Full Text

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 122191 October 8, 1998
SAUDI ARABIAN AIRLINES, 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 seeks to annul and set aside the
Resolution1dated September 27, 1995 and the Decision2 dated April 10, 1996 of the Court of
Appeals3 in CA-G.R. SP No. 36533,4 and the Orders5 dated August 29, 1994 6 and February 2,
19957 that were issued by the trial court in Civil Case No. Q-93-18394.8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision9, 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 Al-Gazzawi, 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.
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
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.
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 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.
SO ORDERED. 25
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 Temporary Restraining

Order 27 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 30dated 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:
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394
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 Arabia, by virtue of the lex
loci delicti commissi rule. 34
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.
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 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
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.
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
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 of the 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." 55The 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. 57An 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, thelex 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 to identify 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." 64As 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. 65 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 for the 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.
Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.
Footnotes
1 Annex "A", PETITION, October 13, 1995; rollo, p. 36.
2 Annex "A", SUPPLEMENTAL PETITION, April 30, 1996; rollo, pp. 88-102.
3 Penned by Associate Justice Bernardo Ll. Salas, and concurred in by
Associate Justice Jorge S. Imperial and Associate Justice Pacita Cañizares-
Nye.
4 Entitled "Saudi Arabian Airlines vs. Hon. Judge Rodolfo A. Ortiz, in his
capacity as Presiding Judge of Branch 89 of the Regional Trial Court of
Quezon City and Milagros P. Morada".
5 Issued by respondent Judge Hon. Rodolfo A. Ortiz of Branch 89, Regional

Trial Court of Quezon City.
6 Annex "B", PETITION, October 13, 1995; rollo, pp. 37-39.
7 Annex "B", PETITION, October 13, 1995; rollo, p. 40.
8 Entitled "Milagros P. Morada vs. Saudi Arabian Airlines".
9 Supra, note 2.
10 Decision, pp. 2-4; see rollo, pp. 89-91.
11 Private respondent's Comment; rollo, p. 50.
12 Ibid., pp. 50-51.
13 Dated November 19, 1993, and docketed as Civil Case No. Q-93-18394,
Branch 89, Regional Trial Court of Quezon City.
14 Dated January 14, 1994.
15 Dated February 4, 1994.
16 Reply dated March 1, 1994.
17 Records, pp. 65-84.
18 Rollo, p. 65.
19 Supra, note 6.
20 Hon. Rodolfo A. Ortiz.
21 Dated September 19, 1994.
22 Records, pp. 108-116.
23 Records, pp. 117-128.
24 Supra, note 7.
25 Ibid.
26 Dated February 18, 1995; see supra, note 4.
27 Supra, note 7.
28 Records, p. 180.
29 Rollo, pp. 1-44.
30 Supra, note 2.
31 Rollo, pp. 80-86.
32 Memorandum for Petitioner dated October 9, 1996, rollo, pp. 149-180; and
Memorandum for Private Respondent, October 30, 1996, rollo, pp. 182-210.
33 Rollo, pp. 157-159. All caps in the original.
34 Memorandum for Petitioner, p. 14, rollo, p. 162.
35 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.
36 Art 21. Any person who wilfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damages.
37 Memorandum for Private Respondent, p. 9, rollo, p. 190.
38 Records, pp. 65-71.
39 Supra, note 17, pp. 65-68.
40 Salonga, Private International Law, 1995 edition, p. 3.
41 Ibid., citing Cheshire and North, Private International Law, p. 5 by P.M. North
and J.J. Faucett (Butterworths; London, 1992).
42 Ibid.
43 Paras, Philippine Conflict of Laws, sixth edition (1984), p.

24, citing Leflar, The Law of Conflict of Laws, pp. 5-6.
44 Supra, note 17.
45 83 SCRA 237, 247.

46 Supra, note at 17, at p. 6. Morada prays that judgment be rendered against
Saudia, ordering it to pay: (1) not less than P250,000.00 as actual damages; (2)
P4 million in moral damages; (3) P500,000.00 in exemplary damages, and (4)
P500,000.00 in attorney's fees.
47 Baguioro v. Barrios, 77 Phil. 120.
48 Jurisdiction over the subject matter is conferred by law and is defined as

the authority of a court to hear and decide cases of the general class to which
the proceedings in question belong. (Reyes v. Diaz, 73 Phil. 484, 487)
49 Supra, note 37, p. 58, citing Gulf Oil Corporation v. Gilbert, 350 U.S. 501, 67
Sup. Ct. 839 (1947).
50 Omnibus Motion to Dismiss dated January 14, 1994; Reply (to Plaintiff's
Opposition) dated February 19, 1994; Comment (to Plaintiffs Motion to Admit
Amended Complaint dated June 23, 1994) dated July 20, 1993; Manifestation
and Motion to Dismiss Amended Complaint dated June 23, 1994 under date
August 11, 1994; and Motion for Reconsideration dated September 19, 1994.
51 18 SCRA 207, 213-214.
52 64 SCRA 23, 31.
53 Coquia and Pangalangan. Conflict of Laws, 1995 edition p. 65, citing Von
Mehren, Recent Trends in Choice-of-Law Methodology, 60 Cornell L. Rev. 927
(1975).
54 Ibid.
55 Supra, note 40 at p. 94, citing Falconbridge, Essays on the Conflict of Laws,

p. 50.
56 Ibid.
57 Supra, note 37, at p. 136; cf. Mussbaum, Principle of Private International

Law, p. 173; and Rabel, The Conflict of Laws: A Comparative Study, pp. 51-52.
58 Supra, note 37, p. 137.
59 Ibid.
60 Supra, note 37, at pp. 138-139.
61 Includes the (1) German rule of elective concurrence; (2) "State of the most
significant relationship" rule (the Second Restatement of 1969); (3) State —
interest analysis; and (4) Caver's Principle of Preference.
62 Supra, note 37, p. 396.

63 Supra, note 59, p. 79, citing Ruben v. Irving Trust Co., 305 N.Y. 288, 305, 113
N.E. 2d 424, 431.
64 Memorandum for Petitioner, p. 22; rollo, p. 170.
65 Memorandum for Private Respondent, pp. 21-22; rollo, pp. 202-203.
66 CA Decision, p. 10; rollo, p. 97.

SUPREME COURT
Manila
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.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
2001 Resolution2 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,
1999.5 Nippon 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
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. 00-0264 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 pre-termination 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. Frank14 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
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001
Decision22finding 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 Certiorari25 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.
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
verification28 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 period30 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 non-forum 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 Authorization35 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.37 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply38 an updated Authorization39 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.40 Considering 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 to Loquias 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
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 parties46 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 Dismiss48 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.52 We 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
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.
1âwphi1
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.
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 contract66 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
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.
ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1Penned by Associate Justice Bienvenido L. Reyes, with the late Associate Justice Eubulo
G. Verzola and Associate Justice Marina L. Buzon, concurring; rollo, pp. 37-44.
2 Id. at 46-47.
3 CA rollo (CA-G.R. SP No. 60827), p. 84.
4 Id. at 116-120.
5 Id. at 32-36.
6 Id. at 85.
7 Id. at 121-148.
8 Id. at 166-171.
9 Id. at 38.
10 Id. at 39-41.
11 Id. at 109.
12 Id. at 53-57.
13 Id. at 42-43.
14
13 Phil. 236 (1909).
15 Insular Government v. Frank, id. at 240.
16 CA rollo (CA-G.R. SP No. 60827), pp. 25-26.
17 Id. at 27-28.
19Id. at 44. The August 23, 2000 Resolution penned by Associate Justice Delilah Vidallon-
Magtolis (retired), with the concurrence of Associate Justices Eloy R. Bello, Jr. (retired) and
Elvi John S. Asuncion (dismissed) pertinently provides as follows:
"A cursory reading of the petition indicates no statement as to the date when the
petitioners filed their motion for reconsideration and when they received the order of
denial thereof, as required in Section 3, paragraph 2, Rule 46 of the 1997 Rules of
Civil Procedure as amended by Circular No. 39-98 dated August 18, 1998 of the
Supreme Court. Moreover, the verification and certification of non-forum shopping
was executed by petitioner Kazuhiro Hasegawa for both petitioners without any
indication that the latter had authorized him to file the same.
"WHEREFORE, the [petition] is DENIED due course and DISMISSED outright.
"SO ORDERED."
20 Id. at 45.
22 Supra note 1.
23 Id. at 222.
24 Supra note 2.
25 Rollo, pp. 3-35.
26 Id. at 15.
27
See Spouses Melo v. Court of Appeals, 376 Phil. 204, 213-214 (1999), in which the
Supreme Court ruled that compliance with the certification against forum shopping is
separate from, and independent of, the avoidance of forum shopping itself. Thus, there is a
difference in the treatment—in terms of imposable sanctions—between failure to comply with
the certification requirement and violation of the prohibition against forum shopping. The
former is merely a cause for the dismissal, without prejudice, of the complaint or initiatory
pleading, while the latter is a ground for summary dismissal thereof and constitutes direct
contempt. See also Philippine Radiant Products, Inc. v. Metropolitan Bank & Trust Company,
Inc., G.R. No. 163569, December 9, 2005, 477 SCRA 299, 314, in which the Court ruled that
the dismissal due to failure to append to the petition the board resolution authorizing a
corporate officer to file the same for and in behalf of the corporation is without prejudice. So
is the dismissal of the petition for failure of the petitioner to append thereto the requisite
copies of the assailed order/s.
28See Torres v. Specialized Packaging Development Corporation, G.R. No. 149634, July 6,
2004, 433 SCRA 455, 463-464, in which the Court made the pronouncement that the
requirement of verification is simply a condition affecting the form of pleadings, and
noncompliance therewith does not necessarily render it fatally defective.
29 Section 3, Rule 46 of the Rules of Court pertinently states that "x x x [i]n actions filed under
Rule 65, the petition shall further indicate the material dates showing when notice of the
judgment or final order or resolution subject thereof was received, when a motion for new
trial or reconsideration, if any, was filed and when notice of the denial thereof was received. x
x x"
30Estrera v. Court of Appeals, G.R. Nos. 154235-36, August 16, 2006, 499 SCRA 86, 95;
and Spouses Melo v. Court of Appeals, supra note 27, at 214.
31 The Rules of Court pertinently provides in Section 4, Rule 65 that "[t]he petition may be
filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is required or not,
the sixty (60) day period shall be counted from notice of the denial of said motion. x x x"
32 Delgado v. Court of Appeals, G.R. No. 137881, December 21, 2004, 447 SCRA 402, 415.
Fuentebella v. Castro, G.R. No. 150865, June 30, 2006, 494 SCRA 183, 193-194; see
34
Roxas v. Court of Appeals, 415 Phil. 430 (2001).
35Rollo, p. 33; CA rollo (CA-G.R. SP No. 60827), p. 23. The Authorization dated September
4, 2000 pertinently reads:
"I, KEN TAKAGI, President and Chief Executive Officer of NIPPON ENGINEERING
CONSULTANTS CO., LTD., a corporation duly organized and existing in accordance
with the corporation laws of Japan, with principal address at 3-23-1 Komagome,
Toshima-ku Tokyo, Japan, hereby authorize its International Division General
Manager, Mr. Kazuhiro Hasegawa, to sign and act for and in behalf of Nippon
Engineering Consultants Co., Ltd., for purposes of filing a Petition for Certiorari
before the proper tribunal in the case entitled: "Kazuhiro Hasegawa and Nippon
Engineering Consultants Co., Ltd. vs. Minoru Kitamura and Hon. Avelino C. Demetria
of the Regional Trial Court, Fourth Judicial Region-Branch 85, Lipa City," and to do
such other things, acts and deals which may be necessary and proper for the
attainment of the said objectives" [Underscoring ours].
36Cf. Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180, 199-200, in which
the Court ruled that the agent's signing therein of the verification and certification is already
covered by the provisions of the general power of attorney issued by the principal.
37 Barcenas v. Tomas, G.R. No. 150321, March 31, 2005, 454 SCRA 593, 604.
38 Dated October 11, 2001; rollo, pp. 192-203.
39 Dated August 17, 2001, id. at 202.
40San Pablo Manufacturing Corporation v. Commissioner of Internal Revenue, G.R. No.

147749, June 22, 2006, 492 SCRA 192, 197; LDP Marketing, Inc. v. Monter, G.R. No.
159653, January 25, 2006, 480 SCRA 137, 142; Expertravel & Tours, Inc. v. Court of
Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA 147, 160.
41 392 Phil. 596, 603-604 (2000).
42 Loquias v. Office of the Ombudsman, id. at 604.
43 Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).

44 Yutingco v. Court of Appeals, 435 Phil. 83, 92 (2002).
45Bank of America NT & SA v. Court of Appeals, 448 Phil. 181, 193 (2003). As stated herein,
under certain situations resort to certiorari is considered appropriate when: (1) the trial court
issued the order without or in excess of jurisdiction; (2) there is patent grave abuse of
discretion by the trial court; or (3) 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
defendants needlessly to go through a protracted trial and clogging the court dockets with
another futile case.
46 Rollo, p. 228.
47 Id. at 234-245.
48 Dated June 5, 2000; CA rollo (CA-G.R. SP No. 60827), pp. 53-57.
49 Id. at 55.
50 Id. at 14.
51 Rollo, pp. 19-28.
52 453 Phil. 927, 934 (2003).
53 Scoles, Hay, Borchers, Symeonides, Conflict of Laws, 3rd ed. (2000), p. 3.
54 Coquia and Aguiling-Pangalangan, Conflict of Laws, 1995 ed., p. 64.
Supra note 53, at 162, citing Hay, The Interrelation of Jurisdictional Choice of Law in U.S.
55
Conflicts Law, 28 Int'l. & Comp. L.Q. 161 (1979).
56Shaffer v. Heitner, 433 U.S. 186, 215; 97 S.Ct. 2569, 2585 (1977), citing Justice Black's
Dissenting Opinion in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct. 1228, 1242 (1958).
57 See Regalado, Remedial Law Compendium, Vol. 1, 8th Revised Ed., pp. 7-8.
58 U.S. v. De La Santa, 9 Phil. 22, 25-26 (1907).
59
Bokingo v. Court of Appeals, G.R. No. 161739, May 4, 2006, 489 SCRA 521, 530; Tomas
Claudio Memorial College, Inc. v. Court of Appeals, 374 Phil. 859, 864 (1999).
60 See RULES OF COURT, Rule 16, Sec. 1.
61 See In Re: Calloway, 1 Phil. 11, 12 (1901).
Bokingo v. Court of Appeals, supra note 59, at 531-533; Radio Communications of the
62
Phils. Inc. v. Court of Appeals, 435 Phil. 62, 68-69 (2002).

