on the husband or the wife of a subsisting marriage.
The prior spouse does not only share in the public interest of prosecuting and
preventing crimes, he is also personally interested in the purely civil aspect of
protecting his marriage.
When the right of the spouse to protect his marriage is violated, the
spouse is clearly an injured party and is therefore interested in the judgment of
the suit.79 Juliano-Llave ruled that the prior spouse "is clearly the aggrieved party

as the bigamous marriage not only threatens the financial and the property
ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse."80 Being a real party in interest, the prior spouse is
entitled to sue in order to declare a bigamous marriage void. For this purpose, he
can petition a court to recognize a foreign judgment nullifying the bigamous
marriage and judicially declare as a fact that such judgment is effective in the
Philippines. Once established, there should be no more impediment to cancel the
entry of the bigamous marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros
Occidental, this Court held that a "trial court has no jurisdiction to nullify
marriages" in a special proceeding for cancellation or correction of entry under
Rule 108 of the Rules of Court.81 Thus, the "validity of marriage[] x x x can be
questioned only in a direct action" to nullify the marriage. 82 The RTC relied
on Braza in dismissing the petition for recognition of foreign judgment as a
collateral attack on the marriage between Marinay and Maekara.
Braza is not applicable because Braza does not involve a recognition of
a foreign judgment nullifying a bigamous marriage where one of the parties is a
citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in the
civil registry cannot substitute for an action to invalidate a marriage. A direct
action is necessary to prevent circumvention of the substantive and procedural
safeguards of marriage under the Family Code, A.M. No. 02-11-10-SC and other
related laws. Among these safeguards are the requirement of proving the limited
grounds for the dissolution of marriage, 83 support pendente lite of the spouses
and children,84 the liquidation, partition and distribution of the properties of the
spouses,85 and the investigation of the public prosecutor to determine
collusion.86 A direct action for declaration of nullity or annulment of marriage is
also necessary to prevent circumvention of the jurisdiction of the Family Courts
under the Family Courts Act of 1997 (Republic Act No. 8369), as a petition for
cancellation or correction of entries in the civil registry may be filed in the
Regional Trial Court "where the corresponding civil registry is located." 87 In other
words, a Filipino citizen cannot dissolve his marriage by the mere expedient of
changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation
of a civil registry entry based on the recognition of a foreign judgment annulling
a marriage where one of the parties is a citizen of the foreign country. There is
neither circumvention of the substantive and procedural safeguards of marriage
under Philippine law, nor of the jurisdiction of Family Courts under R.A. No. 8369.
A recognition of a foreign judgment is not an action to nullify a marriage. It is an
action for Philippine courts to recognize the effectivity of a foreign
judgment, which presupposes a case which was already tried and
decided under foreign law. The procedure in A.M. No. 02-11-10-SC does not
apply in a petition to recognize a foreign judgment annulling a bigamous
marriage where one of the parties is a citizen of the foreign country. Neither can
R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to
extend the effect of a foreign divorce decree to a Filipino spouse without
undergoing trial to determine the validity of the dissolution of the marriage. The
second paragraph of Article 26 of the Family Code provides that "[w]here a
marriage between a Filipino citizen and a foreigner is validly celebrated and a

divorce is thereafter validly obtained abroad by the alien spouse capacitating him
or her to remarry, the Filipino spouse shall have capacity to remarry under
Philippine law." InRepublic v. Orbecido,88 this Court recognized the legislative
intent of the second paragraph of Article 26 which is "to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse" 89 under the
laws of his or her country. The second paragraph of Article 26 of the Family Code
only authorizes Philippine courts to adopt the effects of a foreign divorce decree
precisely because the Philippines does not allow divorce. Philippine courts cannot
try the case on the merits because it is tantamount to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to
address the anomaly that results from a marriage between a Filipino, whose laws
do not allow divorce, and a foreign citizen, whose laws allow divorce. The
anomaly consists in the Filipino spouse being tied to the marriage while the
foreign spouse is free to marry under the laws of his or her country. The
correction is made by extending in the Philippines the effect of the foreign
divorce decree, which is already effective in the country where it was rendered.
The second paragraph of Article 26 of the Family Code is based on this Courts
decision in Van Dorn v. Romillo 90 which declared that the Filipino spouse "should
not be discriminated against in her own country if the ends of justice are to be
served."91
The principle in Article 26 of the Family Code applies in a marriage
between a Filipino and a foreign citizen who obtains a foreign judgment nullifying
the marriage on the ground of bigamy. The Filipino spouse may file a petition
abroad to declare the marriage void on the ground of bigamy. The principle in the
second paragraph of Article 26 of the Family Code applies because the foreign
spouse, after the foreign judgment nullifying the marriage, is capacitated to
remarry under the laws of his or her country. If the foreign judgment is not
recognized in the Philippines, the Filipino spouse will be discriminatedthe
foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine
courts are empowered to correct a situation where the Filipino spouse is still tied
to the marriage while the foreign spouse is free to marry. Moreover,
notwithstanding Article 26 of the Family Code, Philippine courts already have
jurisdiction to extend the effect of a foreign judgment in the Philippines to the
extent that the foreign judgment does not contravene domestic public policy. A
critical difference between the case of a foreign divorce decree and a foreign
judgment nullifying a bigamous marriage is that bigamy, as a ground for the
nullity of marriage, is fully consistent with Philippine public policy as expressed in
Article 35(4) of the Family Code and Article 349 of the Revised Penal Code. The
Filipino spouse has the option to undergo full trial by filing a petition for
declaration of nullity of marriage under A.M. No. 02-11-10-SC, but this is not the
only remedy available to him or her. Philippine courts have jurisdiction to
recognize a foreign judgment nullifying a bigamous marriage, without prejudice
to a criminal prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are
incompetent to substitute their judgment on how a case was decided under
foreign law. They cannot decide on the "family rights and duties, or on the status,
condition and legal capacity" of the foreign citizen who is a party to the foreign
judgment. Thus, Philippine courts are limited to the question of whether to
extend the effect of a foreign judgment in the Philippines. In a foreign judgment

relating to the status of a marriage involving a citizen of a foreign country,

Philippine courts only decide whether to extend its effect to the Filipino party,
under the rule of lex nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether the
foreign judgment is inconsistent with an overriding public policy in the
Philippines; and (2) whether any alleging party is able to prove an extrinsic
ground to repel the foreign judgment, i.e. want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to repel the judgment,
Philippine courts should, by default, recognize the foreign judgment as part of
the comity of nations. Section 48(b), Rule 39 of the Rules of Court states that the
foreign judgment is already "presumptive evidence of a right between the
parties." Upon recognition of the foreign judgment, this right becomes conclusive
and the judgment serves as the basis for the correction or cancellation of entry in
the civil registry. The recognition of the foreign judgment nullifying a bigamous
marriage is a subsequent event that establishes a new status, right and
fact92 that needs to be reflected in the civil registry. Otherwise, there will be an
inconsistency between the recognition of the effectivity of the foreign judgment
and the public records in the Philippines.1wphi1
However, the recognition of a foreign judgment nullifying a bigamous
marriage is without prejudice to prosecution for bigamy under Article 349 of the
Revised Penal Code.93 The recognition of a foreign judgment nullifying a
bigamous marriage is not a ground for extinction of criminal liability under
Articles 89 and 94 of the Revised Penal Code. Moreover, under Article 91 of the
Revised Penal Code, "[t]he term of prescription [of the crime of bigamy] shall not
run when the offender is absent from the Philippine archipelago."
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees
the need to address the questions on venue and the contents and form of the
petition under Sections 4 and 5, respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January
2011 and the Resolution dated 2 March 2011 of the Regional Trial Court, Branch
107, Quezon City, in Civil Case No. Q-11-68582 are REVERSED andSET ASIDE.
The Regional Trial Court is ORDERED to REINSTATE the petition for further
proceedings in accordance with this Decision.
SO ORDERED.
Brion, Del Castillo, Perez, and Perlas-Bernabe, JJ., concur.

SECOND DIVISION
[G.R. No. 172342. July 13, 2009.]
LWV CONSTRUCTION CORPORATION, petitioner, vs. MARCELO B.
DUPO, respondent
Petitioner LWV Construction Corporation appeals the Decision 1 dated
December 6, 2005 of the Court of Appeals in CA-G.R. SP No. 76843 and its
Resolution 2 dated April 12, 2006, denying the motion for reconsideration. The
Court of Appeals had ruled that under Article 87 of the Saudi Labor and Workmen
Law (Saudi Labor Law), respondent Marcelo Dupo is entitled to a service award
or longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino workers, hired
respondent as Civil Structural Superintendent to work in Saudi Arabia for its
principal, Mohammad Al-Mojil Group/Establishment (MMG). On February 26,
1992, respondent signed his first overseas employment contract, renewable after
one year. It was renewed five times on the following dates: May 10, 1993,
November 16, 1994, January 22, 1996, April 14, 1997, and March 26, 1998. All
were fixed-period contracts for one year. The sixth and last contract stated that
respondent's employment starts upon reporting to work and ends when he
leaves the work site. Respondent left Saudi Arabia on April 30, 1999 and arrived
in the Philippines on May 1, 1999.
On May 28, 1999, respondent informed MMG, through the petitioner,
that he needs to extend his vacation because his son was hospitalized. He also
sought a promotion with salary adjustment. 3 In reply, MMG informed respondent
that his promotion is subject to management's review; that his services are still
needed; that he was issued a plane ticket for his return flight to Saudi Arabia on
May 31, 1999; and that his decision regarding his employment must be made
within seven days, otherwise, MMG "will be compelled to cancel [his] slot". 4
On July 6, 1999, respondent resigned. In his letter to MMG, he also
stated: IEAHca
xxx xxx xxx
I am aware that I still have to do a final settlement with the company
and hope that during my more than seven (7) [years] services, as the Saudi Law
stated, I am entitled for a long service award. 5 (Emphasis supplied.)
xxx xxx xxx
According to respondent, when he followed up his claim for long
service award on December 7, 2000, petitioner informed him that MMG did not
respond. 6
On December 11, 2000, respondent filed a complaint 7 for payment
of service award against petitioner before the National Labor Relations
Commission (NLRC), Regional Arbitration Branch, Cordillera Administrative
Region, Baguio City. In support of his claim, respondent averred in his position
paper that:
xxx xxx xxx
Under the Law of Saudi Arabia, an employee who rendered at least five
(5) years in a company within the jurisdiction of Saudi Arabia, is entitled to the
so-called long service award which is known to others as longevity pay of at least
one half month pay for every year of service. In excess of five years an employee
is entitled to one month pay for every year of service. In both cases inclusive of
all benefits and allowances.

This benefit was offered to complainant before he went on vacation,

hence, this was engrained in his mind. He reconstructed the computation of his
long service award or longevity pay and he arrived at the following computation
exactly the same with the amount he was previously offered [which is
US$12,640.33]. 8 (Emphasis supplied.)
xxx xxx xxx
Respondent said that he did not grab the offer for he intended to return
after his vacation.
For its part, petitioner offered payment and prescription as defenses.
Petitioner maintained that MMG "pays its workers their Service Award or
Severance Pay every conclusion of their Labor Contracts pursuant to Article 87 of
the [Saudi Labor Law]". Under Article 87, "payment of the award is at the end or
termination of the Labor Contract concluded for a specific period". Based on the
payroll, 9 respondent was already paid his service award or severance pay for his
latest (sixth) employment contract.
Petitioner added that under Article 13 10 of the Saudi Labor Law, the
action to enforce payment of the service award must be filed within one year
from the termination of a labor contract for a specific period. Respondent's six
contracts ended when he left Saudi Arabia on the following dates: April 15, 1993,
June 8, 1994, December 18, 1995, March 21, 1997, March 16, 1998 and April 30,
1999. Petitioner concluded that the one-year prescriptive period had lapsed
because respondent filed his complaint on December 11, 2000 or one year and
seven months after his sixth contract ended. 11 STcADa
In his June 18, 2001 Decision, 12 the Labor Arbiter ordered petitioner
to pay respondent longevity pay of US$12,640.33 or P648,562.69 and attorney's
fees of P64,856.27 or a total of P713,418.96. 13
The Labor Arbiter ruled that respondent's seven-year employment with
MMG had sufficiently oriented him on the benefits given to workers; that
petitioner was unable to convincingly refute respondent's claim that MMG offered
him longevity pay before he went on vacation on May 1, 1999; and that
respondent's claim was not barred by prescription since his claim on July 6, 1999,
made a month after his cause of action accrued, interrupted the prescriptive
period under the Saudi Labor Law until his claim was categorically denied.
Petitioner appealed. However, the NLRC dismissed the appeal and
affirmed the Labor Arbiter's decision. 14 The NLRC ruled that respondent is
entitled to longevity pay which is different from severance pay.
Aggrieved, petitioner brought the case to the Court of Appeals through
a petition for certiorari under Rule 65 of the Rules of Court. The Court of Appeals
denied the petition and affirmed the NLRC. The Court of Appeals ruled
that service award is the same as longevity pay, and that the severance
pay received by respondent cannot be equated with service award. The
dispositive portion of the Court of Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack
or in (sic) excess of jurisdiction on the part of public respondent NLRC, the
petition is denied. The NLRC decision dated November 29, 2002 as well as and
(sic) its January 31, 2003 Resolution are hereby AFFIRMED in toto.
SO ORDERED. 15
After its motion for reconsideration was denied, petitioner filed the
instant petition raising the following issues:
I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN

FINDING NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION ON THE PART OF PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
FINDING THAT THE SERVICE AWARD OF THE RESPONDENT [HAS] NOT
PRESCRIBED WHEN HIS COMPLAINT WAS FILED ON DECEMBER 11, 2000. caCEDA
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING IN THE CASE AT BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING ARTICLE NO. 7 OF THE SAUDI LABOR AND WORKMEN LAW TO SUPPORT
ITS FINDING THAT THE BASIS OF THE SERVICE AWARD IS LONGEVITY [PAY] OR
LENGTH OF SERVICE RENDERED BY AN EMPLOYEE. 16
Essentially, the issue is whether the Court of Appeals erred in ruling
that respondent is entitled to a service award or longevity pay of US$12,640.33
under the provisions of the Saudi Labor Law. Related to this issue are petitioner's
defenses of payment and prescription.
Petitioner points out that the Labor Arbiter awarded longevity
pay although the Saudi Labor Law grants no such benefit, and the NLRC
confused longevity pay and service award. Petitioner maintains that the benefit
granted by Article 87 of the Saudi Labor Law is service award which was already
paid by MMG each time respondent's contract ended.
Petitioner insists that prescription barred respondent's claim for service
award as the complaint was filed one year and seven months after the sixth
contract ended. Petitioner alleges that the Court of Appeals erred in ruling that
respondent's July 6, 1999 claim interrupted the running of the prescriptive
period. Such ruling is contrary to Article 13 of the Saudi Labor Law which
provides that no case or claim relating to any of the rights provided for under
said law shall be heard after the lapse of 12 months from the date of the
termination of the contract.
Respondent counters that he is entitled to longevity pay under the
provisions of the Saudi Labor Law and quotes extensively the decision of the
Court of Appeals. He points out that petitioner has not refuted the Labor Arbiter's
finding that MMG offered him longevity pay of US$12,640.33 before his onemonth vacation in the Philippines in 1999. Thus, he "submits that such offer
indeed exists" as he sees no reason for MMG to offer the benefit if no law grants
it.
After a careful study of the case, we are constrained to reverse the
Court of Appeals. We find that respondent's service award under Article 87 of the
Saudi Labor Law has already been paid. Our computation will show that
the severance pay received by respondent was his service award.
Article 87 clearly grants a service award. It reads: HAEDIS
Article 87
Where the term of a labor contract concluded for a specified
period comes to an end or where the employer cancels a contract of
unspecified period, the employer shall pay to the workman an award for
the period of his service to be computed on the basis of half a month's pay for
each of the first five years and one month's pay for each of the subsequent

years. The last rate of pay shall be taken as basis for the computation of the
award. For fractions of a year, the workman shall be entitled to an award which is
proportionate to his service period during that year. Furthermore, the workman
shall be entitled to the service award provided for at the beginning of this
article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure
beyond his control. 17 (Emphasis supplied.)
Respondent, however, has called the benefit other names such as long
service award and longevity pay. On the other hand, petitioner claimed that
the service award is the same as severance pay. Notably, the Labor Arbiter was
unable to specify any law to support his award of longevity pay. 18 He anchored
the award on his finding that respondent's allegations were more credible
because his seven-year employment at MMG had sufficiently oriented him on the
benefits given to workers. To the NLRC, respondent is entitled to service award or
longevity pay under Article 87 and that longevity pay is different from severance
pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it
correct to agree with respondent that service award is the same as longevity pay,
and wrong to agree with petitioner that service award is the same as severance
pay? And why would it be correct to say that service award is severance pay, and
wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented.
Respondent's position paper mentioned how his long service award or longevity
pay is computed: half-month's pay per year of service and one-month's pay per
year after five years of service. Article 87 has the same formula to compute the
service award.
The payroll submitted by petitioner showed that respondent
received severance pay of SR2,786 for his sixth employment contract covering
the period April 21, 1998 to April 29, 1999. 19 The computation below shows
that respondent's severance pay of SR2,786 was his service award under
Article 87.
Service Award = 1/2 (SR5,438) 20 + (9 days/365 days) 21 x 1/2
(SR5,438)
Service Award = SR2,786.04
Respondent's service award for the sixth contract is equivalent only to
half-month's pay plus the proportionate amount for the additional nine days of
service he rendered after one year. Respondent's employment contracts
expressly stated that his employment ended upon his departure from work. Each
year he departed from work and successively new contracts were executed
before he reported for work anew. His service was not cumulative. Pertinently,
in Brent School, Inc. v. Zamora, 22 we said that "a fixed term is an essential and
natural appurtenance" of overseas employment contracts, 23 as in this case. We
also said in that case that under American law, "[w]here a contract specifies the
period of its duration, it terminates on the expiration of such period. A contract of
employment for a definite period terminates by its own terms at the end of such
period." 24 As it is, Article 72 of the Saudi Labor Law is also of similar import. It
reads: HIACEa

A labor contract concluded for a specified period shall terminate upon

the expiry of its term. If both parties continue to enforce the contract, thereafter,
it shall be considered renewed for an unspecified period. 25
Regarding respondent's claim that he was offered US$12,640.33 as
longevity pay before he returned to the Philippines on May 1, 1999, we find that
he was not candid on this particular point. His categorical assertion about the
offer being "engrained in his mind" such that he "reconstructed the
computation . . . and arrived at the . . . computation exactly the same with the
amount he was previously offered" is not only beyond belief. Such assertion is
also a stark departure from his July 6, 1999 letter to MMG where he could only
express his hope that he was entitled to a long service award and where he
never mentioned the supposed previous offer. Moreover, respondent's claim that
his monthly compensation is SR10,248.92 26 is belied by the payroll which
shows that he receives SR5,438 per month.
We therefore emphasize that such payroll should have prompted the
lower tribunals to examine closely respondent's computation of his supposed
longevity pay before adopting that computation as their own.
On the matter of prescription, however, we cannot agree with
petitioner that respondent's action has prescribed under Article 13 of the Saudi
Labor Law. What applies is Article 291 of our Labor Code which reads:
ART. 291. Money claims. All money claims arising from employeremployee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise they
shall be forever barred.
xxx xxx xxx
In Cadalin v. POEA's Administrator, 27 we held that Article 291 covers
all money claims from employer-employee relationship and is broader in scope
than claims arising from a specific law. It is not limited to money claims
recoverable under the Labor Code, but applies also to claims of overseas
contract workers. 28 The following ruling inCadalin v. POEA's Administrator is
instructive:
First to be determined is whether it is the Bahrain law on prescription
of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on
prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry of the contract"
....
As a general rule, a foreign procedural law will not be applied in the
forum. Procedural matters, such as service of process, joinder of actions, period
and requisites for appeal, and so forth, are governed by the laws of the forum.
This is true even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International
Law, 131 [1979]). ScCIaA
A law on prescription of actions is sui generis in Conflict of Laws in the
sense that it may be viewed either as procedural or substantive, depending on
the characterization given such a law.
xxx xxx xxx
However, the characterization of a statute into a procedural or
substantive law becomes irrelevant when the country of the forum has a
"borrowing statute". Said statute has the practical effect of treating the foreign

statute of limitation as one of substance (Goodrich, Conflict of Laws, 152-153

[1938]). A "borrowing statute" directs the state of the forum to apply the foreign
statute of limitations to the pending claims based on a foreign law (Siegel,
Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes", one
form provides that an action barred by the laws of the place where it accrued,
will not be enforced in the forum even though the local statute has not run
against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of
our Code of Civil Procedure is of this kind. Said Section provides:
"If by the laws of the state or country where the cause of action arose,
the action is barred, it is also barred in the Philippine Islands."
Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions of the Code
of Civil Procedure as to which were inconsistent with it. There is no provision in
the Civil Code of the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws, 104
[7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code
of Civil Procedure] cannot be enforced ex proprio vigore insofar as it ordains the
application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to
the forum's public policy . . . . To enforce the one-year prescriptive period of the
Amiri Decree No. 23 of 1976 as regards the claims in question would contravene
the public policy on the protection to labor. 29
xxx xxx xxx
Thus, in our considered view, respondent's complaint was filed well
within the three-year prescriptive period under Article 291 of our Labor Code.
This point, however, has already been mooted by our finding that respondent's
service award had been paid, albeit the payroll termed such payment as
severance pay.
WHEREFORE, the petition is GRANTED. The assailed Decision dated
December 6, 2005 and Resolution dated April 12, 2006, of the Court of Appeals
in CA-G.R. SP No. 76843, as well as the Decision dated June 18, 2001 of the Labor
Arbiter in NLRC Case No. RAB-CAR-12-0649-00 and the Decision dated November
29, 2002 and Resolution dated January 31, 2003 of the NLRC in NLRC CA No.
028994-01 (NLRC RAB-CAR-12-0649-00) are REVERSED and SET ASIDE. The
Complaint of respondent is hereby DISMISSED. DTaSIc
No pronouncement as to costs.
SO ORDERED.
Carpio Morales, Chico-Nazario, * Leonardo-de Castro ** and Brion,
JJ., concur.
||| (LWV Construction Corp. v. Dupo, G.R. No. 172342, [July 13, 2009],
610 PHIL 164-177)

THIRD DIVISION
[G.R. No. 178551. October 11, 2010.]
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY
OF PUBLIC HEALTH-KUWAIT, petitioners, vs. MA. JOSEFA ECHIN, respondent.
Josefina Echin (respondent) was hired by petitioner ATCI Overseas
Corporation in behalf of its principal-co-petitioner, the Ministry of Public Health of
Kuwait (the Ministry), for the position of medical technologist under a two-year
contract, denominated as a Memorandum of Agreement (MOA), with a monthly
salary of US$1,200.00.
Under the MOA, 1 all newly-hired employees undergo a probationary
period of one (1) year and are covered by Kuwait's Civil Service Board
Employment Contract No. 2.
Respondent was deployed on February 17, 2000 but was terminated
from employment on February 11, 2001, she not having allegedly passed the
probationary period.
As the Ministry denied respondent's request for reconsideration, she
returned to the Philippines on March 17, 2001, shouldering her own air fare.
On July 27, 2001, respondent filed with the National Labor Relations
Commission (NLRC) a complaint 2 for illegal dismissal against petitioner ATCI as
the local recruitment agency, represented by petitioner, Amalia Ikdal (Ikdal), and
the Ministry, as the foreign principal.
By Decision 3 of November 29, 2002, the Labor Arbiter, finding that
petitioners neither showed that there was just cause to warrant respondent's
dismissal nor that she failed to qualify as a regular employee, held that
respondent was illegally dismissed and accordingly ordered petitioners to pay her
US$3,600.00, representing her salary for the three months unexpired portion of
her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor
Arbiter's decision by Resolution 4 of January 26, 2004. Petitioners' motion for
reconsideration having been denied by Resolution 5 of April 22, 2004, they
appealed to the Court of Appeals, contending that their principal, the Ministry,
being a foreign government agency, is immune from suit and, as such, the
immunity extended to them; and that respondent was validly dismissed for her
failure to meet the performance rating within the one-year period as required
under Kuwait's Civil Service Laws. Petitioners further contended that Ikdal should
not be liable as an officer of petitioner ATCI.
By Decision 6 of March 30, 2007, the appellate court affirmed the NLRC
Resolution.
In brushing aside petitioners' contention that they only acted as agent
of the Ministry and that they cannot be held jointly and solidarily liable with it,
the appellate court noted that under the law, a private employment agency shall
assume all responsibilities for the implementation of the contract of employment
of an overseas worker, hence, it can be sued jointly and severally with the
foreign principal for any violation of the recruitment agreement or contract of
employment. ATcaHS
As to Ikdal's liability, the appellate court held that under Sec. 10
of Republic Act No. 8042, the "Migrant and Overseas Filipinos' Act of 1995,"
corporate officers, directors and partners of a recruitment agency may
themselves be jointly and solidarily liable with the recruitment agency for money
claims and damages awarded to overseas workers.

Petitioners' motion for reconsideration having been denied by the

appellate court by Resolution 7 of June 27, 2007, the present petition for review
on certiorari was filed.
Petitioners maintain that they should not be held liable because
respondent's employment contract specifically stipulates that her employment
shall be governed by the Civil Service Law and Regulations of Kuwait. They thus
conclude that it was patent error for the labor tribunals and the appellate court to
apply the Labor Code provisions governing probationary employment in deciding
the present case.
Further, petitioners argue that even the Philippine Overseas
Employment Act (POEA) Rules relative to master employment contracts (Part III,
Sec. 2 of the POEA Rules and Regulations) accord respect to the "customs,
practices, company policies and labor laws and legislation of the host country."
Finally, petitioners posit that assuming arguendo that Philippine labor
laws are applicable, given that the foreign principal is a government agency
which is immune from suit, as in fact it did not sign any document agreeing to be
held jointly and solidarily liable, petitioner ATCI cannot likewise be held liable,
more so since the Ministry's liability had not been judicially determined as
jurisdiction was not acquired over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency, cannot evade
responsibility for the money claims of Overseas Filipino workers (OFWs) which it
deploys abroad by the mere expediency of claiming that its foreign principal is a
government agency clothed with immunity from suit, or that such foreign
principal's liability must first be established before it, as agent, can be held
jointly and solidarily liable.
In providing for the joint and solidary liability of private recruitment
agencies with their foreign principals, Republic Act No. 8042 precisely affords the
OFWs with a recourse and assures them of immediate and sufficient payment of
what is due them. Skippers United Pacific v. Maguad 8 explains:
. . . [T]he obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign principal
are not coterminous with the term of such agreement so that if either or
both of the parties decide to end the agreement, the responsibilities of such
parties towards the contracted employees under the agreement do not at all
end, but the same extends up to and until the expiration of the employment
contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Otherwise, this will render nugatory the very
purpose for which the law governing the employment of workers for
foreign jobs abroad was enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line with the policy of
the state to protect and alleviate the plight of the working class. 9 Verily, to allow
petitioners to simply invoke the immunity from suit of its foreign principal or to
wait for the judicial determination of the foreign principal's liability before
petitioner can be held liable renders the law on joint and solidary liability inutile.
As to petitioners' contentions that Philippine labor laws on probationary
employment are not applicable since it was expressly provided in respondent's
employment contract, which she voluntarily entered into, that the terms of her
engagement shall be governed by prevailing Kuwaiti Civil Service Laws and
Regulations as in fact POEA Rules accord respect to such rules, customs and
practices of the host country, the same was not substantiated.