Garcia v. Recio, 418 Phil. 723, 729 (2001); Board of Commissioners (CID) v. Dela Rosa,
63
G.R. Nos. 95122-23, May 31, 1991, 197 SCRA 853, 888.
64 <http://web2.westlaw.com/search/default.wl?rs=WLW7.10&action=Search&fn=_top&sv=Sp
lit&
method=TNC&query=CA(+lex+loci+celebrationis+)&db=DIBLACK&utid=%7bD0AE3BEE-
91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription>
(visited October 22, 2007).
lit& method=TNC&query=CA(+lex+loci+contractus+)&db=DIBLACK&utid=%7bD0AE3BEE-
91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription>(visi
ted October 22, 2007).
66 Id.
67Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction,
Inc., G.R. No. 140047, July 13, 2004, 434 SCRA 202, 214-215.
lit&
method=TNC&query=CA(+most+significant+relationship+)&db=DIBLACK&utid=%7bD0AE3
BEE-91BC-4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=
WLIGeneralSubscription> (visited October 22, 2007).
69Saudi Arabian Airlines v. Court of Appeals, 358 Phil. 105, 127 (1998). The contacts which
were taken into account in this case are the following: (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.
70 See Auten v. Auten, 308 N.Y 155, 159-160 (1954).
71 Supra note 53, at 117-118; supra note 54, at 64-65.
72 Laurel v. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, 187 SCRA 797, 810-811.
73International Harvester Company in Russia v. Hamburg-American Line, 42 Phil. 845, 855

(1918).
74 Salonga, Private International Law, 1995 ed., p. 44.
75Veitz, Jr. v. Unisys Corporation, 676 F. Supp. 99, 101 (1987), citing Randall v. Arabian Am.
Oil. Co., 778 F. 2d 1146 (1985).
76 Under this rule, a court, in conflicts 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 (Bank of America NT & SA v. Court of Appeals, supra note 45,
at 196). The court may refuse to entertain a case for any of the following practical reasons:
(1) the belief that 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; (2) the belief that the non-resident plaintiff sought the forum, a practice
known as forum shopping, merely to secure procedural advantages or to convey or harass
the defendant; (3) the unwillingness to extend local judicial facilities to non-residents or
aliens when the docket may already be overcrowded; (4) the inadequacy of the local judicial
machinery for effectuating the right sought to be maintained; and (5) the difficulty of
ascertaining foreign law (Puyat v. Zabarte, 405 Phil. 413, 432 [2001]).
Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, June 19, 1997, 274
77
SCRA 102, 113.
78 Bank of America NT & SA v. Court of Appeals, supra note 45, at 196.
_____________________________________________________________________________________
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,

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 Decision1 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 respondent’s money claims.5 Upon appeal by BMSI, the
NLRC reversed the decision of the Labor Arbiter and dismissed respondent’s 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 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.
In its Answer,8 petitioner alleged that contrary to respondent’s 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 petitioner’s 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 court could enforce judgment on petitioner, it being a
foreign corporation licensed to do business in the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s 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 petitioner’s 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 petitioner’s 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-of-laws 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 Petitioner’s 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 court’s 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.
DANTE O. TINGA
Associate Justice
WE CONCUR:
*ANTONIO T. CARPIO
Associate Justice
Acting Chairperson
**ANGELINA SANDOVAL-GUTIERREZ CONCHITA CARPIO MORALES

PRESBITERO J. VELASCO, JR.

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
ANTONIO T. CARPIO
Associate Justice
Acting Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it
is hereby certified that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
* Acting Chairperson.
** As replacement of Justice Leonardo A. Quisumbing who inhibited himself per

Administrative Circular No. 84-2007.
1Rollo, pp. 42-46. Dated 28 August 2003; penned by Associate Justice Arsenio J. Magpale
and concurred in by Associate Justices Bienvenido L. Reyes, Acting Chairperson of the
Special Ninth Division, and Rebecca De Guia-Salvador.
2 Id. at 47. Dated 10 March 2004.
3 Id. at 48-49.
4 Id. at 61-62.
5 Id. at 63-74.
6 Id. at 75-90.
7 Id. at 48-54.
8 Id. at 91-99.
9 Id. at 94.
10 Id. at 96.
11 Id. at 97-98.
12 Id. at 100-111.
13 Records, Vol. I, pp. 180-238.
14 Rollo, pp. 127-131.
15 Id. at 130.
16 Id. at 132-149.
17 Id. at 150-151.
18 Id. at 162.
19 Id. at 163-192.
20 Id. at 191.
21 Supra note 1.
22 Supra note 2.
23 Id. at 44.
24 Id. at 18.
25 Id. at 318.
26 G.R. No. 149177, 23 November 2007.
27Bank of America NT & SA v. Court of Appeals, 448 Phil. 181 (2003); Puyat v. Zabarte, 405
Phil. 413 (2001); Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, 19
June 1997, 274 SCRA 102.
The Manila Hotel Corp. v. NLRC, 397 Phil. 1, 16-17 (2000); Communication Materials and
28
Design, Inc. v. CA, 329 Phil. 487, 510-511 (1996).
29 Agpalo, Ruben E. CONFLICT OF LAWS (Private International Law), 2004 Ed., p. 491.
30
Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, G.R. No. 162890,
22 November 2005, 475 SCRA 743, 756.
31 Laresma v. Abellana, G.R. No. 140973, 11 November 2004, 442 SCRA 156, 168.
32 See Arcelona v. CA, 345 Phil. 250, 267 (1997).
33 Hasegawa v. Kitamura, supra note 26.
34 Bank of America NT & SA v. Court of Appeals, supra note 27.
35 Philsec Investment Corporation v. Court of Appeals, supra note 27 at 113.
36 Bank of America NT & SA v. Court of Appeals, supra note 27 at 194.
37Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R. No. 143896, 8 July
2005, 463 SCRA 64, 73.
38 Rollo, p. 44.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,

vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE
COURT, respondents.
Quiason, Makalintal, Barot & Torres for petitioner.
Alejandro, Aranzaso & Associates for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now
Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated
February 28,1985 denying the Motion to Dismiss filed by private respondents Jack Robert Sherman
and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and
Shanghai Banking Corporation (hereinafter referred to as petitioner BANK) against private
respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before
the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as
COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore
branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars
200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with
interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said
overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner
BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and
a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed
a Joint and Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private
respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the
COMPANY to petitioner BANK under the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws
of the Republic of Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the
obligation from private respondents, conformably with the provisions of the Joint and Several
Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-
mentioned complaint.
On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was
opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order
dated February 28, 1985 (pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December 14, 1984, the defendants seek the
dismissal of the complaint on two grounds, namely:
1. That the court has no jurisdiction over the subject matter of the complaint; and
2. That the court has no jurisdiction over the persons of the defendants.
In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the
motion. "On the first ground, defendants claim that by virtue of the provision in the
Guarantee (the actionable document) which reads —
This guarantee and all rights, obligations and liabilities arising

hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the courts in Singapore shall have jurisdiction
over all disputes arising under this guarantee,
the Court has no jurisdiction over the subject matter of the case. The Court finds and
concludes otherwise. There is nothing in the Guarantee which says that the courts of
Singapore shall have jurisdiction to the exclusion of the courts of other countries or
nations. Also, it has long been established in law and jurisprudence that jurisdiction
of courts is fixed by law; it cannot be conferred by the will, submission or consent of
the parties.
On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen
nor a resident of the Philippines. This argument holds no water. Jurisdiction over the
persons of defendants is acquired by service of summons and copy of the complaint
on them. There has been a valid service of summons on both defendants and in fact
the same is admitted when said defendants filed a 'Motion for Extension of Time to
File Responsive Pleading on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by private respondents which was, however,
denied (p. 66,Rollo).
Private respondents then filed before the respondent Intermediate Appellate Court (now Court of
Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order (pp.
39-48, Rollo). On August 2, 1985, the respondent Court rendered a decision (p. 37, Rollo), the
dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is hereby
GRANTED. The respondent Court is enjoined from taking further cognizance of the
case and to dismiss the same for filing with the proper court of Singapore which is
the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to
wit:
(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be
of the Republic of Singapore. We hereby agree that the Courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee. ... (p. 53-A, Rollo)
In rendering the decision in favor of private respondents, the Court of Appeals made, the following
observations (pp. 35-36, Rollo):
There are significant aspects of the case to which our attention is invited. The loan
was obtained by Eastern Book Service PTE, Ltd., a company incorporated
in Singapore. The loan was granted by the Singapore Branch of Hongkong and
Shanghai Banking Corporation. The Joint and Several Guarantee was also
concluded in Singapore. The loan was in Singaporean dollars and the repayment
thereof also in the same currency. The transaction, to say the least, took place in
Singporean setting in which the law of that country is the measure by which that
relationship of the parties will be governed.
xxx xxx xxx
Contrary to the position taken by respondents, the guarantee agreement compliance

that any litigation will be before the courts of Singapore and that the rights and
obligations of the parties shall be construed and determined in accordance with the
laws of the Republic of Singapore. A closer examination of paragraph 14 of the
Guarantee Agreement upon which the motion to dismiss is based, employs in clear
and unmistakeable (sic) terms the word 'shall' which under statutory construction is
mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which may be enforced
(Dizon vs. Encarnacion, 9 SCRA 714). lâwphî1.ñèt
There is nothing more imperative and restrictive than what the agreement
categorically commands that 'all rights, obligations, and liabilities arising
hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several
Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the
stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws of the Republic
of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee" be liberally construed. One basic principle underlies all rules of
jurisdiction in International Law: a State does not have jurisdiction in the absence of some
reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend
traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p.
46). Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd
situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign
tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine
residents (a fact which was not disputed by them) who would rather face a complaint against them
before a foreign court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case. Private respondents' stance
is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a
just obligation.
The defense of private respondents that the complaint should have been filed in Singapore is based
merely on technicality. They did not even claim, much less prove, that the filing of the action here will
cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing
that petitioner BANK filed the action here just to harass private respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187,
it was ruled:
... An accurate reading, however, of the stipulation, 'The parties agree to sue and be
sued in the Courts of Manila,' does not preclude the filing of suits in the residence of
plaintiff or defendant. The plain meaning is that the parties merely consented to be
sued in Manila. Qualifying or restrictive words which would indicate that Manila and
Manila alone is the venue are totally absent therefrom. We cannot read into that
clause that plaintiff and defendant bound themselves to file suits with respect to the
last two transactions in question only or exclusively in Manila. For, that agreement
did not change or transfer venue. It simply is permissive. The parties solely agreed to
add the courts of Manila as tribunals to which they may resort. They did not waive
their right to pursue remedy in the courts specifically mentioned in Section 2(b) of
Rule 4. Renuntiatio non praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R.
No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation,
jurisdiction shall be vested in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue, suffice it to say
that a stipulation as to venue does not preclude the filing of suits in the residence of
plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of
qualifying or restrictive words in the agreement which would indicate that the place
named is the only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of
Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate
to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light
of a State to exercise authority over persons and things within its boundaries subject to certain
exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign military units stationed in or marching through
State territory with the permission of the latter's authorities. This authority, which finds its source in
the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is
competent to take hold of any judicial matter it sees fit by making its courts and agencies assume
jurisdiction over all kinds of cases brought before them (J. Salonga, Private International Law, 1981,
pp. 37-38).lâwphî1.ñèt
As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue
has been waived. However, We agree with the ruling of the respondent Court that:
While in the main, the motion to dismiss fails to categorically use with exactitude the
words 'improper venue' it can be perceived from the general thrust and context of the
motion that what is meant is improper venue, The use of the word 'jurisdiction' was
merely an attempt to copy-cat the same word employed in the guarantee agreement
but conveys the concept of venue. Brushing aside all technicalities, it would appear
that jurisdiction was used loosely as to be synonymous with venue. It is in this spirit
that this Court must view the motion to dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was properly laid for
the same reasons discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may still
refuse to entertain the case by applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the basis of the principle of forum
non conveniensdepends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49). Thus, the respondent
lâwphî1.ñèt
Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion
and that consequently, it cannot be permitted to take a stand contrary to the stipulations of the
contract, substantial bases exist for petitioner Bank's choice of forum, as discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine
branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart
the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any
defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the
Regional Trial Court is REINSTATED, with costs against private respondents. This decision is
immediately executory.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griñ;o-Aquino, JJ., concur.

SUPREME COURT
Manila
EN BANC
G.R. No. L-16749 January 31, 1963
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 oppositor-appellant.
LABRADOR, J.:
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. 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.
xxx xxx 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..
xxx xxx 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 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:
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.
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.1äw phï1.ñët
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 if he 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 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 renvoidoctrine, 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)
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.
xxx xxx xxx
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.
xxx xxx 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 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-of-
laws 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. 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.
SUPREME COURT
Manila
EN BANC
G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.

PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.

Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First
Instance of Manila dated April 30, 1964, approving the project of partition filed by the executor in
Civil Case No. 37089 therein. 1äwphï1.ñët
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his
first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis,
George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis
Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children:
Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children:
Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after
all taxes, obligations, and expenses of administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen;
(b) P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam
Palma Bellis, or P40,000.00 each and (c) after the foregoing two items have been satisfied, the
remainder shall go to his seven surviving children by his first and second wives, namely: Edward A.
Bellis, Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis,
and Dorothy E. Bellis, in equal shares. 1äw phï1.ñët
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His
will was admitted to probate in the Court of First Instance of Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests therein
including the amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the
three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various
amounts totalling P40,000.00 each in satisfaction of their respective legacies, or a total of
P120,000.00, which it released from time to time according as the lower court approved and allowed
the various motions or petitions filed by the latter three requesting partial advances on account of
their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter
alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock
amounting to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam
Palma Bellis in the amount of P40,000.00 each or a total of P120,000.00. In the project of partition,
the executor — pursuant to the "Twelfth" clause of the testator's Last Will and Testament — divided
the residuary estate into seven equal portions for the benefit of the testator's seven legitimate
children by his first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions
to the project of partition on the ground that they were deprived of their legitimes as illegitimate
children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is
evidenced by the registry receipt submitted on April 27, 1964 by the executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on
April 30, 1964, issued an order overruling the oppositions and approving the executor's final account,
report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it applied
the national law of the decedent, which in this case is Texas law, which did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower court on June 11,
1964, oppositors-appellants appealed to this Court to raise the issue of which law must apply —
Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied
by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually
pertinent where the decedent is a national of one country, and a domicile of another. In the present
case, it is not disputed that the decedent was both a national of Texas and a domicile thereof at the
time of his death.2 So that even assuming Texas has a conflict of law rule providing that the
domiciliary system (law of the domicile) should govern, the same would not result in a reference
back (renvoi) to Philippine law, but would still refer to Texas law. Nonetheless, if Texas has a
conflicts rule adopting the situs theory (lex rei sitae) calling for the application of the law of the place
where the properties are situated, renvoi would arise, since the properties here involved are found in
the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it should not
be presumed different from ours.3 Appellants' position is therefore not rested on the doctrine of
renvoi. As stated, they never invoked nor even mentioned it in their arguments. Rather, they argue
that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation
to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent,
in intestate or testamentary successions, with regard to four items: (a) the order of succession; (b)
the amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the
capacity to succeed. They provide that —
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 he the nature of the property and
regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that —
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.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct.
Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next
preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil
Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil
Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art.
16 a specific provision in itself which must be applied in testate and intestate succession. As further
indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees
that capacity to succeed is to be governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For
it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's
national law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills — one to govern his Texas
estate and the other his Philippine estate — arguing from this that he intended Philippine law to
govern his Philippine estate. Assuming that such was the decedent's intention in executing a
separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil.
867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in
accordance with Philippine law and not with his national law, is illegal and void, for his national law
cannot be ignored in regard to those matters that Article 10 — now Article 16 — of the Civil Code
states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and
that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic
validity of the provision of the will and the amount of successional rights are to be determined under
Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ.,
concur.
Footnotes
1He later filed a motion praying that as a legal heir he be included in this case as one of the
oppositors-appellants; to file or adopt the opposition of his sisters to the project of partition; to
submit his brief after paying his proportionate share in the expenses incurred in the printing
of the record on appeal; or to allow him to adopt the briefs filed by his sisters — but this
Court resolved to deny the motion.
2 San Antonio, Texas was his legal residence.
3 Lim vs. Collector, 36 Phil. 472; In re Testate Estate of Suntay, 95 Phil. 500.
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 NAMED-COMPLAINANTS, 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 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. 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. 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 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. CASTAÑEDA,
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, 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, MARIO J. LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M.
LAMADRID, GUADENCIO LATANAN, VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO
LAUREL, ALFREDO LAXAMANA, DANIEL 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 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.
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.
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, L-85-10-777, 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:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases
Nos. L-84-06-555, L-85-10-777, 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 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 pre-trial
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-84-06-555 (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. 14-16). 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.
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. L-84-06-555. 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. L-86-05-460. 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 "Ex-Parte 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
"Counter-Manifestation," 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 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. 85-
87; 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 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. 105029-32, Rollo, pp. 906-956;
G.R. Nos. 104911-14, Rollo, pp. 679-729; 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. 104911-14, 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. 1243-1254; 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. 987-1105; 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 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 restif 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. 107: A contract of employment made for a period of indefinite

duration may be 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;
(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.
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.
Eighth: — Whether or not the POEA Administrator erred in not dismissing POEA
Case No. (L) 86-65-460 on the ground of multiplicity of suits (G.R. Nos. 104911-
14, Rollo, pp. 25-29, 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.
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
(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.
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 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).
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 capital and labor, 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).
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
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 ten-year 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 employer-employee 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, quasi-judicial, 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, 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-84-06-555.
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. 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 the Supreme 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.
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, Asia 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 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
overseas-employment 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.
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. 37-39).
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 NLRC additional 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.
Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.
ANNEX A
LIST OF CLAIMANTS WHO SIGNED QUITCLAIMS
Bienvenido Cadalin Ardon Ello

Antonio Acupan Josefino R. Enano
Benjamin Alejandre Rolando E. Espiritu
Wilfredo Aligada Patricio L. Garcia Jr.
Robert Batica Felino M. Jocson
Enrico Belen Eduardo S. Kolimlim
Guillermo Cabeza Emmanuel C. Labella
Rodolfo Cagatan Ernesto S. Lising
Francisco De Guzman Edilberto G. Magat
Ignacio De Vera Victoriano L. Matilla
Ernesto De la Cruz Renato V. Morada
Reynaldo Dizon Ildefonso C. Muñoz
Ricardo Ebrada Herbert G. Ng
Antonio Ejercito Reynado Oczon
Eduardo Espiritu Romeo Orial
Ernesto Espiritu Ricardo Paguio
Rodolfo Espiritu Emilio Pakingan
Oligario Francisco Ernesto S. Pangan
Antonio Jocson Albert L. Quinto
Alejandro Olorino Romulo M. Reyes
Efren Lirio Leonilo Tiposo
Noel Martinez Manual P. Villanueva
Francis Mediodia Arnaldo J. Alonzo
Luciano Melendez Pastor M. Aquino
Reymundo Milay Ramon Castro
Jose Pancho Graciano Isla
Modesto Pin Pin Renato Matilla
Gaudencio Retana Ricardo B. Morada
Rodelio Rieta, Jr. Pacifico D. Navarro
Jose Robleza Eugenio A. Remonquillo
Nemeriano San Mateo Felix Barcena
Juanito Santos Eliseo Fajardo
Paquito Solanto Sergio S. Santiago
Conrado Solis, Jr. Antonio R. Rodriquez
Menandro Temprosa Luis Val B. Ronquillo
Maximiano Torres Teodorico C. Del Rosario
Francisco Trias Joselito C. Solante
Delfin Victoria Ricardo C. Dayrit
Gilbert Victoria Antonio P. Hilario
Domingo Villahermosa Edgardo O. Salonga
Rogelio Villanueva Dante C. Aceres
Jose M. Aban Reynaldo S. Acojido
Amorsolo S. Anading Esidro M. Aquino
Alfredo S. Balogo Rosendo M. Aquino
Ramon T. Barboza Rodolfo D. Arevalo
Felix M. Bobier Rexy De Leon Ascuncion
Jose H. Castillo Basilio Buenaventura
Emmanuel H. Castillo Alexander Bustamante
Remar R. Castrojerez Virgilio V. Butiong, Jr.
Romeo O. Cecilio Delfin Caballero
Bayani M. Dayrit Danilo M. Castro
Felizardo S. Delos Santos Franscisco O. Corvera
Nestor N. Estava Edgardo N. Dayacap
Rolando M. Garcia Napoleon S. De Luna
Angel D. Guda Benjamin E. Doza
Henry L. Jacob Renato A. Eduarte
Dante A. Matreo Clyde C. Estuye
Renato S. Melo Buenaventura M. Francisco
Resurrecion D. Nazareno Rogelio D. Guanio
Jaime C. Pollos Arnel L. Jacob
Domingo Pondales Renato S. Lising
Eugenio Ramirez Wilfredo S. Lising
Lucien M. Respall Rogelio S. Lopena
Alvin C. Reyes Bernardito G. Loreja
Rizalina R. Reyes Ignacio E. Muñoz
Quirino Ronquillo Romeo C. Quintos
Avelino M. Roque Willafredo Dayrit Raymundo
Pedro L. Salgatar Virgilio L. Rosario
Rodolfo T. Sultan Joselito Santiago
Benedicto E. Torres Ernesto G. Sta. Maria
Sergio A. Ursolino Gavino U. Tuazon
Rogelio R. Valdez Elito S. Villanueva
Dionisio Bobongo Lamberto Q. Alcantara
Crisenciano Miranda Arturo P. Apilado
Ildefonso C. Molina Turiano V. Concepcion
Gorgonio C. Parala Domingo V. Dela Cruz
Virgilio Ricaza Eduardo R. Enguancho
Palconeri D. Banaag Melanio R. Esteron
Bayani S. Bracamante Santiago N. Galoso
Onofre De Rama Joveniano Hilado
Jose C. Melanes Eduardo Hipolito
Romeo I. Patag Romero M. Javier
Valerio A. Evangelista Valentino S. Jocson
Gilbert E. Ebrada Jose B. Lacson
Juanito P. Villarino Armando M. Magsino
Aristeo M. Bicol Avelino O. Nuqui
Quiterio R. Agudo Delmar F. Pineda
Marianito J. Alcantara Federico T. Quiman
Jose Arevalo Alberto M. Redaza
Ramon A. Arevalo Renosa Ronquillo
Jesus Baya Rodolfo Ronquillo
Guillermo Buenconsejo Antonio T. Valderama
Teresito A. Constantino Ramon Valderama
Eduardo A. Diaz Benigno N. Melendez
Emigdio Abarquez Claudio A. Modesto
Herbert Ayo Solomon Reyes
Mario Bataclan Isaias Talactac
Ricardo Ordonez William G. Taruc
Bernardino Robillos Oscar C. Calderon
Francisco Villaflores Pacifico P. Campano
Angel Villarba Eulalio G. Arguelles
Honesto Jardiniano Ben G. Belir
Juan Y. Olindo Cornelio L. Castillo
Hernani T. Victoriano Valeriano B. Francisco
Ubed B. Ello, Sr. Jaime L. Relosa
Ernesto V. Macaraig Alex Q. Villahermosa
Espiritu A. Munoz, Sr. Vivencio V. Abello, Jr.
Rodrigo E. Ocampo Renato C. Corcuera
Rodolfo V. Ramirez Emiliano B. Dela Cruz, Jr.
Ceferino Batitis Esteban B. Jose, Jr.
Augusto R. Bondoc Ricardo B. Martinez
Jaime C. Catli Bienvenido Vergara
Gerardo B. Limuaco, Jr. Pedro G. Cagatan
Macario S. Magsino Francisco Apolinario
Domingo B. Solano Miguel Abestano
Ricardo De Rama Prudencio Araullo
Arturo V. Araullo
SUPREME COURT
Manila
SECOND DIVISION
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 party-defendant.
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, T-186273, 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
(P39,000,000.00). 12 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 T-78761, 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 Courtdocketed 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 15and 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 to bring
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 chosen upon 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 contract—loan—remains 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 foreclosure of 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. T-78759, T-78762, 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 well-paved 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. T-187781(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
by the evidence on record. 46Applying 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. 49citing 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 cross-examination. 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.
Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.
Footnotes
1 CA Decision in CA-G.R. CV No. 51094, penned by Justice Ricardo P. Galvez and

concurred in by Justice Fidel V. Purisima and Justice B.A. Adefuin-De la Cruz; Rollo, pp. 38-
58.
2 CA Resolution in CA G.R. CV No. 51094, dated 22 May 1998; Rollo, p. 60.
3 Rollo, p. 38.
4 Ibid., p. 39.
5 Ibid.
6 Ibid., p. 40.
7 Ibid.
8 Ibid.
9 Ibid.
10 Rollo, p. 41.
11 Ibid.
12 Ibid.
13 Rollo, pp. 41-42.
14 Rollo, pp. 10-36.

15 Bachrach Motor Co., Inc., vs. Esteban Icarangal, 68 Phil. 287.
16 154 SCRA 446.
17 71 Phil. 448.
18 105 Phil. 886.
19 Danao vs. Court of Appeals 154 SCRA 446.
20 Article 2085, Civil Code; Lustan vs. Court of Appeals, 266 SCRA 663.
21 Cerna vs. Court of Appeals 220 SCRA 517.
22 Ibid.
23 176 SCRA 741.
24 68 Phil. 287.
25 Rollo, p. 94.
26 Caltex Philippines, Inc. vs. Intermediate Appellate Court, 176 SCRA 741.
27 196 SCRA 29.
28 Bachrach Motor vs. Icarangal, 68 Phil. 287.
29 Rollo, p. 16.7.
30 Adong vs. Cheong Seng Gee, 43 Phil. 43; Sy Joc Lieng vs. Syquia, 16 Phil. 137.
31 Lim vs. Collector, 36 Phil. 472.
32 167 SCRA 736.
33 Philippine Conflict of Laws, Eighth Edition, 1996, Paras, page 46.
34 Article 17, par. 3, Civil Code.
35 Philippine Conflict of Laws, Eight Edition, 1996, Paras, p. 60.
36 Perfecto vs. Gonzales, 128 SCRA 640, as cited in Danao vs. Court of Appeals, 154
SCRA 447.
37 22 Am. Jur. 2d 193.
38 City of Manila vs. Corrales, 32 Phil. 85, 96.