Indeed, a contract freely entered into is considered the law between

the parties who can establish stipulations, clauses, terms and conditions as they
may deem convenient, including the laws which they wish to govern their
respective obligations, as long as they are not contrary to law, morals, good
customs, public order or public policy.
It is hornbook principle, however, that the party invoking the
application of a foreign law has the burden of proving the law, under the doctrine
of processual presumption which, in this case, petitioners failed to discharge. The
Court's ruling in EDI-Staffbuilders Int'l. v. NLRC 10 illuminates:
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract(e.g., specific causes for termination, termination
procedures, etc.). Being the law intended by the parties (lex loci intentiones) to
apply to the contract, Saudi Labor Laws should govern all matters relating to the
termination of the employment of Gran. HcACTE
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the foreign law.
The foreign law is treated as a question of fact to be properly pleaded
and proved as the judge or labor arbiter cannot take judicial notice of a
foreign law. He is presumed to know only domestic or forum law.
Unfortunately for petitioner, it did not prove the pertinent
Saudi laws on the matter; thus, the International Law doctrine
of presumed-identity approach orprocessual presumption comes into
play. Where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the same as ours. Thus,
we apply Philippine labor laws in determining the issues presented
before us. (emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence,
they must not only be alleged; they must be proven. To prove a foreign law, the
party invoking it must present a copy thereof and comply with Sections 24 and
25 of Rule 132 of the Revised Rules of Court which reads:
SEC. 24.Proof of official record. The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any purpose, may
be evidenced by an official publication thereof or by a copy attested by the
officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that
such officer has the custody. If the office in which the record is kept is in a
foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular
agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. (emphasis supplied)
SEC. 25.What attestation of copy must state. Whenever a copy of a
document or record is attested for the purpose of the evidence, the attestation
must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be. The attestation must be under the
official seal of the attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court.
To prove the Kuwaiti law, petitioners submitted the following: MOA
between respondent and the Ministry, as represented by ATCI, which provides
that the employee is subject to a probationary period of one (1) year and that the

host country's Civil Service Laws and Regulations apply; a translated

copy 11 (Arabic to English) of the termination letter to respondent stating that
she did not pass the probation terms, without specifying the grounds therefor,
and a translated copy of the certificate of termination, 12 both of which
documents were certified by Mr. Mustapha Alawi, Head of the Department of
Foreign Affairs-Office of Consular Affairs Inslamic Certification and Translation
Unit; and respondent's letter 13 of reconsideration to the Ministry, wherein she
noted that in her first eight (8) months of employment, she was given a rating of
"Excellent" albeit it changed due to changes in her shift of work schedule.
These documents, whether taken singly or as a whole, do not
sufficiently prove that respondent was validly terminated as a probationary
employee under Kuwaiti civil service laws. Instead of submitting a copy of
the pertinent Kuwaiti labor laws duly authenticated and translated by
Embassy officials thereat, as required under the Rules, what petitioners
submitted were mere certifications attesting only to the correctness of
the translations of the MOA and the termination letter which does not
prove at all that Kuwaiti civil service laws differ from Philippine laws
and that under such Kuwaiti laws, respondent was validly
terminated. Thus the subject certifications read:
xxx xxx xxx
This is to certify that the herein attached translation/s from Arabic to
English/Tagalog and or vice versa was/were presented to this Office for review
and certification and the same was/were found to be in order. This Office,
however, assumes no responsibility as to the contents of the
document/s.
This certification is being issued upon request of the interested party
for whatever legal purpose it may serve. (emphasis supplied)
Respecting Ikdal's joint and solidary liability as a corporate officer, the
same is in order too following the express provision of R.A. 8042 on money
claims, viz.:
SEC. 10.Money Claims. Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual moral,
exemplary and other forms of damages. cHDAIS
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be filed
by the recruitment/placement agency, as provided by law, shall be answerable
for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers
and directors and partners as the case may be, shall themselves be
jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages. (emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED. SO ORDERED.

SECOND DIVISION
[G.R. No. 120135. March 31, 2003.]
BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL,
LTD., petitioners, vs. COURT OF APPEALS, HON. MANUEL PADOLINA,
EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents.
Agcaoili & Associates for petitioner.
William R. Veto for respondent.
SYNOPSIS
The Litonjuas were engaged in the shipping business and owned two
vessels, through their wholly-owned corporations. With their business doing well,
the petitioner banks induced them to increase the number of their ships in
operation, offering them easy loans to acquire said vessels. Thereafter,
petitioners acquired, through Litonjuas' corporations as borrowers, four additional
vessels which were registered in the names of their corporations. The Litonjuas
claimed, among others, that petitioners as trustees did not fully render an
account of all the income derived from the operation of the vessels as well as the
proceeds of the subsequent foreclosure sale and that the loans acquired for the
purchase of the four additional vessels matured and remained unpaid, prompting
petitioners to have all the six vessels, including the two vessels originally owned
by the private respondents, foreclosed and sold at public auction. Petitioners filed
a motion to dismiss on grounds of forumnon conveniens and lack of cause of
action against them, but the same was denied by the trial court. The Court of
Appeals denied petitioners' petition for review oncertiorari and motion for
reconsideration. Hence, this petition.
In denying the petition, the Supreme Court ruled that it is not the lack
or absence of cause of action that is a ground for dismissal of the complaint, but
rather the fact that the complaint states no cause of action. Failure to state a
cause of action refers to the insufficiency of allegation in the pleading, unlike lack
of cause of action which refers to the insufficiency of factual basis for the action.
In the case at bar, the complaint contains the three elements of a cause of
action.
The Court further ruled that whether a suit should be entertained or
dismissed on the basis of the doctrine of forum non conveniens depends largely
upon the facts of the particular case and is addressed to the sound discretion of
the trial court. In the case of Communication Materials and Design, Inc. vs. Court
of Appeals, this Court held that a Philippine Court may assume jurisdiction over
the case if it chooses to do so; provided, that the following requisites are met: (1)
that the Philippine Court is one to which the parties may conveniently resort to;
(2) that the Philippine Court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine Court has or is likely to have the
power to enforce its decision. Evidently, all these requisites are present in the
instant case.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI;
ORDER DENYING MOTION TO DISMISS CANNOT BE THE SUBJECT THEREOF; CASE
AT BAR. [T]he order denying the motion to dismiss cannot be the subject of
petition for certiorari. Petitioners should have filed an answer to the complaint,
proceed to trial and await judgment before making an appeal. As repeatedly held
by this Court: "An order denying a motion to dismiss is interlocutory and cannot
be the subject of the extraordinary petition for certiorari or mandamus. The
remedy of the aggrieved party is to file an answer and to interpose as defenses

the objections raised in his motion to dismiss, proceed to trial, and in case of an
adverse decision, to elevate the entire case by appeal in due course. . . . Under
certain
situations,
recourse
tocertiorari
or
mandamus is
considered
appropriate, i.e., (a) when the trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of discretion by the trial court;
or (c) appeal would not prove to be a speedy and adequate remedy as when an
appeal would not promptly relieve a defendant from the injurious effects of the
patently mistaken order maintaining the plaintiff's baseless action and
compelling the defendant needlessly to go through a protracted trial and
clogging the court dockets by another futile case."
2. ID.; ACTIONS; MOTION TO DISMISS; LACK OF PERSONALITY TO SUE
CAN BE USED AS GROUND FOR MOTION TO DISMISS BASED ON THE FACT THAT
THE COMPLAINT EVIDENTLY STATES NO CAUSE OF ACTION. A case is
dismissible for lack of personality to sue upon proof that the plaintiff is not the
real party-in-interest. Lack of personality to sue can be used as a ground for a
Motion to Dismiss based on the fact that the complaint, on the face thereof,
evidently states no cause of action.
3. ID.; ID.; CAUSE OF ACTION; ELEMENTS; PRESENT IN CASE AT BAR.
In San Lorenzo Village Association, Inc. vs. Court of Appeals, this Court clarified
that a complaint states a cause of action where it contains three essential
elements of a cause of action, namely: (1) the legal right of the plaintiff, (2) the
correlative obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right. If these elements are absent, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to
state a cause of action. . . . In the case at bar, the complaint contains the three
elements of a cause of action. It alleges that: (1) plaintiffs, herein private
respondents, have the right to demand for an accounting from defendants
(herein petitioners), as trustees by reason of the fiduciary relationship that was
created between the parties involving the vessels in question; (2) petitioners
have the obligation, as trustees, to render such an accounting; and (3)
petitioners failed to do the same. cHTCaI
4. ID.; ID.; ID.; FAILURE TO STATE A CAUSE OF ACTION AND LACK OF
CAUSE OF ACTION, DISTINGUISHED. [I]t is not the lack or absence of cause of
action that is a ground for dismissal of the complaint but rather the fact that the
complaint states no cause of action. "Failure to state a cause of action" refers to
the insufficiency of allegation in the pleading, unlike "lack of cause of action"
which refers to the insufficiency of factual basis for the action. "Failure to state a
cause of action" may be raised at the earliest stages of an action through a
motion to dismiss the complaint, while "lack of cause of action" may be raised
any time after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented.
5. PRIVATE INTERNATIONAL LAW; FORUM NON CONVENIENS;
APPLICATION OF THE DOCTRINE DEPENDS LARGELY UPON THE FACTS OF THE
CASE AND ADDRESSED TO THE. SOUND DISCRETION OF THE TRIAL COURT.
The doctrine of forum non-conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of global
forum shopping, that is to prevent non-resident litigants from choosing the forum
or place wherein to bring their suit for malicious reasons, such as to secure
procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it

is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere. Whether a suit should be entertained or
dismissed on the basis of said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. In the
case of Communication Materials and Design, Inc. vs. Court of Appeals, this Court
held that ". . . [a] Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2) that
the Philippine Court is in a position to make an intelligent decision as to the law
and the facts; and, (3) that the Philippine Court has or is likely to have power to
enforce its decision." Evidently, all these requisites are present in the instant
case.
6. ID.; ID.; SHOULD NOT BE USED AS GROUND FOR A MOTION TO
DISMISS. [T]his Court enunciated in Philsec. Investment Corporation vs. Court
of Appeals, that the doctrine of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does
not include said doctrine as a ground. This Court further ruled that while it is
within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the court's desistance; and that the
propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly
considered a matter of defense.
7. REMEDIAL LAW; ACTIONS; FORUM SHOPPING; WHEN PRESENT.
Forum shopping exists where the elements of litis pendentia are present and
where a final judgment in one case will amount to res judicata in the other.
8. ID.; ID.; LITIS PENDENTIA; ELEMENTS; NOT PRESENT IN CASE AT BAR.
[F]or litis pendentia to be a ground for the dismissal of an action there must
be: (a) identity of the parties or at least such as to represent the same interest in
both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same acts; and (c) the identity in the two cases should be such
that the judgment which may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other. In case at bar, not all the
requirements for litis pendentia are present. While there may be identity of
parties, notwithstanding the presence of other respondents, as well as the
reversal in positions of plaintiffs and defendants, still the other requirements
necessary for litis pendentia were not shown by petitioner. It merely mentioned
that civil cases were filed in Hongkong and England without however showing the
identity of rights asserted and the reliefs sought for as well as the presence of
the elements of res judicata should one of the cases be adjudged.
DECISION
AUSTRIA-MARTINEZ, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the November 29, 1994 decision of the Court of Appeals 1 and
the April 28, 1995 resolution denying petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua
(Litonjuas, for brevity) filed a Complaint 2 before the Regional Trial Court of Pasig
against the Bank of America NT&SA and Bank of America International, Ltd.
(defendant banks for brevity) alleging that: they were engaged in the shipping

business; they owned two vessels: Don Aurelio and El Champion, through their
wholly-owned corporations; they deposited their revenues from said business
together with other funds with the branches of said banks in the United Kingdom
and Hongkong up to 1979; with their business doing well, the defendant banks
induced them to increase the number of their ships in operation, offering them
easy loans to acquire said vessels; 3 thereafter, the defendant banks acquired,
through their (Litonjuas') corporations as the borrowers: (a) El Carrier 4 ; (b) El
General 5 ; (c) El Challenger 6 ; and (d) El Conqueror 7 ; the vessels were
registered in the names of their corporations; the operation and the funds
derived therefrom were placed under the complete and exclusive control and
disposition of the petitioners; 8 and the possession of the vessels was also
placed by defendant banks in the hands of persons selected and designated by
them (defendant banks). 9
The Litonjuas claimed that defendant banks as trustees did not fully
render an account of all the income derived from the operation of the vessels as
well as of the proceeds of the subsequent foreclosure sale; 10 because of the
breach of their fiduciary duties and/or negligence of the petitioners and/or the
persons designated by them in the operation of private respondents' six vessels,
the revenues derived from the operation of all the vessels declined drastically;
the loans acquired for the purchase of the four additional vessels then matured
and remained unpaid, prompting defendant banks to have all the six vessels,
including the two vessels originally owned by the private respondents, foreclosed
and sold at public auction to answer for the obligations incurred for and in behalf
of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their
own personal funds equivalent to ten percent (10%) of the acquisition cost of the
four vessels and were left with the unpaid balance of their loans with defendant
banks. 11 The Litonjuas prayed for the accounting of the revenues derived in the
operation of the six vessels and of the proceeds of the sale thereof at the
foreclosure proceedings instituted by petitioners; damages for breach of trust;
exemplary damages and attorney's fees. 12
Defendant banks filed a Motion to Dismiss on grounds of forum non
conveniens and lack of cause of action against them. 13
On December 3, 1993, the trial court issued an Order denying the
Motion to Dismiss, thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to
Dismiss is hereby DENIED. The defendant is therefore, given a period of ten (10)
days to file its Answer to the complaint.
"SO ORDERED." 14
Instead of filing an answer the defendant banks went to the Court of
Appeals on a "Petition for Review on Certiorari" 15 which was aptly treated by
the appellate court as a petition for certiorari. They assailed the above-quoted
order
as
well
as
the
subsequent
denial
of
their
Motion
for
Reconsideration. 16 The appellate court dismissed the petition and denied
petitioners' Motion for Reconsideration. 17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT
THAT THE SEPARATE PERSONALITIES OF THE PRIVATE RESPONDENTS (MERE
STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL BORROWERS)
CLEARLY SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION THAT THE PRIVATE
RESPONDENTS HAVE NO PERSONALITIES TO SUE.