39 Rollo, p. 103.
40 People vs. Morales, 241 SCRA 267.
41 People vs. Gamiao, 240 SCRA 254.
42 People vs. Cascalla, 240 SCRA 482.
43 Lee Eng Hong vs. Court of Appeals, 241 SCRA 392.
44 Ibid.
45 Rollo, pp. 46-47.
46 People vs. Asoy, 251 SCRA 682.
47 TSN, April 22, 1994, p. 6.
48 Decision, Records, ibid.
49 247 SCRA 361, 377-378.
50 158 SCRA 408.
51 Article 2229, Civil Code.
52 Philtranco Service Exporters, Inc. vs. Court of Appeals, 273 SCRA 562.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168785 February 5, 2010
HERALD BLACK DACASIN, Petitioner,

vs.
SHARON DEL MUNDO DACASIN, Respondent.
DECISION
CARPIO, J.:
The Case
For review1 is a dismissal2 of a suit to enforce a post-foreign divorce child custody agreement for lack
of jurisdiction.
The Facts
Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del Mundo Dacasin
(respondent), Filipino, were married in Manila in April 1994. They have one daughter, Stephanie,
born on 21 September 1995. In June 1999, respondent sought and obtained from the Circuit Court,
19th Judicial Circuit, Lake County, Illinois (Illinois court) a divorce decree against petitioner.3 In its
ruling, the Illinois court dissolved the marriage of petitioner and respondent, awarded to respondent
sole custody of Stephanie and retained jurisdiction over the case for enforcement purposes.
On 28 January 2002, petitioner and respondent executed in Manila a contract (Agreement4 ) for the
joint custody of Stephanie. The parties chose Philippine courts as exclusive forum to adjudicate
disputes arising from the Agreement. Respondent undertook to obtain from the Illinois court an order
"relinquishing" jurisdiction to Philippine courts.
In 2004, petitioner sued respondent in the Regional Trial Court of Makati City, Branch 60 (trial court)
to enforce the Agreement. Petitioner alleged that in violation of the Agreement, respondent
exercised sole custody over Stephanie.
Respondent sought the dismissal of the complaint for, among others, lack of jurisdiction because of
the Illinois court’s retention of jurisdiction to enforce the divorce decree.
The Ruling of the Trial Court
In its Order dated 1 March 2005, the trial court sustained respondent’s motion and dismissed the
case for lack of jurisdiction. The trial court held that: (1) it is precluded from taking cognizance over
the suit considering the Illinois court’s retention of jurisdiction to enforce its divorce decree, including
its order awarding sole custody of Stephanie to respondent; (2) the divorce decree is binding on
petitioner following the "nationality rule" prevailing in this jurisdiction;5 and (3) the Agreement is void
for contravening Article 2035, paragraph 5 of the Civil Code6 prohibiting compromise agreements on
jurisdiction.7
Petitioner sought reconsideration, raising the new argument that the divorce decree obtained by
respondent is void. Thus, the divorce decree is no bar to the trial court’s exercise of jurisdiction over
the case.
In its Order dated 23 June 2005, the trial court denied reconsideration, holding that unlike in the case
of respondent, the divorce decree is binding on petitioner under the laws of his nationality.
Hence, this petition.
Petitioner submits the following alternative theories for the validity of the Agreement to justify its
enforcement by the trial court: (1) the Agreement novated the valid divorce decree, modifying the
terms of child custody from sole (maternal) to joint;8 or (2) the Agreement is independent of the
divorce decree obtained by respondent.
The Issue
The question is whether the trial court has jurisdiction to take cognizance of petitioner’s suit and
enforce the Agreement on the joint custody of the parties’ child.
The Ruling of the Court
The trial court has jurisdiction to entertain petitioner’s suit but not to enforce the Agreement which is
void. However, factual and equity considerations militate against the dismissal of petitioner’s suit and
call for the remand of the case to settle the question of Stephanie’s custody.
Regional Trial Courts Vested With Jurisdiction

to Enforce Contracts
Subject matter jurisdiction is conferred by law. At the time petitioner filed his suit in the trial court,
statutory law vests on Regional Trial Courts exclusive original jurisdiction over civil actions incapable
of pecuniary estimation.9 An action for specific performance, such as petitioner’s suit to enforce the
Agreement on joint child custody, belongs to this species of actions.10 Thus, jurisdiction-wise,
petitioner went to the right court.
Indeed, the trial court’s refusal to entertain petitioner’s suit was grounded not on its lack of power to
do so but on its thinking that the Illinois court’s divorce decree stripped it of jurisdiction. This
conclusion is unfounded. What the Illinois court retained was "jurisdiction x x x for the purpose of
enforcing all and sundry the various provisions of [its] Judgment for Dissolution."11 Petitioner’s suit
seeks the enforcement not of the "various provisions" of the divorce decree but of the post-divorce
Agreement on joint child custody. Thus, the action lies beyond the zone of the Illinois court’s so-
called "retained jurisdiction."
Petitioner’s Suit Lacks Cause of Action
The foregoing notwithstanding, the trial court cannot enforce the Agreement which is contrary to law.
In this jurisdiction, parties to a contract are free to stipulate the terms of agreement subject to the
minimum ban on stipulations contrary to law, morals, good customs, public order, or public
policy.12 Otherwise, the contract is denied legal existence, deemed "inexistent and void from the
beginning."13 For lack of relevant stipulation in the Agreement, these and other ancillary Philippine
substantive law serve as default parameters to test the validity of the Agreement’s joint child custody
stipulations.14
At the time the parties executed the Agreement on 28 January 2002, two facts are undisputed: (1)
Stephanie was under seven years old (having been born on 21 September 1995); and (2) petitioner
and respondent were no longer married under the laws of the United States because of the divorce
decree. The relevant Philippine law on child custody for spouses separated in fact or in law15 (under
the second paragraph of Article 213 of the Family Code) is also undisputed: "no child under seven
years of age shall be separated from the mother x x x."16 (This statutory awarding of sole parental
custody17 to the mother is mandatory,18 grounded on sound policy consideration,19subject only to a
narrow exception not alleged to obtain here.20 ) Clearly then, the Agreement’s object to establish a
post-divorce joint custody regime between respondent and petitioner over their child under seven
years old contravenes Philippine law.
The Agreement is not only void ab initio for being contrary to law, it has also been repudiated by the
mother when she refused to allow joint custody by the father. The Agreement would be valid if the
spouses have not divorced or separated because the law provides for joint parental authority when
spouses live together.21 However, upon separation of the spouses, the mother takes sole custody
under the law if the child is below seven years old and any agreement to the contrary is void. Thus,
the law suspends the joint custody regime for (1) children under seven of (2) separated or divorced
spouses. Simply put, for a child within this age bracket (and for commonsensical reasons), the law
decides for the separated or divorced parents how best to take care of the child and that is to give
custody to the separated mother. Indeed, the separated parents cannot contract away the provision
in the Family Code on the maternal custody of children below seven years anymore than they can
privately agree that a mother who is unemployed, immoral, habitually drunk, drug addict, insane or
afflicted with a communicable disease will have sole custody of a child under seven as these are
reasons deemed compelling to preclude the application of the exclusive maternal custody regime
under the second paragraph of Article 213.22
It will not do to argue that the second paragraph of Article 213 of the Family Code applies only to
judicial custodial agreements based on its text that "No child under seven years of age shall be
separated from the mother, unless the court finds compelling reasons to order otherwise." To limit
this provision’s enforceability to court sanctioned agreements while placing private agreements
beyond its reach is to sanction a double standard in custody regulation of children under seven
years old of separated parents. This effectively empowers separated parents, by the simple
expedient of avoiding the courts, to subvert a legislative policy vesting to the separated mother sole
custody of her children under seven years of age "to avoid a tragedy where a mother has seen her
baby torn away from her."23 This ignores the legislative basis that "[n]o man can sound the deep
sorrows of a mother who is deprived of her child of tender age."24
It could very well be that Article 213’s bias favoring one separated parent (mother) over the other
(father) encourages paternal neglect, presumes incapacity for joint parental custody, robs the
parents of custodial options, or hijacks decision-making between the separated parents.25 However,
these are objections which question the law’s wisdom not its validity or uniform enforceability. The
forum to air and remedy these grievances is the legislature, not this Court. At any rate, the rule’s
seeming harshness or undesirability is tempered by ancillary agreements the separated parents may
wish to enter such as granting the father visitation and other privileges. These arrangements are not
inconsistent with the regime of sole maternal custody under the second paragraph of Article 213
which merely grants to the mother final authority on the care and custody of the minor under seven
years of age, in case of disagreements. 1avvphi 1
Further, the imposed custodial regime under the second paragraph of Article 213 is limited in
duration, lasting only until the child’s seventh year. From the eighth year until the child’s
emancipation, the law gives the separated parents freedom, subject to the usual contractual
limitations, to agree on custody regimes they see fit to adopt. Lastly, even supposing that petitioner
and respondent are not barred from entering into the Agreement for the joint custody of Stephanie,
respondent repudiated the Agreement by asserting sole custody over Stephanie. Respondent’s act
effectively brought the parties back to ambit of the default custodial regime in the second paragraph
of Article 213 of the Family Code vesting on respondent sole custody of Stephanie.
Nor can petitioner rely on the divorce decree’s alleged invalidity - not because the Illinois court
lacked jurisdiction or that the divorce decree violated Illinois law, but because the divorce was
obtained by his Filipino spouse26 - to support the Agreement’s enforceability. The argument that
foreigners in this jurisdiction are not bound by foreign divorce decrees is hardly novel. Van Dorn v.
Romillo27 settled the matter by holding that an alien spouse of a Filipino is bound by a divorce decree
obtained abroad.28 There, we dismissed the alien divorcee’s Philippine suit for accounting of alleged
post-divorce conjugal property and rejected his submission that the foreign divorce (obtained by the
Filipino spouse) is not valid in this jurisdiction in this wise:
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.
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.
xxxx
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.
(Emphasis supplied)
We reiterated Van Dorn in Pilapil v. Ibay-Somera29 to dismiss criminal complaints for adultery filed by
the alien divorcee (who obtained the foreign divorce decree) against his former Filipino spouse
because he no longer qualified as "offended spouse" entitled to file the complaints under Philippine
procedural rules. Thus, it should be clear by now that a foreign divorce decree carries as much
validity against the alien divorcee in this jurisdiction as it does in the jurisdiction of the alien’s
nationality, irrespective of who obtained the divorce.
The Facts of the Case and Nature of Proceeding

Justify Remand
Instead of ordering the dismissal of petitioner’s suit, the logical end to its lack of cause of action, we
remand the case for the trial court to settle the question of Stephanie’s custody. Stephanie is now
nearly 15 years old, thus removing the case outside of the ambit of the mandatory maternal custody
regime under Article 213 and bringing it within coverage of the default standard on child custody
proceedings – the best interest of the child.30 As the question of custody is already before the trial
court and the child’s parents, by executing the Agreement, initially showed inclination to share
custody, it is in the interest of swift and efficient rendition of justice to allow the parties to take
advantage of the court’s jurisdiction, submit evidence on the custodial arrangement best serving
Stephanie’s interest, and let the trial court render judgment. This disposition is consistent with the
settled doctrine that in child custody proceedings, equity may be invoked to serve the child’s best
interest.31
WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23 June 2005 of the Regional
Trial Court of Makati City, Branch 60. The case is REMANDED for further proceedings consistent
with this ruling.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ARTURO D. BRION
Associate Justice
MARIANO C. DEL CASTILLO ROBERTO A. ABAD

JOSE P. PEREZ
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
REYNATO S. PUNO
Chief Justice
Footnotes
1 Under Rule 45 of the 1997 Rules of Civil Procedure.
2In the Orders dated 1 March 2005 and 23 June 2005 issued by the Trial Court of Makati
City, Branch 60.
3 Petitioner did not contest the proceedings.
4 Denominated "Compromise Agreement on Child Custody and Support."
5Under Article 15 of the Civil Code which provides: "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."
6 This provides: "No compromise upon the following questions shall be valid: x x x (5) The
jurisdiction of courts[.]"
7 The trial court held (Records, pp. 157-158):
[H]aving expressly recognized the validity of the Illinois Court’s judgment [petitioner]
is bound by its provisions including the provision that the Court would maintain sole
jurisdiction to implement and enforce the provisions of the said judgment which
necessarily included guidelines for the child’s custody.
[Petitioner] being admittedly an American, following the nationality rule which