"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT

WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT MANDATORY, THERE
ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING WHETHER THE
CHOICE OF FORUM SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES
SURROUNDING THE INSTANT CASE, DISMISSAL OF THE COMPLAINT ON THE
GROUND OF FORUM NON-CONVENIENS IS MORE APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL
JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN ACTION
MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY THE
PRIVATE RESPONDENT. COROLLARY TO THIS, THE RESPONDENT COURT OF
APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE
GUILTY OF FORUM SHOPPING." 18
As to the first assigned error: Petitioners argue that the borrowers and
the registered owners of the vessels are the foreign corporations and not private
respondents Litonjuas who are mere stockholders; and that the revenues derived
from the operations of all the vessels are deposited in the accounts of the
corporations. Hence, petitioners maintain that these foreign corporations are the
legal entities that have the personalities to sue and not herein private
respondents; that private respondents, being mere shareholders, have no claim
on the vessels as owners since they merely have an inchoate right to whatever
may remain upon the dissolution of the said foreign corporations and after all
creditors have been fully paid and satisfied; 19 and that while private
respondents may have allegedly spent amounts equal to 10% of the acquisition
costs of the vessels in question, their 10% however represents their investments
as stockholders in the foreign corporations. 20
Anent the second assigned error, petitioners posit that while the
application of the principle of forum non conveniens is discretionary on the part
of the Court, said discretion is limited by the guidelines pertaining to the private
as well as public interest factors in determining whether plaintiffs' choice of
forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert 21 and Piper Aircraft Co. vs. Reyno, 22 to wit:
"Private interest factors include: (a) the relative ease of access to
sources of proof; (b) the availability of compulsory process for the attendance of
unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; or
(d) all other practical problems that make trial of a case easy, expeditious and
inexpensive. Public interest factors include: (a) the administrative difficulties
flowing from court congestion; (b) the local interest in having localized
controversies decided at home; (c) the avoidance of unnecessary problems in
conflict of laws or in the application of foreign law; or (d) the unfairness of
burdening citizens in an unrelated forum with jury duty." 23
In support of their claim that the local court is not the proper forum,
petitioners allege the following:
"i) The Bank of America Branches involved, as clearly mentioned in the
Complaint, are based in Hongkong and England. As such, the evidence and the
witnesses are not readily available in the Philippines;
"ii) The loan transactions were obtained, perfected, performed,
consummated and partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore,
the mortgaged vessels were part of an offshore fleet, not based in the
Philippines;

"iv) All the loans involved were granted to the Private Respondents'
foreign CORPORATIONS;
"v) The Restructuring Agreements were ALL governed by the laws of
England;
"vi) The
subsequent sales of
the
mortgaged
vessels
and
the application of the sales proceeds occurred and transpired outside the
Philippines, and the deliveries of the sold mortgaged vessels were likewise made
outside the Philippines;
"vii) The revenues of the vessels and the proceeds of the sales of these
vessels
were ALL deposited
to
the
Accounts
of
the
foreign CORPORATIONS abroad; and
"viii) Bank of America International Ltd. is not licensed nor engaged in
trade or business in the Philippines." 24
Petitioners argue further that the loan agreements, security
documentation and all subsequent restructuring agreements uniformly,
unconditionally and expressly provided that they will be governed by the laws of
England; 25 that Philippine Courts would then have to apply English law in
resolving whatever issues may be presented to it in the event it recognizes and
accepts herein case; that it would then be imposing a significant and
unnecessary expense and burden not only upon the parties to the transaction
but also to the local court. Petitioners insist that the inconvenience and difficulty
of applying English law with respect to a wholly foreign transaction in a case
pending in the Philippines may be avoided by its dismissal on the ground
of forum non conveniens. 26
Finally, petitioners claim that private respondents have already waived
their alleged causes of action in the case at bar for their refusal to contest the
foreign civil cases earlier filed by the petitioners against them in Hongkong and
England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench
Division Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN
TRANSPORT NAVIGATION, SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL
CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATORS CORP.
SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K.
LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against (a) EL CHALLENGER
S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA
and (d) AURELIO KATIPUNAN LITONJUA.
"3.) Civil action in the Supreme Court of Hongkong High Court (Action
No. 4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f)
LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA,
JR., and (h) EDUARDO KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court
(Action No. 4040 of 1992); against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC
NAVIGATORS CORPORATION (e) EDDIE NAVIGATION CORPORATION S.A., (f)
LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA,
JR., and (h) EDUARDO KATIPUNAN LITONJUA."

and that private respondents' alleged cause of action is already barred

by the pendency of another action or by litis pendentia as shown above. 27
On the other hand, private respondents contend that certain material
facts and pleadings are omitted and/or misrepresented in the present petition
for certiorari; that the prefatory statement failed to state that part of the security
of the foreign loans were mortgages on a 39-hectare piece of real estate located
in the Philippines; 28 that while the complaint was filed only by the stockholders
of the corporate borrowers, the latter are wholly-owned by the private
respondents who are Filipinos and therefore under Philippine laws, aside from the
said corporate borrowers being but their alter-egos, they have interests of their
own in the vessels. 29 Private respondents also argue that the dismissal by the
Court of Appeals of the petition for certiorari was justified because there was
neither allegation nor any showing whatsoever by the petitioners that they had
no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of
law from the Order of the trial judge denying their Motion to Dismiss; that the
remedy available to the petitioners after their Motion to Dismiss was denied was
to file an Answer to the complaint; 30 that as upheld by the Court of Appeals, the
decision of the trial court in not applying the principle of forum non conveniens is
in the lawful exercise of its discretion. 31 Finally, private respondents aver that
the statement of petitioners that the doctrine of res judicata also applies to
foreign judgment is merely an opinion advanced by them and not based on a
categorical ruling of this Court; 32 and that herein private respondents did not
actually participate in the proceedings in the foreign courts. 33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss
cannot be the subject of petition for certiorari. Petitioners should have filed an
answer to the complaint, proceed to trial and await judgment before making an
appeal. As repeatedly held by this Court:
"An order denying a motion to dismiss is interlocutory and cannot be
the subject of the extraordinary petition for certiorari or mandamus. The remedy
of the aggrieved party is to file an answer and to interpose as defenses the
objections raised in his motion to dismiss, proceed to trial, and in case of an
adverse decision, to elevate the entire case by appeal in due course. . . . Under
certain
situations,
recourse
to certiorari or mandamus is
considered
appropriate, i.e., (a) when the trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of discretion by the trial court;
or (c) appeal would not prove to be a speedy and adequate remedy as when an
appeal would not promptly relieve a defendant from the injurious effects of the
patently mistaken order maintaining the plaintiff's baseless action and
compelling the defendant needlessly to go through a protracted trial and
clogging the court dockets by another futile case." 34
Records show that the trial court acted within its jurisdiction when it
issued the assailed Order denying petitioners' motion to dismiss. Does the denial
of the motion to dismiss constitute a patent grave abuse of discretion? Would
appeal, under the circumstances, not prove to be a speedy and adequate
remedy? We will resolve said questions in conjunction with the issues raised by
the parties.
First issue. Did the trial court commit grave abuse of discretion in
refusing to dismiss the complaint on the ground that plaintiffs have no cause of
action against defendants since plaintiffs are merely stockholders of the

corporations which are the registered owners of the vessels and the borrowers of
petitioners?
No. Petitioners' argument that private respondents, being mere
stockholders of the foreign corporations, have no personalities to sue, and
therefore, the complaint should be dismissed, is untenable. A case is dismissible
for lack of personality to sue upon proof that the plaintiff is not the real party-ininterest. Lack of personality to sue can be used as a ground for a Motion to
Dismiss based on the fact that the complaint, on the face thereof, evidently
states no cause of action. 35 In San Lorenzo Village Association, Inc. vs. Court of
Appeals, 36 this Court clarified that a complaint states a cause of action where it
contains three essential elements of a cause of action, namely: (1) the legal right
of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or
omission of the defendant in violation of said legal right. If these elements are
absent, the complaint becomes vulnerable to a motion to dismiss on the ground
of failure to state a cause of action. 37 To emphasize, it is not the lack or
absence of cause of action that is a ground for dismissal of the complaint but
rather the fact that the complaint states no cause of action. 38 "Failure to state
a cause of action" refers to the insufficiency of allegation in the pleading, unlike
"lack of cause of action" which refers to the insufficiency of factual basis for the
action. "Failure to state a cause of action" may be raised at the earliest stages of
an action through a motion to dismiss the complaint, while "lack of cause of
action" may be raised any time after the questions of fact have been resolved on
the basis of stipulations, admissions or evidence presented. 39
In the case at bar, the complaint contains the three elements of a
cause of action. It alleges that: (1) plaintiffs, herein private respondents, have
the right to demand for an accounting from defendants (herein petitioners), as
trustees by reason of the fiduciary relationship that was created between the
parties involving the vessels in question; (2) petitioners have the obligation, as
trustees, to render such an accounting; and (3) petitioners failed to do the same.
Petitioners insist that they do not have any obligation to the private
respondents as they are mere stockholders of the corporation; that the corporate
entities have juridical personalities separate and distinct from those of the
private respondents. Private respondents maintain that the corporations are
wholly owned by them and prior to the incorporation of such entities, they were
clients of petitioners which induced them to acquire loans from said petitioners to
invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo
case, 40
". . . assuming that the allegation of facts constituting plaintiffs' cause
of action is not as clear and categorical as would otherwise be desired, any
uncertainty thereby arising should be so resolved as to enable a full inquiry into
the merits of the action."
As this Court has explained in the San Lorenzo case, such a course,
would preclude multiplicity of suits which the law abhors, and conduce to the
definitive determination and termination of the dispute. To do otherwise, that is,
to abort the action on account of the alleged fatal flaws of the complaint would
obviously be indecisive and would not end the controversy, since the institution
of another action upon a revised complaint would not be foreclosed. 41
Second Issue. Should the complaint be dismissed on the ground
of forum non-conveniens?

No. The doctrine of forum non-conveniens, literally meaning 'the forum

is inconvenient', emerged in private international law to deter the practice of
global forum shopping, 42 that is to prevent non-resident litigants from choosing
the forum or place wherein to bring their suit for malicious reasons, such as to
secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere.43
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court. 44 In the case of Communication
Materials and Design, Inc. vs. Court of Appeals, 45 this Court held that ". . . [a]
Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court is
one to which the parties may conveniently resort to; (2) that the Philippine Court
is in a position to make an intelligent decision as to the law and the facts; and,
(3) that the Philippine Court has or is likely to have power to enforce its
decision." 46 Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs.
Court of Appeals, 47 that the doctrine of forum non conveniens should not be
used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of
Court does not include said doctrine as a ground. This Court further ruled that
while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to
determine whether special circumstances require the court's desistance; and that
the propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly
considered a matter of defense. 48
Third issue. Are private respondents guilty of forum shopping because
of the pendency of foreign action?
No. Forum shopping exists where the elements of litis pendentia are
present and where a final judgment in one case will amount to res judicata in the
other. 49Parenthetically, for litis pendentia to be a ground for the dismissal of an
action there must be: (a) identity of the parties or at least such as to represent
the same interest in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same acts; and (c) the identity in the two
cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other. 50
In case at bar, not all the requirements for litis pendentia are present.
While there may be identity of parties, notwithstanding the presence of other
respondents, 51 as well as the reversal in positions of plaintiffs and
defendants 52 , still the other requirements necessary for litis pendentia were
not shown by petitioner. It merely mentioned that civil cases were filed in
Hongkong and England without however showing the identity of rights asserted
and the reliefs sought for as well as the presence of the elements of res
judicata should one of the cases be adjudged.
As the Court of Appeals aptly observed:
. . . [T]he petitioners, by simply enumerating the civil actions instituted
abroad involving the parties herein . . ., failed to provide this Court with relevant

and clear specifications that would show the presence of the above-quoted
elements or requisites for res judicata. While it is true that the petitioners in their
motion for reconsideration (CA Rollo, p. 72), after enumerating the various civil
actions instituted abroad, did aver that "Copies of the foreign judgments are
hereto attached and made integral parts hereof as Annexes 'B', 'C', 'D' and `E'",
they failed, wittingly or inadvertently, to include a single foreign judgment in
their pleadings submitted to this Court as annexes to their petition. How then
could We have been expected to rule on this issue even if We were to hold that
foreign judgments could be the basis for the application of the aforementioned
principle of res judicata? 53
Consequently, both courts correctly denied the dismissal of herein
subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioners. TIcEDC
SO ORDERED.
Bellosillo, Mendoza, Quisumbing, and Callejo, Sr., JJ., concur.
||| (Bank of America NT&SA v. Court of Appeals, G.R. No. 120135,
[March 31, 2003], 448 PHIL 181-198)

SECOND DIVISION
[G.R. No. 145587. October 26, 2007.]
EDI-STAFFBUILDERS
INTERNATIONAL,
INC., petitioner, vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
and
ELEAZAR
S.
GRAN, respondents.
DECISION
VELASCO, JR., J p:
The Case
This Petition for Review on Certiorari 1 seeks to set aside the October
18, 2000 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which
affirmed the January 15, 1999 Decision 3 and September 30, 1999
Resolution 4 rendered by the National Labor Relations Commission (NLRC) (Third
Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search International
(ESI), EDI-Staffbuilders International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr
Est. (OAB) jointly and severally to pay Eleazar S. Gran (Gran) the amount of USD
16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement
of Overseas Filipino Workers (OFWs). 5 ESI is another recruitment agency which
collaborated with EDI to process the documentation and deployment of private
respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed
by ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia. 6
It appears that OAB asked EDI through its October 3, 1993 letter
for curricula vitae of qualified applicants for the position of "Computer
Specialist." 7 In a facsimile transmission dated November 29, 1993, OAB
informed EDI that, from the applicants' curricula vitae submitted to it for
evaluation, it selected Gran for the position of "Computer Specialist." The faxed
letter also stated that if Gran agrees to the terms and conditions of employment
contained in it, one of which was a monthly salary of SR (Saudi Riyal) 2,250.00
(USD 600.00), EDI may arrange for Gran's immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an
employment contract 9 that granted him a monthly salary of USD 850.00 for a
period of two years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia
on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly
salary his employment contract stated USD 850.00; while his Philippine
Overseas Employment Agency (POEA) Information Sheet indicated USD 600.00
only. However, through the assistance of the EDI office in Riyadh, OAB agreed to
pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his
employment was terminated through OAB's July 9, 1994 letter, 11 on the
following grounds:
1. Non-compliance to contract requirements by the recruitment agency
primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment
agency[,] vide OAB letter ref. F-5751-93, dated October 3, 1993. 12
3. Insubordination or disobedience to Top Management Order and/or
instructions (non-submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR
2,948.00 representing his final pay, and on the same day, he executed a

Declaration 13 releasing OAB from any financial obligation or otherwise, towards

him.
After his arrival in the Philippines, Gran instituted a complaint, on July
21, 1994, against ESI/EDI, OAB, Country Bankers Insurance Corporation, and
Western Guaranty Corporation with the NLRC, National Capital Region, Quezon
City, which was docketed as POEA ADJ (L) 94-06-2194 for underpayment of
wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision, 14 Labor Arbiter Manuel R. Caday,
to whom Gran's case was assigned, ruled that there was neither underpayment
nor illegal dismissal.ICDcEA
The Labor Arbiter reasoned that there was no underpayment of salaries
since according to the POEA-Overseas Contract Worker (OCW) Information Sheet,
Gran's monthly salary was USD 600.00, and in his Confirmation of Appointment
as Computer Specialist, his monthly basic salary was fixed at SR 2,500.00, which
was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify
that Gran had no claim for unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found
that Gran failed to refute EDI's allegations; namely, (1) that Gran did not submit
a single activity report of his daily activity as dictated by company policy; (2) that
he was not qualified for the job as computer specialist due to his insufficient
knowledge in programming and lack of knowledge in ACAD system; (3) that Gran
refused to follow management's instruction for him to gain more knowledge of
the job to prove his worth as computer specialist; (4) that Gran's employment
contract had never been substituted; (5) and that Gran was paid a monthly
salary of USD 850.00, and USD 350.00 monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed
from his work due to insubordination, disobedience, and his failure to submit
daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint
for lack of merit.
Dissatisfied, Gran filed an Appeal 15 on April 6, 1998 with the NLRC,
Third Division. However, it appears from the records that Gran failed to furnish
EDI with a copy of his Appeal Memorandum. SETAcC
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's
contract to ESI is actually "reprocessing," which is a prohibited transaction under
Article 34 (b) of theLabor Code. This scheme constituted misrepresentation
through the conspiracy between EDI and ESI in misleading Gran and even POEA
of the actual terms and conditions of the OFW's employment. In addition, it was
found that Gran did not commit any act that constituted a legal ground for
dismissal. The alleged non-compliance with contractual stipulations relating to
Gran's salary and contract duration, and the absence of pre-qualification
requirements cannot be attributed to Gran but to EDI, which dealt directly with
OAB. In addition, the charge of insubordination was not substantiated, and Gran
was not even afforded the required notice and investigation on his alleged
offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a
new one, the dispositive portion of which reads:

WHEREFORE, the assailed decision is SET ASIDE. Respondents

Expertise Search International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed
Ali Bin Bechr Est. (OAB) are hereby ordered jointly and severally liable to pay the
complainant Eleazar Gran the Philippine peso equivalent at the time of actual
payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for the unexpired portion of his
contract.
SO ORDERED. 16
Gran then filed a Motion for Execution of Judgment 17 on March 29,
1999 with the NLRC and petitioner receiving a copy of this motion on the same
date. 18
To prevent the execution, petitioner filed an Opposition 19 to Gran's
motion arguing that the Writ of Execution cannot issue because it was not
notified of the appellate proceedings before the NLRC and was not given a copy
of the memorandum of appeal nor any opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed
its Opposition, petitioner filed, on August 26, 1999, a Motion for Reconsideration
of the NLRC Decision after receiving a copy of the Decision on August 16,
1999. 20
The NLRC then issued a Resolution 21 denying petitioner's Motion for
Reconsideration, ratiocinating that the issues and arguments raised in the motion
"had already been amply discussed, considered, and ruled upon" in the Decision,
and that there was "no cogent reason or patent or palpable error that warrant
any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition
for Certiorari before the CA. Petitioner claimed in its petition that the NLRC
committed grave abuse of discretion in giving due course to the appeal despite
Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of
EDI's petition. CIDTcH
On the procedural issue, the appellate court held that "Gran's failure to
furnish a copy of his appeal memorandum [to EDI was] a mere formal lapse, an
excusable neglect and not a jurisdictional defect which would justify the
dismissal of his appeal." 22 The court also held that petitioner EDI failed to prove
that private respondent was terminated for a valid cause and in accordance with
due process; and that Gran's Declaration releasing OAB from any monetary
obligation had no force and effect. The appellate court ratiocinated that EDI had
the burden of proving Gran's incompetence; however, other than the termination
letter, no evidence was presented to show how and why Gran was considered to
be incompetent. The court held that since the law requires the recruitment
agencies to subject OFWs to trade tests before deployment, Gran must have
been competent and qualified; otherwise, he would not have been hired and
deployed abroad.
As for the charge of insubordination and disobedience due to Gran's
failure to submit a "Daily Activity Report," the appellate court found that EDI
failed to show that the submission of the "Daily Activity Report" was a part of
Gran's duty or the company's policy. The court also held that even if Gran was
guilty of insubordination, he should have just been suspended or reprimanded,
but not dismissed.

The CA also held that Gran was not afforded due process, given that
OAB did not abide by the twin notice requirement. The court found that Gran was
terminated on the same day he received the termination letter, without having
been apprised of the bases of his dismissal or afforded an opportunity to explain
his side.
Finally, the CA held that the Declaration signed by Gran did not bar him
from demanding benefits to which he was entitled. The appellate court found
that the Declaration was in the form of a quitclaim, and as such is frowned upon
as contrary to public policy especially where the monetary consideration given in
the Declaration was very much less than what he was legally entitled to his
backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court
denied the petition to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL
MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL
DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE PROCESS AS
WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY
REASON OF INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS.
NLRC RULING, AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE IN THE
INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL
EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO
TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED
PORTION OF HIS CONTRACT. 23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish
EDI with his Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide
Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the
Appeal Memorandum constitutes a jurisdictional defect and a deprivation of due
process that would warrant a rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish
a copy of the appeal to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission, 24 this Court set
aside the order of the NLRC which dismissed an appeal on the sole ground that
the appellant did not furnish the appellee a memorandum of appeal contrary to
the requirements of Article 223 of the New Labor Code and Section 9, Rule XIII of
its Implementing Rules and Regulations. SEHaTC
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of
dismissal of an appeal to the NLRC based on the ground that "there is no

showing whatsoever that a copy of the appeal was served by the appellant on
the appellee" 25 was annulled. The Court ratiocinated as follows:
The failure to give a copy of the appeal to the adverse party was a
mere formal lapse, an excusable neglect. Time and again We have acted on
petitions to review decisions of the Court of Appeals even in the absence of proof
of service of a copy thereof to the Court of Appeals as required by Section 1 of
Rule 45, Rules of Court.We act on the petitions and simply require the
petitioners to comply with the rule. 26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines
Employees
Labor
Union-FFW
v.
National
Labor
Relations
Commission, 27 Pagdonsalan v. NLRC, 28 and inSunrise Manning Agency, Inc. v.
NLRC. 29
Thus, the doctrine that evolved from these cases is that failure to
furnish the adverse party with a copy of the appeal is treated only as a formal
lapse, an excusable neglect, and hence, not a jurisdictional defect. Accordingly,
in such a situation, the appeal should not be dismissed; however, it should not be
given due course either. As enunciated in J.D. Magpayo, the duty that is
imposed on the NLRC, in such a case, is to require the appellant to
comply with the rule that the opposing party should be provided with a
copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal
Memorandum is excusable, the abject failure of the NLRC to order Gran to furnish
EDI with the Appeal Memorandum constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish
EDI a copy of the Appeal Memorandum. The NLRC then ordered Gran to present
proof of service. In compliance with the order, Gran submitted a copy of Camp
Crame Post Office's list of mail/parcels sent on April 7, 1998. 30 The post office's
list shows that private respondent Gran sent two pieces of mail on the same
date: one addressed to a certain Dan O. de Guzman of Legaspi Village, Makati;
and the other appears to be addressed to Neil B. Garcia (or Gran), 31 of Ermita,
Manila both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed
received a copy of the Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and
completeness of service in proceedings before the NLRC:
Section 5. 32 Proof and completeness of service. The return
is prima facie proof of the facts indicated therein. Service by registered mail
is complete upon receipt by the addressee or his agent; but if the
addressee fails to claim his mail from the post office within five (5) days from the
date of first notice of the postmaster, service shall take effect after such time.
(Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed
complete when the addressee or his agent received the mail or after five (5) days
from the date of first notice of the postmaster. However, the NLRC Rules do not
state what would constitute proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of
service: AHacIS
Section 13. Proof of service. Proof of personal service shall consist
of a written admission of the party served or the official return of the server, or
the affidavit of the party serving, containing a full statement of the date, place
and manner of service. If the service is by ordinary mail, proof thereof shall

consist of an affidavit of the person mailing of facts showing compliance with

section 7 of this Rule. If service is made by registered mail, proof shall be
made by such affidavit and registry receipt issued by the mailing office.
The registry return card shall be filed immediately upon its receipt by
the sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the
addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted
by Gran is not conclusive proof that he had served a copy of his appeal
memorandum to EDI, nor is it conclusive proof that EDI received its copy of the
Appeal Memorandum. He should have submitted an affidavit proving that he
mailed the Appeal Memorandum together with the registry receipt issued by the
post office; afterwards, Gran should have immediately filed the registry return
card.
Hence, after seeing that Gran failed to attach the proof of service, the
NLRC should not have simply accepted the post office's list of mail and parcels
sent; but it should have required Gran to properly furnish the opposing
parties with copies of his Appeal Memorandum as prescribed in J.D.
Magpayo and the other cases. The NLRC should not have proceeded with the
adjudication of the case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should have furnished
petitioner EDI a copy of the Appeal Memorandum before rendering judgment
reversing the dismissal of Gran's complaint constitutes an evasion of the
pertinent NLRC Rules and established jurisprudence. Worse, this failure deprived
EDI of procedural due process guaranteed by the Constitution which can serve as
basis for the nullification of proceedings in the appeal before the NLRC. One can
only surmise the shock and dismay that OAB, EDI, and ESI experienced when
they thought that the dismissal of Gran's complaint became final, only to receive
a copy of Gran's Motion for Execution of Judgment which also informed them that
Gran had obtained a favorable NLRC Decision. This is not level playing field and
absolutely unfair and discriminatory against the employer and the job recruiters.
The rights of the employers to procedural due process cannot be cavalierly
disregarded for they too have rights assured under the Constitution.
However, instead of annulling the dispositions of the NLRC and
remanding the case for further proceedings we will resolve the petition based on
the records before us to avoid a protracted litigation. 33
The second and third issues have a common matter whether there
was just cause for Gran's dismissal hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is
justifiable
by reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and
between the OFW, the local recruiter/agent, and the foreign employer/principal
are governed by the employment contract. A contract freely entered into is
considered law between the parties; and hence, should be respected. In
formulating the contract, the parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy. 34 HAaDcS
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not provided for in
the contract (e.g. specific causes for termination, termination procedures, etc.).