Philippine civil laws adhere to, the Judgment of the Illinois Court would be binding
upon him since the judicial disposition refers to matters of status or legal capacity of
a person.
xxxx
Moreover, this Court cannot act upon [petitioner’s] prayer to enforce the terms of the
said Compromise Agreement the said agreement being invalid and therefore, void,
precisely because it seeks to transfer jurisdiction over the issue of child custody from
the Illinois Court to this Court by agreement of the parties, when the previous Court
had already effectively asserted its authority to act upon all matters relating to the
said issue.
In this regard, Art. 2035 of the Civil Code expressly states that no compromise upon
the questions of civil status of persons, validity of marriage, or legal separation,
future support, jurisdiction of courts and future legitimate shall be valid.
8As a corollary claim, petitioner submits that the stipulation in the Agreement "vesting"
exclusive jurisdiction to Philippine courts over conflicts arising from the Agreement, even if
void for being contrary to Article 2035, paragraph 5 of the Civil Code, is severable from and
does not affect the validity of the other terms of the Agreement on joint custody.
9Section 19, paragraph 1, Batas Pambansa Blg. 129, as amended by Republic Act No.
7691, provides: "Jurisdiction in civil cases.- Regional Trial Courts shall exercise exclusive
original jurisdiction: (1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation; x x x x"
10 See Ortigas & Company, Limited Partnership v. Herrera, 205 Phil. 61 (1983).
11 Records, p. 17 (emphasis supplied).
12 Article 1306 of the Civil Code provides: "The contracting 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."
13Article 1409, paragraph 1 of the Civil Code provides: "The following contracts are
inexistent and void from the beginning: (1) Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or public policy; x x x x"
14It can be inferred from the terms of the Agreement that the parties intended to be bound by
Philippine law on its intrinsic validity (this is evident, for instance, from the stipulation
selecting Philippine courts as exclusive forum to settle "any legal issue or dispute that may
arise from the provisions of [the] Agreement and its interpretation x x x" (Records, p. 19;
emphasis supplied). At any rate, Philippine law has the most substantial connection to the
contract, considering its object (custody of a Filipino-American child), subject (Filipino-
American child under seven years of age, born of a Filipino mother, both of whom reside in
the country) and parties (Filipina mother and alien father).
15Including those marriages whose vinculum has been severed (see Sempio-Dy, Handbook
on the Family Code of the Philippines 67-68 [1988]).
16The provision states: "In case of separation of the parents, parental authority shall be
exercised by the parent designated by the Court. The Court shall take into account all
relevant considerations, especially the choice of the child over seven years of age, unless
the parent chosen is unfit.
No child under seven years of age shall be separated from the mother, unless the
court finds compelling reasons to order otherwise." (Emphasis supplied)
17Gamboa-Hirsch v. Court of Appeals (Res.), G.R. No. 174485, 11 July 2007, 527 SCRA
320 (reversing the Court of Appeals’ ruling mandating joint custody and awarding sole
custody to the mother).
18Perez v. Court of Appeals, 325 Phil. 1014 (1996). For children over seven, custody
decisions are guided by the standard of "best interest of the child."
19Our discussion in Pablo-Gualberto v. Gualberto V, G.R. No. 154994, 28 June 2005, 461
SCRA 450, 471-472, on the statutory genealogy and policy grounding of the second
paragraph of Article 213 is enlightening:
[A]rticle 213 takes its bearing from Article 363 of the Civil Code, which reads:
Art. 363. In all questions on the care, custody, education and property of children, the
latter’s welfare shall be paramount. No mother shall be separated from her child
under seven years of age, unless the court finds compelling reasons for such
measure.
The general rule that children under seven years of age shall not be separated from
their mother finds its raison d’etre in the basic need of minor children for their
mother’s loving care. In explaining the rationale for Article 363 of the Civil Code, the
Code Commission stressed thus:
The general rule is recommended in order to avoid a tragedy where a mother has
seen her baby torn away from her. No man can sound the deep sorrows of a mother
who is deprived of her child of tender age. The exception allowed by the rule has to
be for compelling reasons for the good of the child: those cases must indeed be rare,
if the mother’s heart is not to be unduly hurt. If she has erred, as in cases of adultery,
the penalty of imprisonment and the (relative) divorce decree will ordinarily be
sufficient punishment for her. Moreover, her moral dereliction will not have any effect
upon the baby who is as yet unable to understand the situation. (Report of the Code
Commission, p. 12)
20Sole maternal custody is denied only for "compelling reasons" such as "neglect,
abandonment, unemployment, immorality, habitual drunkenness, drug addiction,
maltreatment of the child, insanity or affliction with a communicable disease" (Id. at 476;
internal citation omitted).
21 Civil Code, Article 211, as amended.
22 See note 20.
23 See note 19.
24 Id.
25 This line of argument can be subsumed under the rubric of "unfair state intervention" but
this complaint can very well be leveled against the entire field of family law where the state
injects itself on a host of areas impinging on the decision-making capacity and autonomy of
individuals ranging from the intensely personal (e.g. who can marry [Article 5, Family Code],
where to marry [Article 5, Family Code], who can celebrate the marriage [Article 5, Family
Code], and how to relate to one’s spouse [Articles 68-72]) to proprietary (e.g. Articles 74-125,
Family Code, on property relations of spouses and Articles 194-208, Family Code, on
support) to familial (e.g. Articles 209-233, Family Code, on parental authority). 1avvph!1
26
Petitioner hooks his argument on Gonzales v. Gonzales (58 Phil. 67 [1933]), Arca v. Javier
(95 Phil. 579 [1954]) and Tenchavez v. Escaño (122 Phil. 752 [1965]). These cases,
involving Filipino spouses, merely applied the "nationality rule" (now embodied in Article 15
of the Civil Code) to reject validating foreign divorce decrees obtained by Filipino spouses to
circumvent the no-divorce rule in this jurisdiction. They are no authority to support petitioner’s
submission that as to aliens, foreign divorce decrees are void here.
27 223 Phil. 357 (1985).

28Id. at 361-363.Van Dornspawned the second paragraph of Article 26 granting to Filipino
spouses of aliens who obtain foreign divorce decrees the right to remarry. (Republic v.
Orbecido III, G.R. No. 154380, 5 October 2005, 472 SCRA 114).
29 G.R. No. 80116, 30 June 1989, 174 SCRA 653.
30 Bagtas v. Santos, G.R. No. 166682, 27 November 2009.
31 Thus, in habeas corpus proceedings involving child custody, judicial resolutions extend
beyond the custodial right of persons exercising parental authority over the child and reach
issues on custodial arrangements serving the child’s best interest (see Bagtas v. Santos, id.,
remanding a habeas corpus petition to determine the fitness of the legal custodians
notwithstanding that the question of illegal withholding of custody has been mooted by the
transfer of the child’s physical custody to the habeas corpus petitioners).
The Lawphil Project - Arellano Law Foundation
SEPARATE OPINION
ABAD, J.:
I agree with the reasons that the majority of the Court gave in support of the decision, except one. I
am uncomfortable with the proposition that an agreement between the mother and the father on a
joint custody over a child below seven years of age is void for being contrary to law and public
policy. True, the law provides in Article 363 of the Civil Code that "No mother shall be separated
from her child under seven years of age, unless the court finds compelling reasons for such
measure." The State can think up ways of protecting the child. But the 1987 Constitution
acknowledges in Article II, Section 12, the natural and primary right and duty of parents to nurture
their children and that the State must support them in this respect.1
I submit that, in the matter of child custody, the mutual will of the child’s parents takes precedence in
the absence of circumstances that justify recourse to the law. The law becomes relevant, only as a
default, if a separated couple cannot agree on the custody of their child. The law should not supplant
parental discretion or unnecessarily infringe on parental authority.
Parents have a natural and fundamental right to autonomy in the care, custody, and upbringing of
their children. The Family Code recognizes this in Article 209:
Art. 209. Pursuant to the natural right and duty of parents over the person and property of their
unemancipated children, parental authority and responsibility shall include the caring for and rearing
them for civic consciousness and efficiency and the development of their moral, mental and physical
character and well-being. (n)
The State ought not to interfere with the right of parents to bring up their child unless its exercise
causes potential harm to him. The State steps in, through the law, only if there are compelling
reasons to do so. State intrusion is uncalled for where the welfare of a child is not jeopardized.
Regardless of marital circumstances, the mother and the father are presumed to be fit and
competent to act in the best interest of their child. They can agree to share parental authority or, if
you will, parental custody even as they decide to live under separate roofs. In a voluntary joint
custody the mother might want to keep the child in her home during schooldays but allow the father
to have him on weekends. And they could agree on some device for arriving at a consensus on
where the child will study and how his spiritual needs are to be attended to.
The law does not take away from a separating couple the authority and competence to determine
what is best for their child. If they resolve on their own that shared parental custody is in their child’s
best interest, then the law and the courts have no business vetoing their decision. The parents enjoy
a primary right to make such decision. I cannot concede that, where the child is below seven years
of age, any agreement that diminishes the mother’s absolute custody over him is void.
The second paragraph of Article 213 of the Family Code should not be read as prohibiting separated
couples from agreeing to a custody arrangement, other than sole maternal custody, for their child of
tender age. The statutory preference for the mother’s custody comes into play only when courts are
compelled to resolve custody fights between separated parents. Where the parents settle the matter
out of court by mutual agreement, the statutory preference reserved to the mother should not apply.
A reading of the entire text of Article 213 shows that the second paragraph applies only to custody
disputes that have reached the courtroom. Thus:
Article 213. In case of separation of the parents, parental authority shall be exercised by the parent
designated by the Court. The Court shall take into account all relevant considerations, especially the
choice of the child over seven years of age, unless the parent chosen is unfit.
No child under seven years of age shall be separated from the mother, unless the court finds
compelling reasons to order otherwise.
It is unmistakable that the legislative policy is to vest the separated mother with physical custody of
the child under seven years old, in cases where the courts are called upon to designate a parent for
the exercise of parental authority. The second sentence of the first paragraph and the second
paragraph itself merely qualify the general rule expressed in the first sentence that "parental
authority shall be exercised by the parent designated by the Court," in case of parental separation.
In choosing the parent who will exercise parental authority, the court must take into account all
relevant considerations. One of these is the child’s age, as the court is directed to give due regard to
the child’s choice, if the child is more than seven years of age. If the child, however, is below seven
years of age, the court cannot separate the child from the mother, except for compelling reasons.
This is the import of the entire provision.
Thus, no legislative policy is violated if separated parents are allowed to voluntarily agree to a child
custody arrangement other than sole maternal custody. It is not the policy of the state to prohibit
separated parents from compromising on child custody even if the child is of tender age. On the
contrary, voluntary custody agreements are generally favored as it can only work for the best interest
of the child.
It is not logical to say that the Court would be subverting the legislative policy of avoiding "a tragedy
where a mother has seen her baby torn away from her" if separated parents are allowed to enter into
a joint custody agreement. It can hardly be said that a child is being "torn away" from the mother, if
the mother sees the wisdom and benefit of sharing custody of the child with the father. The voluntary
nature of the agreement negates any "deep sorrow" or sense of deprivation that the mother may
experience on account of her separation from the child.
Consequently, if separated parents mutually stipulate to uphold some form of joint authority over
their children of tender age, it cannot in any way be regarded as illegal or contrary to public policy.
Joint parental authority and custody is the norm and should be viewed as the more desirable
custody arrangement. It encourages continuing contact with and involvement of both parents in the
lives of their children. It can only redound to the minor’s greater well-being and should thus be
favored.
To declare that a joint custody agreement over minors of tender age contravenes Philippine laws will
only discourage separating couples from sharing parental duties and responsibilities. It will render
shared parenthood illegal and unduly promote paternal alienation. It also presumes that separated
parents cannot cooperate and compromise for the welfare of their children. It constitutes undue
interference in the parents’ intrinsic right to direct their relations with their child.
A joint custody agreement can of course never be regarded as permanent and unbending. The
situations of the mother or the father and even of the child can change and render performance of
such agreement no longer in the latter’s best interest. If the parents disagree on what they think is
best for the child, recourse to the Court may be inevitable. But I suggest that the parent who wants
the joint custody agreement changed or set aside bears the burden of showing to the court the new
situations of the parties and how such arrangement have become unfavorable or detrimental to the
child under the circumstances. This is a consequence of the presumption that contracts that are
valid remain valid unless shown otherwise.
Here, the agreement between petitioner Herald and his estranged wife providing for joint custody of
their then six-year-old child is a valid exercise of parental discretion and authority. It is independent
of the foreign divorce decree and may be enforced or repudiated in this jurisdiction, since its object is
the custody of a Filipino-American minor residing in the Philippines. Although Herald’s complaint
before the trial court appears to be one for specific performance, it is, at heart, an action for custody
and enforcement of parental rights. Being so, the Regional Trial Courts have exclusive original
jurisdiction over the action.
I concur in the decision subject to my above reservations.
ROBERTO A. ABAD
Associate Justice
Footnotes
1Article II, Sec. 12. The State recognizes the sanctity of family life and shall protect and
strengthen the family as a basic autonomous social institution. It shall equally protect the life
of the mother and the life of the unborn from conception. The natural and primary right and
duty of parents in the rearing of the youth for civic efficiency and the development of moral
character shall receive the support of the Government.
SUPREME COURT
Manila
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.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the April 18, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25,
2001 Resolution2 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,
1999.5 Nippon 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
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. 00-0264 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 pre-termination 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. Frank14 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
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001
Decision22finding 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 Certiorari25 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.
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
verification28 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 period30 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 non-forum 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 Authorization35 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.37 Given that petitioners herein sufficiently explained their
misgivings on this point and appended to their Reply38 an updated Authorization39 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.40 Considering 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 to Loquias 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
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 parties46 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 Dismiss48 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.52 We 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
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.
1âwphi1
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.
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 contract66 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
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.
ANTONIO EDUARDO B. NACHURA