Being the law intended by the parties (lex loci intentiones) to apply to the
contract, Saudi Labor Laws should govern all matters relating to the termination
of the employment of Gran.
In international law, the party who wants to have a foreign law applied
to a dispute or case has the burden of proving the foreign law. The foreign law is
treated as a question of fact to be properly pleaded and proved as the judge or
labor arbiter cannot take judicial notice of a foreign law. He is presumed to know
only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws
on the matter; thus, the International Law doctrine of presumed-identity
approach or processual presumption comes into play. 36 Where a foreign law is
not pleaded or, even if pleaded, is not proved, the presumption is that foreign
law is the same as ours. 37 Thus, we apply Philippine labor laws in determining
the issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed
due to incompetence and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and
jurisprudence that the employer should prove that the dismissal of employees or
personnel is legal and just.
Section 33 of Article 277 of the Labor Code 38 states that:
ART. 277. MISCELLANEOUS PROVISIONS 39
(b) Subject to the constitutional right of workers to security of tenure
and their right to be protected against dismissal except for a just and authorized
cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination
and shall afford the latter ample opportunity to be heard and to defend himself
with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the workers to contest the validity or legality
of his dismissal by filing a complaint with the regional branch of the National
Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. . . .
In many cases, it has been held that in termination disputes or illegal
dismissal cases, the employer has the burden of proving that the dismissal is for
just and valid causes; and failure to do so would necessarily mean that the
dismissal was not justified and therefore illegal. 40 Taking into account the
character of the charges and the penalty meted to an employee, the employer is
bound to adduce clear, accurate, consistent, and convincing evidence to prove
that the dismissal is valid and legal. 41This is consistent with the principle
of security of tenure as guaranteed by the Constitution and reinforced by Article
277 (b) of the Labor Code of the Philippines. 42aEAIDH
In the instant case, petitioner claims that private respondent Gran was
validly dismissed for just cause, due to incompetence and insubordination or
disobedience. To prove its allegations, EDI submitted two letters as evidence. The
first is the July 9, 1994 termination letter, 43 addressed to Gran, from Andrea E.
Nicolaou, Managing Director of OAB. The second is an unsigned April 11, 1995

letter 44 from OAB addressed to EDI and ESI, which outlined the reasons why
OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer
Specialist position because he had "insufficient knowledge in programming and
zero knowledge of [the] ACAD system." 45 Petitioner also claims that Gran was
justifiably dismissed due to insubordination or disobedience because he
continually failed to submit the required "Daily Activity Reports." 46 However,
other than the abovementioned letters, no other evidence was presented to
show how and why Gran was considered incompetent, insubordinate, or
disobedient. Petitioner EDI had clearly failed to overcome the burden of proving
that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to
his "insufficient knowledge in programming and zero knowledge of the ACAD
system" based only on the above mentioned letters, without any other evidence,
cannot be given credence.
An allegation of incompetence should have a factual foundation.
Incompetence may be shown by weighing it against a standard, benchmark, or
criterion. However, EDI failed to establish any such bases to show how petitioner
found Gran incompetent.
In addition, the elements that must concur for the charge of
insubordination or willful disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the following
twin elements must concur: (1) the employee's assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2) the
order violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he had been engaged to discharge. 47
EDI failed to discharge the burden of proving Gran's insubordination or
willful disobedience. As indicated by the second requirement provided for
in Micro Sales Operation Network, in order to justify willful disobedience, we must
determine whether the order violated by the employee is reasonable, lawful,
made known to the employee, and pertains to the duties which he had been
engaged to discharge. In the case at bar, petitioner failed to show that the order
of the company which was violated the submission of "Daily Activity Reports"
was part of Gran's duties as a Computer Specialist. Before the Labor Arbiter,
EDI should have provided a copy of the company policy, Gran's job description,
or any other document that would show that the "Daily Activity Reports" were
required for submission by the employees, more particularly by a Computer
Specialist.
Even though EDI and/or ESI were merely the local employment or
recruitment agencies and not the foreign employer, they should have adduced
additional evidence to convincingly show that Gran's employment was validly
and legally terminated. The burden devolves not only upon the foreign-based
employer but also on the employment or recruitment agency for the latter is not
only an agent of the former, but is also solidarily liable with the foreign principal
for any claims or liabilities arising from the dismissal of the worker. 48 aTADCE
Thus, petitioner failed to prove that Gran was justifiably
dismissed
due
to
incompetence,
insubordination,
or
willful
disobedience.
Petitioner also raised the issue that Prieto v. NLRC, 49 as used by the
CA in its Decision, is not applicable to the present case.

In Prieto, this Court ruled that "[i]t is presumed that before their
deployment, the petitioners were subjected to trade tests required by law to be
conducted by the recruiting agency to insure employment of only technically
qualified workers for the foreign principal." 50 The CA, using the ruling in the
said case, ruled that Gran must have passed the test; otherwise, he would not
have been hired. Therefore, EDI was at fault when it deployed Gran who was
allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in
the case at hand, Gran misrepresented himself in his curriculum vitae as a
Computer Specialist; thus, he was not qualified for the job for which he was
hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade
test is to weed out incompetent applicants from the pool of available workers. It
is supposed to reveal applicants with false educational backgrounds, and expose
bogus qualifications. Since EDI deployed Gran to Riyadh, it can be presumed that
Gran had passed the required trade test and that Gran is qualified for the job.
Even if there was no objective trade test done by EDI, it was still EDI's
responsibility to subject Gran to a trade test; and its failure to do so only
weakened its position but should not in any way prejudice Gran. In any case, the
issue is rendered moot and academic because Gran's incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine
Labor laws and regulations shall govern the relationship between Gran and EDI.
Thus, our laws and rules on the requisites of due process relating to termination
of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due
process, since he was allowed to work and improve his capabilities for five
months prior to his termination. 51 EDI also claims that the requirements of due
process, as enunciated in Santos Jr. v. NLRC, 52 and Malaya Shipping Services,
Inc. v. NLRC, 53 cited by the CA in its Decision, were properly observed in the
present case.
This position is untenable.
In Agabon v. NLRC, 54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation. EAHcCT
Under the twin notice requirement, the employees must be given two
(2) notices before their employment could be terminated: (1) a first notice to
apprise the employees of their fault, and (2) a second notice to communicate to
the employees that their employment is being terminated. In between the first
and second notice, the employees should be given a hearing or opportunity to
defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's
manner of dismissing Gran fell short of the two notice requirement. While it

furnished Gran the written notice informing him of his dismissal, it failed to
furnish Gran the written notice apprising him of the charges against him, as
prescribed by the Labor Code. 56Consequently, he was denied the opportunity to
respond to said notice. In addition, OAB did not schedule a hearing or conference
with Gran to defend himself and adduce evidence in support of his defenses.
Moreover, the July 9, 1994 termination letter was effective on the same day. This
shows that OAB had already condemned Gran to dismissal, even before Gran was
furnished the termination letter. It should also be pointed out that OAB failed to
give Gran the chance to be heard and to defend himself with the assistance of a
representative in accordance with Article 277 of the Labor Code. Clearly, there
was no intention to provide Gran with due process. Summing up, Gran was
notified and his employment arbitrarily terminated on the same day, through the
same letter, and for unjustified grounds. Obviously,Gran was not afforded due
process.
Pursuant to the doctrine laid down in Agabon, 57 an employer is liable
to pay nominal damages as indemnity for violating the employee's right to
statutory due process. Since OAB was in breach of the due process requirements
under the Labor Code and its regulations, OAB, ESI, and EDI, jointly and
solidarily, are liable to Gran in the amount of PhP30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed
period of employment, in cases arising before the effectivity of R.A. No.
8042 58 (Migrant Workers and Overseas Filipinos Act) on August 25, 1995, that
when the contract is for a fixed term and the employees are dismissed without
just cause, they are entitled to the payment of their salaries corresponding to the
unexpired portion of their contract. 59 On the other hand, for cases arising after
the effectivity of R.A. No. 8042, when the termination of employment is without
just, valid or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired
term whichever is less. 60
In the present case, the employment contract provides that the
employment contract shall be valid for a period of two (2) years from the date
the employee starts to work with the employer. 61 Gran arrived in Riyadh, Saudi
Arabia and started to work on February 7, 1994; 62 hence, his employment
contract is until February 7, 1996. Since he was illegally dismissed on July 9,
1994, before the effectivity of R.A. No. 8042, he is therefore entitled to
backwages corresponding to the unexpired portion of his contract, which was
equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and
mainly relies on the Declaration which is claimed to have been freely and
voluntarily executed by Gran. The relevant portions of the Declaration are as
follows: aEDCAH
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL
SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY
EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE
SERVICES I RENDERED TO OAB ESTABLISHMENT.

I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN

MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN
WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY
SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims
or waivers, more particularly those executed by employees. This requirement
was clearly articulated by Chief Justice Artemio V. Panganiban in Land and
Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or
contracts in favor of workers should be strictly scrutinized to protect the weak
and the disadvantaged. The waivers should be carefully examined, in
regard not only to the words and terms used, but also the factual
circumstances under which they have been executed. 63 (Emphasis
supplied.)
This Court had also outlined in Land and Housing Development
Corporation, citing Periquet v. NLRC, 64 the parameters for valid compromise
agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement,
it is binding on the parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following
reasons:
1. The salary paid to Gran upon his termination, in the amount of SR
2,948.00, is unreasonably low. As correctly pointed out by the court a quo, the
payment of SR 2,948.00 is even lower than his monthly salary of SR 3,190.00
(USD 850.00). In addition, it is also very much less than the USD 16,150.00 which
is the amount Gran is legally entitled to get from petitioner EDI as
backwages. AcHCED
2. The Declaration reveals that the payment of SR 2,948.00 is actually
the payment for Gran's salary for the services he rendered to OAB as Computer
Specialist. If the Declaration is a quitclaim, then the consideration should be
much much more than the monthly salary of SR 3,190.00 (USD 850.00)
although possibly less than the estimated Gran's salaries for the remaining
duration of his contract and other benefits as employee of OAB. A quitclaim will
understandably be lower than the sum total of the amounts and benefits that can
possibly be awarded to employees or to be earned for the remainder of the
contract period since it is a compromise where the employees will have to forfeit
a certain portion of the amounts they are claiming in exchange for the early
payment of a compromise amount. The court may however step in when such

amount is unconscionably low or unreasonable although the employee

voluntarily agreed to it. In the case of the Declaration, the amount is
unreasonably small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the
Declaration would show that Gran did not voluntarily and freely execute the
document. Consider the following chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and
required to pay his plane ticket; 65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the
Declaration and constrained to receive the amount of SR 2,948.00 even if it was
against his will since he was told on July 10, 1994 to leave Riyadh on July 12,
1994. He had no other choice but to sign the Declaration as he needed the
amount of SR 2,948.00 for the payment of his ticket. He could have entertained
some apprehensions as to the status of his stay or safety in Saudi Arabia if he
would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a
contract of adhesion which should be construed against the employer, OAB. An
adhesion contract is contrary to public policy as it leaves the weaker party the
employee in a "take-it-or-leave-it" situation. Certainly, the employer is being
unjust to the employee as there is no meaningful choice on the part of the
employee while the terms are unreasonably favorable to the employer. 66
Thus, the Declaration purporting to be a quitclaim and waiver is
unenforceable under Philippine laws in the absence of proof of the applicable law
of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of
quitclaims and waivers of employees under Philippine laws, said agreements
should contain the following:
1. A fixed amount as full and final compromise settlement; TCHEDA
2. The benefits of the employees if possible with the corresponding
amounts, which the employees are giving up in consideration of the fixed
compromise amount;
3. A statement that the employer has clearly explained to the
employee in English, Filipino, or in the dialect known to the employees that by
signing the waiver or quitclaim, they are forfeiting or relinquishing their right to
receive the benefits which are due them under the law; and
4. A statement that the employees signed and executed the document
voluntarily, and had fully understood the contents of the document and that their
consent was freely given without any threat, violence, duress, intimidation, or
undue influence exerted on their person.
It is advisable that the stipulations be made in English and Tagalog
or in the dialect known to the employee. There should be two (2) witnesses
to the execution of the quitclaim who must also sign the quitclaim. The document
should be subscribed and sworn to under oath preferably before any
administering official of the Department of Labor and Employment or its regional
office, the Bureau of Labor Relations, the NLRC or a labor attach in a foreign
country. Such official shall assist the parties regarding the execution of the

quitclaim and waiver. 67 This compromise settlement becomes final and binding
under Article 227 of the Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the
assistance of the Bureau of Labor Relations or the regional office of the DOLE,
shall be final and binding upon the parties and the NLRC or any court "shall not
assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall
apply only to labor contracts of OFWs in the absence of proof of the laws of the
foreign country agreed upon to govern said contracts. Otherwise, the foreign
laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in
CA-G.R. SP No. 56120 of the Court of Appeals affirming the January 15, 1999
Decision and September 30, 1999 Resolution of the NLRC is AFFIRMED with the
MODIFICATION that petitioner EDI-Staffbuilders International, Inc. shall pay the
amount of PhP30,000.00 to respondent Gran as nominal damages for noncompliance with statutory due process.
No costs.
SO ORDERED.
||| (EDI-Staffbuilders International, Inc. v. NLRC, G.R. No. 145587,
[October 26, 2007], 563 PHIL 1-36)

FIRST DIVISION
[G.R. No. 128803. September 25, 1998.]
ASIAVEST LIMITED, petitioner, vs. THE COURT OF APPEALS and
ANTONIO HERAS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; VALIDITY OF FOREIGN
JUDGMENTS. Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,
which was the governing law at the time this case was decided by the trial court
and respondent Court of Appeals, a foreign judgment against a person rendered
by a court having jurisdiction to pronounce the judgment is presumptive
evidence of a right as between the parties and their successors in interest by the
subsequent title. However, the judgment may be repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law
or fact. Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that
in the absence of proof to the contrary, a court, or judge acting as such, whether
in the Philippines or elsewhere, is presumed to have acted in the lawful exercise
of jurisdiction. Hence, once the authenticity of the foreign judgment is proved,
the burden to repel it on grounds provided for in paragraph (b) of Section 50,
Rule 39 of the Rules of Court is on the party challenging the foreign
judgment. EACTSH
2. ID.; ID.; ID.; ID.; CASE AT BAR. At the pre-trial conference, HERAS
admitted the existence of the Hong Kong judgment. On the other hand, ASIAVEST
presented evidence to prove rendition, existence, and authentication of the
judgment by the proper officials. The judgment is thus presumed to be valid and
binding in the country from which it comes, until the contrary is shown.
Consequently, the first ground relied upon by ASIAVEST has merit. The
presumption of validity accorded foreign judgment would be rendered
meaningless were the party seeking to enforce it be required to first establish its
validity.
3. ID.; ACTIONS; MATTERS OF REMEDY AND PROCEDURE, GOVERNED
BY THE LAW OF THE FORUM. Matters of remedy and procedure such as those
relating to the service of process upon the defendant are governed by the lex
fori or the law of the forum. SHIETa
4. ID.; EVIDENCE; RECORD OF PUBLIC DOCUMENTS OF A SOVEREIGN
AUTHORITY, TRIBUNAL, OFFICIAL BODY OR PUBLIC OFFICER, HOW PROVED.
Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of
public documents of a sovereign authority, tribunal, official body, or public officer
may be proved by (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof which must be accompanied if the record
is not kept in the Philippines, with a certificate that such officer has the custody.
The certificate may be issued by a secretary of the embassy or legation, consul
general, consul, vice consul, or consular agent, or any officer in the foreign
service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and must be under the official seal of the attesting
officer. Nevertheless, the testimony of an expert witness may be allowed to
prove a foreign law. CcAIDa
5. ID.; ID.; ID.; HONGKONG LAW ON SERVICE OF SUMMONS PRESUMED
SIMILAR TO PHILIPPINE LAW In the absence of proof of the Hong Kong law on
service of summons, the presumption of identity or similarity or the so-called

processual presumption shall come into play. It will thus be presumed that the
Hong Kong law on the matter is similar to the Philippine law.
6. ID.; ACTIONS; ACTION IN PERSONAM, IN REM AND QUASI IN REM;
DISTINGUISHED. An action in personam is an action against a person on the
basis of his personal liability. An action in rem is an action against the thing itself
instead of against the person. An action quasi in rem is one wherein an individual
is named as defendant and the purpose of the proceeding is to subject his
interest therein to the obligation or lien burdening the property.
7. ID.; ID.; ACTION IN PERSONAM; JURISDICTION OVER THE PERSON OF
THE DEFENDANT, NECESSARY. In an action in personam, jurisdiction over the
person of the defendant is necessary for the court to validly try and decide the
case. Jurisdiction over the person of a resident defendant who does not
voluntarily appear in court can be acquired by personal service of summons as
provided under Section 7, Rule 14 of the Rules of Court. If he cannot be
personally served with summons within a reasonable time, substituted service
may be made in accordance with Section 8 of said Rule. If he is temporarily out
of the country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; (2) personal service outside the
country, with leave of court (3) service by publication, also with leave of court; or
(4) any other manner the court may deem sufficient. However, in an
action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of
summons within the state is essential to the acquisition of jurisdiction over her
person. This method of service is possible if such defendant is physically present
in the country. If he is not found therein, the court cannot acquire jurisdiction
over his person and therefore cannot validly try and decide the case against him.
An exception was laid down in Gemperle v. Schenker wherein a non-resident was
served with summons through his wife, who was a resident of the Philippines and
who was his representative and attorney-in-fact in prior civil case filed by him;
moreover, the second case was a mere offshoot of the first case. HTSaEC
8. ID.; ID.; ACTION IN REM; JURISDICTION OVER THE PERSON OF
DEFENDANT, NOT A PREREQUISITE; SUMMONS MUST BE SERVED UPON
DEFENDANT TO SATISFY DUE PROCESS REQUIREMENT. In a proceeding in
rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Nonetheless, summons must be served upon the
defendant not for the purpose of vesting the court with jurisdiction but merely for
satisfying the due process requirements. Thus, where the defendant is a nonresident who is not found in the Philippines and (1) the action affects the
personal status of the plaintiff; (2) the action relates to, or the subject matter of
which is property in the Philippines in which the defendant has or claims a lien or
interest; (3) the action seeks the exclusion of the defendant from any interest in
the property located in the Philippines; or (4) the property of the defendant has
been attached in the Philippines service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with
leave of court; or (c) any other manner the court may deem sufficient.
9. ID.; ID.; ENFORCEMENT OF FOREIGN JUDGMENT; SUMMONS MUST BE
SERVED ON DEFENDANT IN FOREIGN LAND; CASE AT BAR. In the pre-trial
conference, the parties came up with stipulations of facts, among which was that
"the residence of defendant, Antonio Heras, is New Manila, Quezon City." We note
that the residence of HERAS insofar as the action for the enforcement of the

Hong Kong court judgment is concerned, was never in issue. He never challenged
the service of summons on him through a security guard in his Quezon City
residence and through a lawyer in his office in that city. In his Motion to Dismiss,
he did not question the jurisdiction of the Philippine court over his person on the
ground of invalid service of summons. What was in issue was his residence as far
as the Hong Kong suit was concerned. We therefore conclude that the stipulated
fact that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to
his residence at the time jurisdiction over his person was being sought by the
Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that
HERAS was a resident of Hong Kong at the time. Accordingly, since HERAS was
not a resident of Hong Kong and the action against him was, indisputably,
one in personam, summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was therefore invalid and did
not confer on the Hong Kong court jurisdiction over his person. It follows that the
Hong Kong court judgment cannot be given force and effect here in the
Philippines for having been rendered without jurisdiction. Even assuming that
HERAS was formerly as resident of Hong Kong, he was no longer so in November
1984 when the extraterritorial service of summons was attempted to be made on
him; As declared by his secretary, which statement was not disputed by
ASIAVEST, HERAS left Hong Kong in October 1984 "for good." His absence in
Hong Kong must have been the reason why summons was not served on him
therein; thus, ASIAVEST was constrained to apply for leave to effect service in the
Philippines, and upon obtaining a favorable action on the matter, it
commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the
summons here in the Philippines. HERAS, who was also an absentee, should have
been served with summons in the same manner as a non-resident not found in
Hong Kong. Section 17, Rule 14 of the Rules of Court providing for extraterritorial
service will not apply because of the suit against him was in personam. Neither
can we apply Section 18, which allows extraterritorial service on a resident
defendant who is temporarily absent from the country, because even if HERAS be
considered as a resident of Hong Kong, the undisputed fact remains that he left
Hong Kong not only "temporarily" but "for good." aDHScI
DECISION
DAVIDE, JR, J p:
In issue is the enforceability in the Philippines of a foreign judgment.
The antecedents are summarized in the 24 August 1990 Decision 1 of Branch
107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus:,
The plaintiff Asiavest Limited filed a complaint on December 3, 1987
against the defendant Antonio Heras praying that said defendant be ordered to
pay to the plaintiff the amounts awarded by the Hong Kong Court Judgment
dated December 28, 1984 and amended on April 13, 1987 to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time
of payment with legal interest from December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from
October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees, litigation expenses
and cost, with interest thereon from the date of the judgment until fully paid.
On March 3, 1988 the defendant filed a Motion to Dismiss. However,
before the court could resolve the said motion, a fire which partially razed the

Quezon City Hall Building on June 11, 1988 totally destroyed the office of this
Court, together with all its records, equipment and properties. On July 26, 1988,
the plaintiff, through counsel filed a Motion for Reconstitution of Case Records.
The Court, after allowing the defendant to react thereto, granted the said Motion
and admitted the annexes attached thereto as the reconstituted records of this
case per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the
resolution of which had been deferred, was denied by the Court in its Order of
October 4, 1988.
On October 19, 1988 defendant filed his Answer. The case was then set
for pre-trial conference. At the conference, the parties could not arrive at any
settlement. However, they agreed on the following stipulations of facts:
1. The defendant admits the existence of the judgment dated
December 28, 1984 as well as its amendment dated April 13, 1987, but not
necessarily the authenticity or validity thereof;
2. The plaintiff is not doing business and is not licensed to do business
in the Philippines;
3. The residence of defendant, Antonio Heras, is New Manila, Quezon
City.
The only issue for this Court to determine is, whether or not the
judgment of the Hong Kong Court has been repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or
fact, such as to overcome the presumption established in Section 50, Rule 39 of
the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the
aforementioned judgment (Pls. See Stipulations of Facts in the Order dated
January 5, 1989 as amended by the Order of January 18, 1989) as well as the
legal presumption in favor of the plaintiff as provided for in paragraph (b), Sec.
50, (Ibid.), the plaintiff presented only documentary evidence to show rendition,
existence, and authentication of such judgment by the proper officials concerned
(Pls. See Exhibits "A" thru "B", with their submarkings). In addition, the plaintiff
presented testimonial and documentary evidence to show its entitlement to
attorney's fees and other expenses of litigation . . .
On the other hand, the defendant presented two witnesses, namely,
Fortunata dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of
summons or copy of a statement of claim of Asiavest Limited was ever served in
the office of the Navegante Shipping Agency Limited and/or for Mr. Antonio
Heras, and that no service of the writ of summons was either served on the
defendant at his residence in New Manila, Quezon City. Her knowledge is based
on the fact that she was the personal secretary of Mr. Heras during his JD Transit
days up to the latter part of 1972 when he shifted or diversified to shipping
business in Hong Kong; that she was in-charge of all his letters and
correspondence, business commitments, undertakings, conferences and
appointments, until October 1984 when Mr. Heras left Hong Kong for good; that
she was also the Officer-in-Charge or Office Manager of Navegante Shipping
Agency LTD, a Hong Kong registered and based company acting as ships agent,
up to and until the company closed shop sometime in the first quarter of 1985
when shipping business collapsed worldwide; that the said Company held office
at 34-35 Connaught Road, Central Hong Kong and later transferred to Caxton
House at Duddel Street, Hong Kong, until the company closed shop in 1985; and

that she was certain of such facts because she held office at Caxton House up to
the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and
as a representative of the law office of the defendant's counsel who made a
verification of the record of the case filed by the plaintiff in Hong Kong against
the defendant as well as the procedure in serving Court processes in Hong Kong.
In his affidavit (Exh. "2") which constitutes his direct testimony the said
witness stated that:
The defendant was sued on the basis of his personal guarantee of the
obligations of Compania Hermanos de Navegacion S.A. There is no record that a
writ of summons was served on the person of the defendant in Hong Kong, or
that any such attempt at service was made. Likewise, there is no record that a
copy of the judgment of the High Court was furnished or served on the
defendant; anyway, it is not a legal requirement to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor (lawyer)
of the claimant or plaintiff. In Hong Kong there are no Court personnel who serve
writs of summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not contested, the
claimant or the plaintiff is not required to present proof of his claim or complaint
nor present evidence under oath of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision
rendered by the Court in Hong Kong [to] make a recitation of the facts or the law
upon which the claim is based.
d) There is no necessity to furnish the defendant with a copy of the
Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no established legal
requirement or obligation under Hong Kong laws that the creditor must first bring
proceedings against the principal debtor. The creditor can immediately go
against the guarantor.
On cross examination, Mr. Lousich stated that before he was
commissioned by the law firm of the defendant's counsel as an expert witness
and to verify the records of the Hong Kong case he had been acting as counsel
for the defendant in a number of commercial matters; that there was an
application for service of summons upon the defendant outside the jurisdiction of
Hong Kong; that there was an order of the Court authorizing service upon Heras
outside of Hong Kong, particularly in Manila or any other place in the Philippines
(p. 9, TSN, 2/14/90); that there must be adequate proof of service of summons
otherwise the Hong Kong Court will refuse to render judgment (p. 10, ibid); that
the mere fact that the Hong Kong Court rendered judgment, it can be presumed
that there was service of summons; that in this case, it is not just a presumption
because there was an affidavit stating that service was effected in [sic] a
particular man here in Manila; that such affidavit was filed by one Jose R.
Fernandez of the firm Sycip Salazar on the 21st of December 1984 and stated in
essence that "on Friday the 23rd of November 1984 he served the 4th defendant
at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio
Lopez, the son-in-law of the 4th defendant the copy of the writ and Mr. Lopez
informed me and I barely believed that he would bring the said writ to the
attention of the 4th "defendant" (pp. 11-12, ibid.); that upon filing of that
affidavit the Court was asked and granted judgment against the 4th defendant;
and that if the summons or claim is not contested, the claimant of the plaintiff is
not required to present proof of his claim or complaint or present evidence under

oath of the claim in order to obtain judgment; and that such judgment can be
enforced in the same manner as a judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been
duly proved, it is a presumptive evidence of a right as between the parties;
hence, the party impugning it had the burden to prove want of jurisdiction over
his person. HERAS failed to discharge that burden. He did not testify to state
categorically and under oath that he never received summons. Even his own
witness Lousich admitted that HERAS was served with summons in his Quezon
City residence. As to De la Vega's testimony regarding non-service of summons,
the same was hearsay and had no probative value. prLL
As to HERAS' contention that the Hong Kong court judgment violated
the Constitution and the procedural laws of the Philippines because it contained
no statements of the facts and the law on which it was based, the trial court
ruled that since the issue related to procedural matters, the law of the
forum, i.e., Hong Kong laws, should govern. As testified by the expert witness
Lousich, such legalities were not required under Hong Kong laws. The trial court
also debunked HERAS' contention that the principle of excussion under Article
2058 of the Civil Code of the Philippines was violated. It declared that matters of
substance are subject to the law of the place where the transaction occurred; in
this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be
recognized and given effect in this jurisdiction for failure of HERAS to overcome
the legal presumption in favor of the foreign judgment It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay
to the plaintiff the following sums or their equivalents in Philippine currency at
the time of payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December 28,
1984, and HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorneys fees in the sum of
P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an
award of judicial costs and an increase in attorney's fees in the amount of
US$19,346.45 with interest until full payment of the said obligations. On the
other hand, HERAS no longer opposed the motion and instead appealed the
decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No.
29513.
In its order 2 of 2 November 1990, the trial court granted ASIAVEST's
motion for reconsideration by increasing the award of attorney's fees to
"US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE
COSTS OF THIS SUIT," provided that ASIAVEST would pay the corresponding filing
fees for the increase. ASIAVEST appealed the order requiring prior payment of
filing fees. However, it later withdrew its appeal and paid the additional filing
fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing
the decision of the trial court and dismissing ASIAVEST's complaint without
prejudice. It underscored the fact that a foreign judgment does not of itself have
any extraterritorial application. For it to be given effect, the foreign tribunal
should have acquired jurisdiction over the person and the subject matter. If such
tribunal has not acquired jurisdiction, its judgment is void.