Associate Justice
WE CONCUR:
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
Associate Justice
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Footnotes
1Penned by Associate Justice Bienvenido L. Reyes, with the late Associate Justice Eubulo
G. Verzola and Associate Justice Marina L. Buzon, concurring; rollo, pp. 37-44.
2 Id. at 46-47.
4 Id. at 116-120.
5 Id. at 32-36.
6 Id. at 85.
7 Id. at 121-148.
8 Id. at 166-171.
9 Id. at 38.
10 Id. at 39-41.
11 Id. at 109.
12 Id. at 53-57.
13 Id. at 42-43.
14
13 Phil. 236 (1909).
15 Insular Government v. Frank, id. at 240.
17 Id. at 27-28.
19Id. at 44. The August 23, 2000 Resolution penned by Associate Justice Delilah Vidallon-
Magtolis (retired), with the concurrence of Associate Justices Eloy R. Bello, Jr. (retired) and
Elvi John S. Asuncion (dismissed) pertinently provides as follows:
"A cursory reading of the petition indicates no statement as to the date when the
petitioners filed their motion for reconsideration and when they received the order of
denial thereof, as required in Section 3, paragraph 2, Rule 46 of the 1997 Rules of
Civil Procedure as amended by Circular No. 39-98 dated August 18, 1998 of the
Supreme Court. Moreover, the verification and certification of non-forum shopping
was executed by petitioner Kazuhiro Hasegawa for both petitioners without any
indication that the latter had authorized him to file the same.
"WHEREFORE, the [petition] is DENIED due course and DISMISSED outright.
"SO ORDERED."
20 Id. at 45.
22 Supra note 1.
23 Id. at 222.
24 Supra note 2.
25 Rollo, pp. 3-35.
26 Id. at 15.
27
See Spouses Melo v. Court of Appeals, 376 Phil. 204, 213-214 (1999), in which the
Supreme Court ruled that compliance with the certification against forum shopping is
separate from, and independent of, the avoidance of forum shopping itself. Thus, there is a
difference in the treatment—in terms of imposable sanctions—between failure to comply with
the certification requirement and violation of the prohibition against forum shopping. The
former is merely a cause for the dismissal, without prejudice, of the complaint or initiatory
pleading, while the latter is a ground for summary dismissal thereof and constitutes direct
contempt. See also Philippine Radiant Products, Inc. v. Metropolitan Bank & Trust Company,
Inc., G.R. No. 163569, December 9, 2005, 477 SCRA 299, 314, in which the Court ruled that
the dismissal due to failure to append to the petition the board resolution authorizing a
corporate officer to file the same for and in behalf of the corporation is without prejudice. So
is the dismissal of the petition for failure of the petitioner to append thereto the requisite
copies of the assailed order/s.
28See Torres v. Specialized Packaging Development Corporation, G.R. No. 149634, July 6,
2004, 433 SCRA 455, 463-464, in which the Court made the pronouncement that the
requirement of verification is simply a condition affecting the form of pleadings, and
noncompliance therewith does not necessarily render it fatally defective.
29 Section 3, Rule 46 of the Rules of Court pertinently states that "x x x [i]n actions filed under
Rule 65, the petition shall further indicate the material dates showing when notice of the
judgment or final order or resolution subject thereof was received, when a motion for new
trial or reconsideration, if any, was filed and when notice of the denial thereof was received. x
x x"
30Estrera v. Court of Appeals, G.R. Nos. 154235-36, August 16, 2006, 499 SCRA 86, 95;
and Spouses Melo v. Court of Appeals, supra note 27, at 214.
31 The Rules of Court pertinently provides in Section 4, Rule 65 that "[t]he petition may be
filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is required or not,
the sixty (60) day period shall be counted from notice of the denial of said motion. x x x"
32 Delgado v. Court of Appeals, G.R. No. 137881, December 21, 2004, 447 SCRA 402, 415.
Fuentebella v. Castro, G.R. No. 150865, June 30, 2006, 494 SCRA 183, 193-194; see
34
Roxas v. Court of Appeals, 415 Phil. 430 (2001).
35Rollo, p. 33; CA rollo (CA-G.R. SP No. 60827), p. 23. The Authorization dated September
4, 2000 pertinently reads:
"I, KEN TAKAGI, President and Chief Executive Officer of NIPPON ENGINEERING
CONSULTANTS CO., LTD., a corporation duly organized and existing in accordance
with the corporation laws of Japan, with principal address at 3-23-1 Komagome,
Toshima-ku Tokyo, Japan, hereby authorize its International Division General
Manager, Mr. Kazuhiro Hasegawa, to sign and act for and in behalf of Nippon
Engineering Consultants Co., Ltd., for purposes of filing a Petition for Certiorari
before the proper tribunal in the case entitled: "Kazuhiro Hasegawa and Nippon
Engineering Consultants Co., Ltd. vs. Minoru Kitamura and Hon. Avelino C. Demetria
of the Regional Trial Court, Fourth Judicial Region-Branch 85, Lipa City," and to do
such other things, acts and deals which may be necessary and proper for the
attainment of the said objectives" [Underscoring ours].
36Cf. Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180, 199-200, in which
the Court ruled that the agent's signing therein of the verification and certification is already
covered by the provisions of the general power of attorney issued by the principal.
37 Barcenas v. Tomas, G.R. No. 150321, March 31, 2005, 454 SCRA 593, 604.
38 Dated October 11, 2001; rollo, pp. 192-203.
39 Dated August 17, 2001, id. at 202.
40San Pablo Manufacturing Corporation v. Commissioner of Internal Revenue, G.R. No.

147749, June 22, 2006, 492 SCRA 192, 197; LDP Marketing, Inc. v. Monter, G.R. No.
159653, January 25, 2006, 480 SCRA 137, 142; Expertravel & Tours, Inc. v. Court of
Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA 147, 160.
41 392 Phil. 596, 603-604 (2000).
42 Loquias v. Office of the Ombudsman, id. at 604.
43 Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).

44 Yutingco v. Court of Appeals, 435 Phil. 83, 92 (2002).
45Bank of America NT & SA v. Court of Appeals, 448 Phil. 181, 193 (2003). As stated herein,
under certain situations resort to certiorari is considered appropriate when: (1) the trial court
issued the order without or in excess of jurisdiction; (2) there is patent grave abuse of
discretion by the trial court; or (3) 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
defendants needlessly to go through a protracted trial and clogging the court dockets with
another futile case.
46 Rollo, p. 228.
47 Id. at 234-245.
48 Dated June 5, 2000; CA rollo (CA-G.R. SP No. 60827), pp. 53-57.
49 Id. at 55.
50 Id. at 14.
51 Rollo, pp. 19-28.
52 453 Phil. 927, 934 (2003).
53 Scoles, Hay, Borchers, Symeonides, Conflict of Laws, 3rd ed. (2000), p. 3.
54 Coquia and Aguiling-Pangalangan, Conflict of Laws, 1995 ed., p. 64.
Supra note 53, at 162, citing Hay, The Interrelation of Jurisdictional Choice of Law in U.S.
55
Conflicts Law, 28 Int'l. & Comp. L.Q. 161 (1979).
56Shaffer v. Heitner, 433 U.S. 186, 215; 97 S.Ct. 2569, 2585 (1977), citing Justice Black's
Dissenting Opinion in Hanson v. Denckla, 357 U.S. 235, 258; 78 S. Ct. 1228, 1242 (1958).
57 See Regalado, Remedial Law Compendium, Vol. 1, 8th Revised Ed., pp. 7-8.
58 U.S. v. De La Santa, 9 Phil. 22, 25-26 (1907).
59
Bokingo v. Court of Appeals, G.R. No. 161739, May 4, 2006, 489 SCRA 521, 530; Tomas
Claudio Memorial College, Inc. v. Court of Appeals, 374 Phil. 859, 864 (1999).
60 See RULES OF COURT, Rule 16, Sec. 1.
61 See In Re: Calloway, 1 Phil. 11, 12 (1901).
Bokingo v. Court of Appeals, supra note 59, at 531-533; Radio Communications of the
62
Phils. Inc. v. Court of Appeals, 435 Phil. 62, 68-69 (2002).

Garcia v. Recio, 418 Phil. 723, 729 (2001); Board of Commissioners (CID) v. Dela Rosa,
63
G.R. Nos. 95122-23, May 31, 1991, 197 SCRA 853, 888.
lit&
method=TNC&query=CA(+lex+loci+celebrationis+)&db=DIBLACK&utid=%7bD0AE3BEE-
91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription>
(visited October 22, 2007).
lit& method=TNC&query=CA(+lex+loci+contractus+)&db=DIBLACK&utid=%7bD0AE3BEE-
91BC-4B2B-B788-
3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=WLIGeneralSubscription>(visi
ted October 22, 2007).
66 Id.
67Philippine Export and Foreign Loan Guarantee Corporation v. V.P. Eusebio Construction,
Inc., G.R. No. 140047, July 13, 2004, 434 SCRA 202, 214-215.
lit&
method=TNC&query=CA(+most+significant+relationship+)&db=DIBLACK&utid=%7bD0AE3
BEE-91BC-4B2B-B788-3FB4D963677B%7d&vr=2.0&rp=%2fsearch%2fdefault.wl&mt=
WLIGeneralSubscription> (visited October 22, 2007).
69Saudi Arabian Airlines v. Court of Appeals, 358 Phil. 105, 127 (1998). The contacts which
were taken into account in this case are the following: (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.
70 See Auten v. Auten, 308 N.Y 155, 159-160 (1954).
71 Supra note 53, at 117-118; supra note 54, at 64-65.
72 Laurel v. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, 187 SCRA 797, 810-811.
73International Harvester Company in Russia v. Hamburg-American Line, 42 Phil. 845, 855

(1918).
74 Salonga, Private International Law, 1995 ed., p. 44.
75Veitz, Jr. v. Unisys Corporation, 676 F. Supp. 99, 101 (1987), citing Randall v. Arabian Am.
Oil. Co., 778 F. 2d 1146 (1985).
76 Under this rule, a court, in conflicts 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 (Bank of America NT & SA v. Court of Appeals, supra note 45,
at 196). The court may refuse to entertain a case for any of the following practical reasons:
(1) the belief that 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; (2) the belief that the non-resident plaintiff sought the forum, a practice
known as forum shopping, merely to secure procedural advantages or to convey or harass
the defendant; (3) the unwillingness to extend local judicial facilities to non-residents or
aliens when the docket may already be overcrowded; (4) the inadequacy of the local judicial
machinery for effectuating the right sought to be maintained; and (5) the difficulty of
ascertaining foreign law (Puyat v. Zabarte, 405 Phil. 413, 432 [2001]).
Philsec Investment Corporation v. Court of Appeals, G.R. No. 103493, June 19, 1997, 274
77
SCRA 102, 113.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 55380 September 26, 1994
IN RE: PETITION FOR CORRECTION OF ENTRY IN THE REGISTER OF DEATHS OF THE CIVIL
REGISTRY OF DAVAO CITY, FROM THE NAME "FLAVIANO CASTRO ZAPANTA" TO
"FLORENCIO B. ZAPANTA," GLICERIA S. ZAPANTA, petitioners,
vs.
THE LOCAL CIVIL REGISTRAR OF THE CITY OF DAVAO AND THE REPUBLIC OF THE
PHILIPPINES, respondents.
Dante C. Sandiego for petitioner.
VITUG, J.:
The case at bench has been certified to us by the Court of Appeals after its assessment that it
merely raises a pure question of law.
The case stemmed from the filing of a "Petition for Correction of Entry in the Register of Deaths of
the Civil Registry of Davao City from the name "Flaviano Castro Zapanta" to "Florencio B. Zapanta,"
by Gliceria S. Zapanta before the then Court of First Instance (now Regional Trial Court) of Davao
(docketed Sp. No. 1913).
The narration of the case by the Court of Appeals is hereunder quoted:
The petition alleges that petitioner Gliceria S. Zapanta is the widow of the late
"Florencio B. Zapanta;" that said deceased was born in Sta. Rita, Pampanga, on 24
October 1899, as evidenced by his certificate of baptism (p. 5, Record on Appeal);
that on 5 August 1965, the late Florencio B. Zapanta was admitted and confined at
the San Pedro Hospital, Davao City, and met his untimely demise on 11 August 1965
(p. 6, Record on Appeal); that after the traditional church ceremonies at the Sta. Ana
Church, Davao City, the remains of the deceased was entombed at the municipal
cemetery of Davao City on 12 August 1965; that when petitioner requested the Local
Civil Registrar of Davao City for a certified true copy of the death certificate of her
late husband, she discovered, to her dismay and surprise, that the name indicated in
said death certificate was "Flaviano Castro Zapanta," albeit the date of death and all
other circumstances and information reflected therein clearly and conclusively
revealed that the person referred to therein was no other than her late husband,
Florencio B. Zapanta (p. 7, Record on Appeal). Hence, petitioner prays that, after
due notice and hearing, an order be issued directing the Local Civil Registrar of
Davao City to correct the death certificate of her deceased husband by changing his
name from "Flaviano Castro Zapanta" to "Florencio B. Zapanta."
After due publication of the notice of hearing, the Assistant City Fiscal of Davao City
filed a motion to dismiss the petition, advancing inter-alia that petitioner seeks to
correct not only a clerical error, but indeed a substantial one. In support of the
opposition, heavy reliance has been made in the cases of Schultz vs. Republic, L-
10055, 13 Sept. 1958; Black vs. Republic, L-10869, 10 Nov. 1958; Ty Kong Tin
vs. Republic, 50 O.G. 1078; Ansaldo vs. Republic, 55 O.G. 6541; Balite vs. Republic,
L-17332, 29 Nov. 1961; Tan Su vs. Republic, L-12140, 29 April 1959, where all
substantial corrections in the civil registry were denied because only innocuous or
clerical error could be corrected (p. 10, Record on Appeal). Said motion to dismiss
was opposed by petitioner.
In dismissing the petition, in its 31st January 1975 Order, the court a quo rationalized that the
correction of the name "Flaviano Castro Zapanta" to "Florencio B. Zapanta," was not merely clerical
but substantial in nature and that it thereby did not have the power to grant the relief prayed for.
The trial court committed a reversible error.
Article 407 of the Civil Code provides that "(a)cts, events and judicial decrees concerning the civil
status of persons shall be recorded in the Civil Register." The civil status referred to pertains to one's
birth, marriage, death, legal separation, annulment of marriage, judgment declaring the nullity of
marriage, legitimation, adoption, acknowledgement of natural children, naturalization, loss or
recovery of citizenship, civil interdiction, judicial determination of filiation, voluntary emancipation of a
minor and change of name. 1 Any change or correction in a civil registry record is not allowed without
a judicial order. 2
The general perception, following Ty Kong Tin vs. Republic 3 and cases contemporary and closely
subsequent to it, 4 was that the judicial proceeding under Art. 412 of the Civil Code, implemented by
Rule 108 5 of the Rules of Court, could only justify the correction of innocuous or clerical errors
apparent on the face of the record and capable of being corrected by mere reference to
it, 6 such as misspellings and obvious mistakes. Starting, however, with the case of Republic
vs. Hon. Macli-ing, 7the Court, through Justice Melencio-Herrera, explained:
It is true that the change from Esteban Sy to Sy Piao would necessarily affect the
identity of the father. In that sense, it can be said to be substantial. However, we find
indubitable evidence to support the correction prayed for. In the Alien Certificate of
Registration of the father, his name appears as "Sy Piao." The same is true in his
Immigrant Certificate of Residence. . . . The school records of Oscar Sy both in high
school and
at St. Louis University in Baguio, recorded the name of his father as "Sy Piao" . . . .
In the case of Ty Kong Tin vs. Republic, 94 Phil. 321 (1954), as well as subsequent
cases predicated thereon, we forbade only the entering of material corrections in the
record of birth by virtue of a judgment in a summary action. The proceedings below,
although filed under Rule 108 of the Rules of Court, were not summary.
Thereafter, in Republic vs. Valencia, 8 the Court, through Justice Gutierrez, Jr., discussed, rather at
length, the phrase "appropriate proceeding" that could warrant the correction of even non-clerical
errors. There, Leonor Valencia, for and in behalf of her minor children, Bernardo Go and Jessica Go,
filed with the then Court of First Instance of Cebu a petition for the cancellation and correction of the
entries of birth of Bernardo Go and Jessica Go in the Civil Registry of Cebu City. The Solicitor
General opposed the petition, alleging that the petition for correction of entry in the Civil Registry
pursuant to Article 412 of the Civil Code, in relation to Rule 108 of the Revised Rules of Court,
contemplated a summary proceeding solely to allow innocuous changes in registry entries. The
Court ruled:
It is undoubtedly true that if the subject matter of a petition is not for the correction of
clerical errors of a harmless and innocuous nature, but one involving nationality or
citizenship, which is indisputably substantial as well as controverted, affirmative relief
cannot be granted in a proceeding summary in nature. However, it is also true that a
right in law may be enforced and a wrong may be remedied as long as the
appropriate remedy is used. This Court adheres to the principle that even substantial
errors in a civil registry may be corrected and the true facts established provided the
parties aggrieved by the error avail themselves of the appropriate adversary
proceeding. As a matter of fact, the opposition of the Solicitor General dated
February 20, 1970 while questioning the use of Article 412 of the Civil Code in
relation to Rule 108 of the Revised Rules of Court admits "that the entries sought to
be corrected should be threshed out in an appropriate proceeding."
What is meant by "appropriate adversary proceeding?" Black's Law Dictionary