The Court of Appeals agreed with the trial court that matters of remedy
and procedure such as those relating to service of summons upon the defendant
are governed by the lex fori, which was, in this case, the law of Hong Kong.
Relative thereto, it gave weight to Lousich's testimony that under the Hong Kong
law, the substituted service of summons upon HERAS effected the Philippines by
the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided
that it was done in accordance with Philippine laws. It then stressed that where
the action is in personam and the defendant is in the Philippines, the summons
should be personally served on the defendant pursuant to Section 7, Rule 14 of
the Rules of Court. 4 Substituted service may only be availed of where the
defendant cannot be promptly served in person, the fact of impossibility of
personal service should be explained in the proof of service. It also found as
persuasive HERAS' argument that instead of directly using the clerk of the Sycip
Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge
of the court issuing the summons, ASIAVEST should have asked for leave of the
local courts to have the foreign summons served by the sheriff or other court
officer of the place where service was to be made, or for special reasons by any
person authorized by the judge. cdasia
The Court of Appeals agreed with HERAS that "notice sent outside the
state to a non-resident is unavailing to give jurisdiction in an action against him
personally for money recovery." Summons should have been personally served
on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically
present in Hong Kong for nearly 14 years. Since there was not even an attempt
to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did
not acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the
claim of ASIAVEST; thus:
While we are not fully convinced that [HERAS] has a meritorious
defense against [ASIAVEST's] claims or that [HERAS] ought to be absolved of any
liability, nevertheless, in view of the foregoing discussion, there is a need to
deviate from the findings of the lower court in the interest of justice and fair play
This, however, is without prejudice to whatever action [ASIAVEST] might deem
proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was
necessary that evidence supporting the validity of the foreign judgment be
submitted and that our courts are not bound to give effect to foreign judgments
which contravene our laws and the principle of sound morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of
Appeals erred in ruling that
I.
. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE
'SUPPORTING THE VALIDITY OF THE JUDGMENT';
II.
. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER
PHILIPPINE LAW;
III.
. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN
HONG KONG;
IV.
. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH
LEAVE OF PHILIPPINE COURTS;
V.

. . . THE FOREIGN JUDGMENT 'CONTRAVENES PHILIPPINE LAWS, THE

PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of
Court, 5 which was the governing law at the time this case was decided by the
trial court and respondent Court of Appeals, a foreign judgment against a person
rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors in
interest by the subsequent title. However, the judgment may be repelled by
evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides
that in the absence of proof to the contrary, a court, or judge acting as such,
whether in the Philippines or elsewhere, is presumed to have acted in the lawful
exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the
burden to repel it on grounds provided for in paragraph (b) of Section 50, Rule 39
of the Rules of Court is on the party challenging the foreign judgment HERAS
in this case. cdrep
At the pre-trial conference, HERAS admitted the existence of the Hong
Kong judgment. On the other hand, ASIAVEST presented evidence to prove
rendition, existence, and authentication of the judgment by the proper officials.
The judgment is thus presumed to be valid and binding in the country from which
it comes, until the contrary is shown. 6 Consequently, the first ground relied
upon by ASIAVEST has merit. The presumption of validity accorded foreign
judgment would be rendered meaningless were the party seeking to enforce it be
required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the
Hong Kong Supreme Court did not acquire jurisdiction over the person of HERAS.
This involves the issue of whether summons was properly and validly served on
HERAS. It is settled that matters of remedy and procedure such as those relating
to the service of process upon the defendant are governed by the lex fori or the
law of the forum, 7 i.e., the law of Hong Kong in this case. HERAS insisted that
according to his witness Mr. Lousich, who was presented as an expert on Hong
Kong laws, there was no valid service of summons on him.
In his counter-affidavit, 8 which served as his direct testimony per
agreement of the parties, 9 Lousich declared that the record of the Hong Kong
case failed to show that a writ of summons was served upon HERAS in Hong Kong
or that any such attempt was made. Neither did the record show that a copy of
the judgment of the court was served on HERAS. He stated further that under
Hong Kong laws (a) a writ of summons could be served by the solicitor of the
claimant or plaintiff; and (b) where the said writ or claim was not contested, the
claimant or plaintiff was not required to present proof under oath in order to
obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that
the Hong Kong court authorized service of summons on HERAS outside of its
jurisdiction, particularly in the Philippines. He admitted also the existence of an
affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan
law firm stating that he (Fernandez) served summons on HERAS on 13 November
1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's son-in-law
Dionisio Lopez. 10 On redirect examination, Lousich declared that such service of

summons would be valid under Hong Kong laws provided that it was in
accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the
qualification of Mr. Lousich as an expert on the Hong Kong law. Under Sections 24
and 25, Rule 132 of the New Rules of Evidence, the record of public documents of
a sovereign authority, tribunal, official body, or public officer may be proved by
(1) an official publication thereof or (2) a copy attested by the officer having the
legal custody thereof, which must be accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. The certificate
may be issued by the secretary of the embassy or legation, consul general,
consul, vice consul, or consular agent, or any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in substance,
that the copy is a correct copy of the original, or a specific part thereof, as the
case may be, and must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to
prove a foreign law. An authority 12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with
the above rule, however, the Supreme Court held in the case of Willamettee Iron
and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132 of
the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law of San
Francisco, California, who quoted verbatim a section of California Civil Code and
who stated that the same was in force at the time the obligations were
contracted, as sufficient evidence to establish the existence of said law.
Accordingly, in line with this view, the Supreme Court in the Collector of Internal
Revenue v.Fisher et al., 14 upheld the Tax Court in considering the pertinent law
of California as proved by the respondents' witness. In that case, the counsel for
respondent "testified that as an active member of the California Bar since 1951,
he is familiar with the revenue and taxation laws of the State of California. When
asked by the lower court to state the pertinent California law as regards
exemption of intangible personal properties, the witness cited Article 4, Sec.
13851 (a) & (b) of the California Internal and Revenue Code as published in
Derring's California Code, a publication of Bancroft-Whitney Co., Inc. And as part
of his testimony, a full quotation of the cited section was offered in evidence by
respondents." Likewise, in several naturalization cases, it was held by the Court
that evidence of the law of a foreign country on reciprocity regarding the
acquisition of citizenship, although not meeting the prescribed rule of practice,
may be allowed and used as basis for favorable action, if, in the light of all the
circumstances, the Court is "satisfied of the authenticity of the written proof
offered." 15 Thus, in a number of decisions, mere authentication of the Chinese
Naturalization Law by the Chinese Consulate General of Manila was held to be
competent proof of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched
on the specific law of Hong Kong in respect of service of summons either in
actions in rem or in personam, and where the defendant is either a resident or
nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law
on this particular issue, the presumption of identity or similarity or the so-called

processual presumption shall come into play. It will thus be presumed that the
Hong Kong law on the matter is similar to the Philippine law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to
determine first whether the action is in personam, in rem, or quasi in
rem because the rules on service of summons under Rule 14 of the Rules of
Court of the Philippines apply according to the nature of the action. prcd
An action in personam is an action against a person on the basis of his
personal liability. An action in rem is an action against the thing itself instead of
against the person. 19 An action quasi in rem is one wherein an individual is
named as defendant and the purpose of the proceeding is to subject his interest
therein to the obligation or lien burdening the property. 20
In an action in personam, jurisdiction over the person of the defendant
is necessary for the court to validly try and decide the case. Jurisdiction over the
person of aresident defendant who does not voluntarily appear in court can be
acquired by personal service of summons as provided under Section 7, Rule 14 of
the Rules of Court. If he cannot be personally served with summons within a
reasonable time, substituted service may be made in accordance with Section 8
of said Rule. If he is temporarily out of the country, any of the following modes of
service may he resorted to: (1) substituted service set forth in Section
8; 21 (2) personal service outside the country, with leave of court; (3) service by
publication also with leave of court; 22 or (4) any other manner the court may
deem sufficient. 23
However, in an action in personam wherein the defendant is a nonresident who does not voluntarily submit himself to the authority of the court,
personal service of summons within the state is essential to the acquisition of
jurisdiction over her person. 24 This method of service is possible if such
defendant is physically present in the country. If he is not found therein, the court
cannot acquire jurisdiction over his person and therefore cannot validly try and
decide the case against him. 25 An exception was laid down in Gemperle
v. Schenker 26 wherein a non-resident was served with summons through his
wife, who was a resident of the Philippines and who was his representative and
attorney-in-fact in a prior civil case filed by him; moreover, the second case was
a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to confer jurisdiction on
the court provided that the court acquires jurisdiction over the res. Nonetheless,
summons must be served upon the defendant not for the purpose of vesting the
court with jurisdiction but merely for satisfying the due process
requirements. 27 Thus, where the defendant is a non-resident who is not found
in the Philippines and (1) the action affects the personal status of the plaintiff; (2)
the action relates to, or the subject matter of which is property in the Philippines
in which the defendant has or claims a lien or interest; (3) the action seeks the
exclusion of the defendant from any interest in the property located in the
Philippines; or (4) the property of the defendant has been attached in the
Philippines service of summons may be effected by (a) personal service out of
the country, with leave of court; (b) publication, also with leave of court; or (c)
any other manner the court may deem sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS
was in personam, since it was based on his personal guarantee of the obligation
of the principal debtor. Before we can apply the foregoing rules, we must
determine first whether HERAS was a resident of Hong Kong.

Fortunata de la Vega, HERAS's personal secretary in Hong Kong since

1972 until 1985, 29 testified that HERAS was the President and part owner of a
shipping company in Hong Kong during all those times that she served as his
secretary. He had in his employ a staff of twelve. 30 He had "business
commitments, undertakings, conferences, and appointments until October 1984
when [he] left Hong Kong for good." 31 HERAS's other witness, Russel Warren
Lousich, testified that he had acted as counsel for HERAS "for a number of
commercial matters." 32 ASIAVEST then infers that HERAS was a resident of
Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his
Answer 34 to ASIAVEST's complaint for the enforcement of the Hong Kong court
judgment, HERAS maintained that the Hong Kong court did not have jurisdiction
over him because the fundamental rule is that jurisdiction in personam over nonresident defendants, so as to sustain a money judgment, must be based upon
personal service of summons within the state which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to
Dismiss 36 contended: "The question of Hong Kong court's 'want of jurisdiction'
is therefore a triable issue if it is to be pleaded by the defendant to 'repel' the
foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong Kong suit
was in personam, that defendant was not a resident of Hong Kong when the suit
was filed or that he did not voluntarily submit to the Hong Kong court's
jurisdiction) should be alleged and proved by the defendant." 37
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued
that the lack of jurisdiction over his person was corroborated by ASIAVEST's
allegation in the complaint that he "has his residence at No. 6, 1st St., New
Manila, Quezon City, Philippines." He then concluded that such Judicial admission
amounted to evidence that he was and is not a resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with
stipulations of facts, among which was that "the residence of defendant, Antonio
Heras, is New Manila, Quezon City." 39
We note that the residence of HERAS insofar as the action for the
enforcement of the Hong Kong court judgment is concerned, was never in issue.
He never challenged the service of summons on him through a security guard in
his Quezon City residence and through a lawyer in his office in that city. In his
Motion to Dismiss, he did not question the jurisdiction of the Philippine court over
his person on the ground of invalid service of summons. What was in issue was
his residence as far as the Hong Kong suit was concerned. We therefore conclude
that the stipulated fact that HERAS "is a resident of New Manila, Quezon City,
Philippines" refers to his residence at the time jurisdiction over his person was
being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST
cannot now claim that HERAS was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the
action against him was, indisputably, one in personam, summons should have

been personally served on him in Hong Kong. The extraterritorial service in the
Philippines was therefore invalid and did not confer on the Hong Kong court
jurisdiction over his person. It follows that the Hong Kong court judgment cannot
be given force and effect here in the Philippines for having been rendered
without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he
was no longer so in November 1984 when the extraterritorial service of summons
was attempted to be made on him. As declared by his secretary, which
statement was not disputed by ASIAVEST, HERAS left Hong Kong in October 1984
"for good." 40 His absence in Hong Kong must have been the reason why
summons was not served on him therein; thus, ASIAVEST was constrained to
apply for leave to effect service in the Philippines, and upon obtaining a
favorable action on the matter, it commissioned the Sycip Salazar Hernandez &
Gatmaitan law firm to serve the summons here in the Philippines.
In Brown v. Brown, 41 the defendant was previously a resident of the
Philippines. Several days after a criminal action for concubinage was filed against
him, he abandoned the Philippines. Later, a proceeding quasi in rem was
instituted against him. Summons in the latter case was served on the
defendant's attorney-in-fact at the latter's address. The Court held that under the
facts of the case, it could not be said that the defendant was "still a resident of
the Philippines because he ha[d] escaped to his country and [was] therefore an
absentee in the Philippines." As such, he should have been "summoned in the
same manner as one who does not reside and is not found in the Philippines."
Similarly, HERAS, who was also an absentee, should have been served
with summons in the same manner as a non-resident not found in Hong Kong.
Section 17, Rule 14 of the Rules of Court providing for extraterritorial service will
not apply because the suit against him was in personam. Neither can we apply
Section 18, which allows extraterritorial service on a resident defendant who is
temporarily absent from the country, because even if HERAS be considered as a
resident of Hong Kong, the undisputed fact remains that he left Hong Kong not
only "temporarily" but "for good." cdll
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered
DENYING the petition in this case and AFFIRMING the assailed Judgment of the
Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.
Bellosillo, Vitug and Panganiban, JJ ., concur.
Quisumbing, J ., took no part.
||| (Asiavest Limited v. Court of Appeals, G.R. No. 128803, [September
25, 1998], 357 PHIL 536-558)