defines "adversary proceeding" as follows:
One having opposing parties; contested, as distinguished from an ex

parte application, one of which the party seeking relief has given legal
warning to the other party, and afforded the latter an opportunity to
contest it. . . .
xxx xxx xxx
Provided the trial court has conducted proceedings where all relevant facts have
been fully and properly developed, where opposing counsel have been given
opportunity to demolish the opposite party's case, and where the evidence has been
thoroughly weighed and considered, the suit or proceeding is "appropriate."
The pertinent sections of Rule 108 provide: . . .
Thus, the persons who must be made parties to a proceeding concerning the
cancellation or correction of an entry in the civil register
are — (1) the civil registrar, and (2) all persons who have or claim any interest which
would be affected thereby. Upon the filing of the petition, it becomes the duty of the
court to — (1) issue an order fixing the time and place for the hearing of the petition,
and (2) cause the order for hearing to be published once a week for three (3)
consecutive weeks in a newspaper of general circulation in the province. The
following are likewise entitled to oppose the petition: — (1) the civil registrar, and (2)
any person having or claiming any interest under the entry whose cancellation or
correction is sought.
If all these procedural requirements have been followed, a petition for correction
and/or cancellation of entries in the record of birth even if filed and conducted under
Rule 108 of the Revised Rules of Court can no longer be described as "summary."
There can be no doubt that when an opposition to the petition is filed either by the
Civil Registrar or any person having or claiming any interest in the entries sought to
be cancelled and/or corrected and the opposition is actively prosecuted, the
proceedings thereon become adversary proceedings.
xxx xxx xxx
We are of the opinion that the petition filed by the respondent in the lower court by
way of a special proceeding for cancellation and/or correction of entries in the civil
register with the requisite notice and publication and the recorded proceedings that
actually took place thereafter could very well be regarded as that proper suit or
appropriate action.
The doctrine was reiterated in Chiao Ben Lim v. Zosa 9 and Republic v. Flojo. 10
Accordingly, the dismissal by the trial court of Gliceria's petition must now be reversed. The records
show that the publication requirement has already been complied with. The next step would thus be
for the court a quo to consider the petition before it to be, in substance, an adversary proceeding and
to allow petitioner and all adverse and interested parties their day in court.
WHEREFORE, the questioned Order of the then Court of First Instance (now Regional Trial Court)
of Davao is hereby SET ASIDE and Special Proceedings No. 1913 is ordered reinstated. No costs.
SO ORDERED.
Feliciano, Romero and Melo, JJ., concur.
Bidin, J., is on leave.
#Footnotes
1 Art. 410, Civil Code.
2 Article 412, Civil Code.
3 94 Phil. 321.
4 See Republic vs. Bartolome, 138 SCRA 442; De Castro vs. Republic, 134 SCRA
12.
5 Cancellation or Correction of Entries in the Civil Registry.
6 Barretto vs. Local Civil Registrar of Manila, 74 SCRA 257.
7 135 SCRA 367.
8 141 SCRA 462.
9 146 SCRA 366.
10 152 SCRA 550.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 193707 December 10, 2014
NORMA A. DEL SOCORRO, for and in behalf of her minor child RODERIGO NORJO VAN
WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Orders1 dated February 19, 2010 and September 1, 2010, respectively, of
the Regional Trial Court of Cebu City (RTC-Cebu), which dismissed the criminal case entitled
People of the Philippines v. Ernst Johan Brinkman Van Wilsem, docketed as Criminal Case No.
CBU-85503, for violation of Republic Act (R.A.) No. 9262, otherwise known as the Anti-Violence
Against Women and Their Children Act of 2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem contracted
marriage in Holland on September 25, 1990.2 On January 19, 1994, they were blessed with a son
named Roderigo Norjo Van Wilsem, who at the time of the filing of the instant petition was sixteen
(16) years of age.3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree issued by
the appropriate Court of Holland.4 At that time, their son was only eighteen (18) months
old.5 Thereafter, petitioner and her son came home to the Philippines.6
According to petitioner, respondent made a promise to provide monthly support to their son in the
amount of Two Hundred Fifty (250) Guildene (which is equivalent to Php17,500.00 more or
less).7 However, since the arrival of petitioner and her son in the Philippines, respondent never gave
support to the son, Roderigo.8
Not long thereafter, respondent cameto the Philippines and remarried in Pinamungahan, Cebu, and
since then, have been residing thereat.9 Respondent and his new wife established a business known
as Paree Catering, located at Barangay Tajao, Municipality of Pinamungahan, Cebu City.10 To date,
all the parties, including their son, Roderigo, are presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter demanding for support from
respondent. However, respondent refused to receive the letter.12
Because of the foregoing circumstances, petitioner filed a complaint affidavit with the Provincial
Prosecutor of Cebu City against respondent for violation of Section 5, paragraph E(2) of R.A. No.
9262 for the latter’s unjust refusal to support his minor child with petitioner.13 Respondent submitted
his counter-affidavit thereto, to which petitioner also submitted her reply-affidavit.14 Thereafter, the
Provincial Prosecutor of Cebu City issued a Resolution recommending the filing of an information for
the crime charged against herein respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof, states that:
That sometime in the year 1995 and up to the present, more or less, in the Municipality of
Minglanilla, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, did then and there wilfully, unlawfully and deliberately deprive, refuse and
still continue to deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14) year old minor,
of financial support legally due him, resulting in economic abuse to the victim. CONTRARY TO
LAW.15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order against
respondent.16Consequently, respondent was arrested and, subsequently, posted bail.17 Petitioner
also filed a Motion/Application of Permanent Protection Order to which respondent filed his
Opposition.18 Pending the resolution thereof, respondent was arraigned.19 Subsequently, without the
RTC-Cebu having resolved the application of the protection order, respondent filed a Motion to
Dismiss on the ground of: (1) lack of jurisdiction over the offense charged; and (2) prescription of the
crime charged.20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order,21 dismissing the instant
criminal case against respondent on the ground that the facts charged in the information do not
constitute an offense with respect to the respondent who is an alien, the dispositive part of which
states:
WHEREFORE, the Court finds that the facts charged in the information do not constitute an offense
with respect to the accused, he being an alien, and accordingly, orders this case DISMISSED.
The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional liberty is
hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating respondent’s obligation
to support their child under Article 19523 of the Family Code, thus, failure to do so makes him liable
under R.A. No. 9262 which "equally applies to all persons in the Philippines who are obliged to
support their minor children regardless of the obligor’s nationality."24
On September 1, 2010, the lower court issued an Order25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling. Thus:
x x x The arguments therein presented are basically a rehash of those advanced earlier in the
memorandum of the prosecution. Thus, the court hereby reiterates its ruling that since the accused
is a foreign national he is not subject to our national law (The Family Code) in regard to a parent’s
duty and obligation to givesupport to his child. Consequently, he cannot be charged of violating R.A.
9262 for his alleged failure to support his child. Unless it is conclusively established that R.A. 9262
applies to a foreigner who fails to give support tohis child, notwithstanding that he is not bound by
our domestic law which mandates a parent to give such support, it is the considered opinion of the
court that no prima faciecase exists against the accused herein, hence, the case should be
dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following issues:
1. Whether or not a foreign national has an obligation to support his minor child under
Philippine law; and
2. Whether or not a foreign national can be held criminally liable under R.A. No. 9262 for his
unjustified failure to support his minor child.27
At the outset, let it be emphasized that We are taking cognizance of the instant petition despite the
fact that the same was directly lodged with the Supreme Court, consistent with the ruling in Republic
v. Sunvar Realty Development Corporation,28 which lays down the instances when a ruling of the trial
court may be brought on appeal directly to the Supreme Court without violating the doctrine of
hierarchy of courts, to wit:
x x x Nevertheless, the Rules do not prohibit any of the parties from filing a Rule 45 Petition with this
Court, in case only questions of law are raised or involved. This latter situation was one that
petitioners found themselves in when they filed the instant Petition to raise only questions of law. In
Republic v. Malabanan, the Court clarified the three modes of appeal from decisions of the RTC, to
wit: (1) by ordinary appeal or appeal by writ of error under Rule 41, whereby judgment was rendered
in a civil or criminal action by the RTC in the exercise of its original jurisdiction; (2) by a petition for
review under Rule 42, whereby judgment was rendered by the RTC in the exercise of its appellate
jurisdiction; and (3) by a petition for review on certiorari before the Supreme Court under Rule 45.
"The first mode of appeal is taken to the [Court of Appeals] on questions of fact or mixed questions
of fact and law. The second mode of appeal is brought to the CA on questions of fact, of law, or
mixed questions of fact and law. The third mode of appealis elevated to the Supreme Court only on
questions of law." (Emphasis supplied)
There is a question of law when the issue does not call for an examination of the probative value of
the evidence presented or of the truth or falsehood of the facts being admitted, and the doubt
concerns the correct application of law and jurisprudence on the matter. The resolution of the issue
must rest solely on what the law provides on the given set of circumstances.29
Indeed, the issues submitted to us for resolution involve questions of law – the response thereto
concerns the correct application of law and jurisprudence on a given set of facts, i.e.,whether or not
a foreign national has an obligation to support his minor child under Philippine law; and whether or
not he can be held criminally liable under R.A. No. 9262 for his unjustified failure to do so.
It cannot be negated, moreover, that the instant petition highlights a novel question of law
concerning the liability of a foreign national who allegedly commits acts and omissions punishable
under special criminal laws, specifically in relation to family rights and duties. The inimitability of the
factual milieu of the present case, therefore, deserves a definitive ruling by this Court, which will
eventually serve as a guidepost for future cases. Furthermore, dismissing the instant petition and
remanding the same to the CA would only waste the time, effort and resources of the courts. Thus,
in the present case, considerations of efficiency and economy in the administration of justice should
prevail over the observance of the hierarchy of courts.
Now, on the matter of the substantive issues, We find the petition meritorious. Nonetheless, we do
not fully agree with petitioner’s contentions.
To determine whether or not a person is criminally liable under R.A. No. 9262, it is imperative that
the legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code, which provides the parent’s obligation to support
his child. Petitioner contends that notwithstanding the existence of a divorce decree issued in
relation to Article 26 of the Family Code,31 respondent is not excused from complying with his
obligation to support his minor child with petitioner.
On the other hand, respondent contends that there is no sufficient and clear basis presented by
petitioner that she, as well as her minor son, are entitled to financial support.32 Respondent also
added that by reason of the Divorce Decree, he is not obligated topetitioner for any financial
support.33
On this point, we agree with respondent that petitioner cannot rely on Article 19534 of the New Civil
Code in demanding support from respondent, who is a foreign citizen, since Article 1535 of the New
Civil Code stresses the principle of nationality. In other words, insofar as Philippine laws are
concerned, specifically the provisions of the Family Code on support, the same only applies to
Filipino citizens. By analogy, the same principle applies to foreigners such that they are governed by
their national law with respect to family rights and duties.36
The obligation to give support to a child is a matter that falls under family rights and duties. Since the
respondent is a citizen of Holland or the Netherlands, we agree with the RTC-Cebu that he is subject
to the laws of his country, not to Philippinelaw, as to whether he is obliged to give support to his
child, as well as the consequences of his failure to do so.37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position to invoke the provisions of the Civil Code of
the Philippines, for that Code cleaves to the principle that family rights and duties are governed by
their personal law, i.e.,the laws of the nation to which they belong even when staying in a foreign
country (cf. Civil Code, Article 15).39
It cannot be gainsaid, therefore, that the respondent is not obliged to support petitioner’s son under
Article195 of the Family Code as a consequence of the Divorce Covenant obtained in Holland. This
does not, however, mean that respondent is not obliged to support petitioner’s son altogether.
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.40 In the present case, respondent hastily concludes that being a
national of the Netherlands, he is governed by such laws on the matter of provision of and capacity
to support.41 While respondent pleaded the laws of the Netherlands in advancing his position that he
is not obliged to support his son, he never proved the same.
It is incumbent upon respondent to plead and prove that the national law of the Netherlands does not
impose upon the parents the obligation to support their child (either before, during or after the
issuance of a divorce decree), because Llorente v. Court of Appeals,42 has already enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to
takejudicial notice of them. Like any other fact, they must be alleged and proved.43
In view of respondent’s failure to prove the national law of the Netherlands in his favor, the doctrine
of processual presumption shall govern. Under this doctrine, 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.44 Thus, since the law of the Netherlands as regards the obligation to support
has not been properly pleaded and proved in the instant case, it is presumed to be the same with
Philippine law, which enforces the obligation of parents to support their children and penalizing the
non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera,45 the Court held that a divorce obtained in a foreign land as
well as its legal effects may be recognized in the Philippines in view of the nationality principle on the
matter of status of persons, the Divorce Covenant presented by respondent does not completely
show that he is notliable to give support to his son after the divorce decree was issued. Emphasis is
placed on petitioner’s allegation that under the second page of the aforesaid covenant, respondent’s
obligation to support his child is specifically stated,46 which was not disputed by respondent.
We likewise agree with petitioner that notwithstanding that the national law of respondent states that
parents have no obligation to support their children or that such obligation is not punishable by law,
said law would still not find applicability,in light of the ruling in Bank of America, NT and SA v.
American Realty Corporation,47 to wit:
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, 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.
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.
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.48
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s obligation to
support his child nor penalize the noncompliance therewith, such obligation is still duly enforceable
in the Philippines because it would be of great injustice to the child to be denied of financial support
when the latter is entitled thereto.
We emphasize, however, that as to petitioner herself, respondent is no longer liable to support his
former wife, in consonance with the ruling in San Luis v. San Luis,49 to wit:
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longerbe
considered marriedto 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. (Emphasis added)50
Based on the foregoing legal precepts, we find that respondent may be made liable under Section
5(e) and (i) of R.A. No. 9262 for unjustly refusing or failing to give support topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence against
women and their children is committed through any of the following acts:
xxxx
(e) Attempting to compel or compelling the woman or her child to engage in conduct which the
woman or her child has the right to desist from or desist from conduct which the woman or her child
has the right to engage in, or attempting to restrict or restricting the woman's or her child's freedom
of movement or conduct by force or threat of force, physical or other harm or threat of physical or
other harm, or intimidation directed against the woman or child. This shall include, butnot limited to,
the following acts committed with the purpose or effect of controlling or restricting the woman's or her
child's movement or conduct:
xxxx
(2) Depriving or threatening to deprive the woman or her children of financial support legally due her
or her family, or deliberately providing the woman's children insufficient financial support; x x x x
(i) Causing mental or emotional anguish, public ridicule or humiliation to the woman or her child,
including, but not limited to, repeated verbal and emotional abuse, and denial of financial support or
custody of minor childrenof access to the woman's child/children.51
Under the aforesaid special law, the deprivation or denial of financial support to the child is
considered anact of violence against women and children.
In addition, considering that respondent is currently living in the Philippines, we find strength in
petitioner’s claim that the Territoriality Principle in criminal law, in relation to Article 14 of the New
Civil Code, applies to the instant case, which provides that: "[p]enal laws and those of public security
and safety shall be obligatory upon all who live and sojourn in Philippine territory, subject to the
principle of public international law and to treaty stipulations." On this score, it is indisputable that the
alleged continuing acts of respondent in refusing to support his child with petitioner is committed
here in the Philippines as all of the parties herein are residents of the Province of Cebu City. As
such, our courts have territorial jurisdiction over the offense charged against respondent. It is
likewise irrefutable that jurisdiction over the respondent was acquired upon his arrest.
Finally, we do not agree with respondent’s argument that granting, but not admitting, that there is a
legal basis for charging violation of R.A. No. 9262 in the instant case, the criminal liability has been
extinguished on the ground of prescription of crime52 under Section 24 of R.A. No. 9262, which
provides that:
SECTION 24. Prescriptive Period. – Acts falling under Sections 5(a) to 5(f) shall prescribe in twenty
(20) years. Acts falling under Sections 5(g) to 5(I) shall prescribe in ten (10) years.
The act of denying support to a child under Section 5(e)(2) and (i) of R.A. No. 9262 is a continuing
offense,53 which started in 1995 but is still ongoing at present. Accordingly, the crime charged in the
instant case has clearly not prescribed.
Given, however, that the issue on whether respondent has provided support to petitioner’s child calls
for an examination of the probative value of the evidence presented, and the truth and falsehood of
facts being admitted, we hereby remand the determination of this issue to the RTC-Cebu which has
jurisdiction over the case.
WHEREFORE, the petition is GRANTED. The Orders dated February 19, 2010 and September 1,
2010, respectively, of the Regional Trial Court of the City of Cebu are hereby REVERSED and SET
ASIDE. The case is REMANDED to the same court to conduct further proceedings based on the
merits of the case.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:

Associate Justice
Chairperson
MARTIN S. VILLARAMA, JR. JOSE CATRAL MENDOZA*

BIENVENIDO L. REYES
Associate Justice
ATTESTATION
was assigned to the writer of the opinion of the Court's Division.
Associate Justice
CERTIFICATION
was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P.A. SERENO

Chief Justice
Footnotes
* Designated Acting Member in lieu of Associate Justice Francis H. Jardeleza, per Special
Order No. 1896 dated November 28, 2014
1
Penned by Judge Bienvenido R. Saniel, Jr.; Annexes "A" and "B" to Petition, respectively,
rollo, pp. 22-26.
2
Rollo, p. 6.
3
Id.
4
Id. at 7.
5
Annex "F" to Petition, rollo, p. 31.
6
Id. at 32.
7
Annex "A" to Petition, rollo, pp. 23-24.
8
Id. at 24.
9
Id.at 32.
10
Id.
11
Supra note 7, at 23-24.
12
Supra note 5, at 32.
13
Rollo, p. 7.
14
Id.
15
Id. at 22.
16
Id.
17
Id. at 24.
18
Id. at 8.
19
Id.
20
Id.
21
Supra note 7.
22
Id.at 24.
Art. 195. Subject to the provisions of the succeeding articles, the following are obliged to
23
support each other to the whole extent set forth in the preceding article:
(1) The spouses;
(2) Legitimate ascendants and descendants;
(3) Parents and their legitimate children and the legitimate and illegitimate children of
the latter;
(4) Parents and their illegitimate children and the legitimate and illegitimate children
of the latter; and
(5) Legitimate brothers and sisters, whether of full or half-blood.
24
Annex "R" to Petition, rollo, p. 102.
25
Annex "B" to Petition, id. at 25.
26
Id.
27
Rollo, p. 10.
28
G.R. No. 194880, June 20, 2012, 674 SCRA 320.
29
Id.at 332-333.
30
Supra note 23.
31
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 assuch, shall also be valid
in this country, except those prohibited under Articles 35 (1), (4), (5) and (6), 3637 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. (As amended by Executive Order 227)
32
Comment on the Petition for Review on Certiorari, rollo, p. 123.
33
Id. at 122.
34
Supra note 23.
Art. 15. Laws relating to family rights and duties, or to the status, condition and legal
35
capacity of persons are binding upon citizens of the Philippines, even though living abroad.
36
Supra note 7, at 24.
37
Id.
38
G.R. No. L-25441, October 26, 1968, 25 SCRA 616.
39
Id. at 625-626. (Emphasis supplied)
40
EDI-Staff builders International, Inc. v. NLRC, 563 Phil. 1, 22 (2007).
41
Annex "N" to Petition, rollo, p. 84.
42
399 Phil. 342 (2000).
43
Id. at 354. (Emphasis supplied)
44
Bank of America, NT and SA v. American Realty Corporation, 378 Phil. 1279, 1296 (1999).
45
G.R. No. 80116, June 30, 1989, 174 SCRA 653.
46
Rollo, p. 18.
47
Supra note 44.
48
Id.at 1296-1297. (Emphasis supplied)
49
543 Phil. 275 (2007).
50
Id.at 290.
51
Section 5(e) and (i) of R.A. No. 9262. (Emphasis supplied)
52
Rollo, p. 15.
53
In People v. De Leon, 608 Phil. 701, 722 (2009), it was held that:
A continued (continuous or continuing) crime is defined as a single crime, consisting
of a series of acts but all arising from one criminal resolution. Although there is a
series of acts, there is only one crime committed; hence, only one penalty shall be
imposed.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,

vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE
COURT, respondents.
Quiason, Makalintal, Barot & Torres for petitioner.
Alejandro, Aranzaso & Associates for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now
Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated
February 28,1985 denying the Motion to Dismiss filed by private respondents Jack Robert Sherman
and Deodato Reloj.
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and
Shanghai Banking Corporation (hereinafter referred to as petitioner BANK) against private
respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before
the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as
COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore
branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars
200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with
interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said
overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner
BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and
a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed
a Joint and Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private
respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the
COMPANY to petitioner BANK under the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations and liabilities arising hereunder shall be
of the Republic of Singapore. We hereby agree that the Courts of Singapore shall
have jurisdiction over all disputes arising under this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the
obligation from private respondents, conformably with the provisions of the Joint and Several
Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-
mentioned complaint.
On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was
opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order
dated February 28, 1985 (pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December 14, 1984, the defendants seek the
dismissal of the complaint on two grounds, namely:
1. That the court has no jurisdiction over the subject matter of the complaint; and
2. That the court has no jurisdiction over the persons of the defendants.
In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the
motion. "On the first ground, defendants claim that by virtue of the provision in the
Guarantee (the actionable document) which reads —
This guarantee and all rights, obligations and liabilities arising

hereunder shall be construed and determined under and may be
enforced in accordance with the laws of the Republic of Singapore.
We hereby agree that the courts in Singapore shall have jurisdiction
over all disputes arising under this guarantee,
the Court has no jurisdiction over the subject matter of the case. The Court finds and
concludes otherwise. There is nothing in the Guarantee which says that the courts of
Singapore shall have jurisdiction to the exclusion of the courts of other countries or
nations. Also, it has long been established in law and jurisprudence that jurisdiction
of courts is fixed by law; it cannot be conferred by the will, submission or consent of
the parties.
On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen
nor a resident of the Philippines. This argument holds no water. Jurisdiction over the
persons of defendants is acquired by service of summons and copy of the complaint
on them. There has been a valid service of summons on both defendants and in fact
the same is admitted when said defendants filed a 'Motion for Extension of Time to
File Responsive Pleading on December 5, 1984.
WHEREFORE, the Motion to Dismiss is hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by private respondents which was, however,
denied (p. 66,Rollo).
Private respondents then filed before the respondent Intermediate Appellate Court (now Court of
Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order (pp.
39-48, Rollo). On August 2, 1985, the respondent Court rendered a decision (p. 37, Rollo), the
dispositive portion of which reads:
WHEREFORE, the petition for prohibition with preliminary injuction is hereby
GRANTED. The respondent Court is enjoined from taking further cognizance of the
case and to dismiss the same for filing with the proper court of Singapore which is
the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition.
The main issue is whether or not Philippine courts have jurisdiction over the suit.
The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to
wit:
(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be
of the Republic of Singapore. We hereby agree that the Courts in Singapore shall
have jurisdiction over all disputes arising under this guarantee. ... (p. 53-A, Rollo)
In rendering the decision in favor of private respondents, the Court of Appeals made, the following
observations (pp. 35-36, Rollo):
There are significant aspects of the case to which our attention is invited. The loan
was obtained by Eastern Book Service PTE, Ltd., a company incorporated
in Singapore. The loan was granted by the Singapore Branch of Hongkong and
Shanghai Banking Corporation. The Joint and Several Guarantee was also
concluded in Singapore. The loan was in Singaporean dollars and the repayment
thereof also in the same currency. The transaction, to say the least, took place in
Singporean setting in which the law of that country is the measure by which that
relationship of the parties will be governed.
xxx xxx xxx
Contrary to the position taken by respondents, the guarantee agreement compliance

that any litigation will be before the courts of Singapore and that the rights and
obligations of the parties shall be construed and determined in accordance with the
laws of the Republic of Singapore. A closer examination of paragraph 14 of the
Guarantee Agreement upon which the motion to dismiss is based, employs in clear
and unmistakeable (sic) terms the word 'shall' which under statutory construction is
mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating to impose a duty which may be enforced
(Dizon vs. Encarnacion, 9 SCRA 714). lâwphî1.ñèt
There is nothing more imperative and restrictive than what the agreement
categorically commands that 'all rights, obligations, and liabilities arising
hereunder shall be construed and determined under and may be enforced in
accordance with the laws of the Republic of Singapore.'
While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several
Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the
stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be
construed and determined under and may be enforced in accordance with the laws of the Republic
of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes
arising under this guarantee" be liberally construed. One basic principle underlies all rules of
jurisdiction in International Law: a State does not have jurisdiction in the absence of some
reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend
traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p.
46). Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd
situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign
tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine
residents (a fact which was not disputed by them) who would rather face a complaint against them
before a foreign court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case. Private respondents' stance
is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a
just obligation.
The defense of private respondents that the complaint should have been filed in Singapore is based
merely on technicality. They did not even claim, much less prove, that the filing of the action here will
cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing
that petitioner BANK filed the action here just to harass private respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187,
it was ruled:
... An accurate reading, however, of the stipulation, 'The parties agree to sue and be
sued in the Courts of Manila,' does not preclude the filing of suits in the residence of
plaintiff or defendant. The plain meaning is that the parties merely consented to be
sued in Manila. Qualifying or restrictive words which would indicate that Manila and
Manila alone is the venue are totally absent therefrom. We cannot read into that
clause that plaintiff and defendant bound themselves to file suits with respect to the
last two transactions in question only or exclusively in Manila. For, that agreement
did not change or transfer venue. It simply is permissive. The parties solely agreed to
add the courts of Manila as tribunals to which they may resort. They did not waive
their right to pursue remedy in the courts specifically mentioned in Section 2(b) of
Rule 4. Renuntiatio non praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R.
No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation,
jurisdiction shall be vested in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the venue, suffice it to say
that a stipulation as to venue does not preclude the filing of suits in the residence of
plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of
qualifying or restrictive words in the agreement which would indicate that the place
named is the only venue agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of
Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate
to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light
of a State to exercise authority over persons and things within its boundaries subject to certain
exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign military units stationed in or marching through
State territory with the permission of the latter's authorities. This authority, which finds its source in
the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is
competent to take hold of any judicial matter it sees fit by making its courts and agencies assume
jurisdiction over all kinds of cases brought before them (J. Salonga, Private International Law, 1981,
pp. 37-38).lâwphî1.ñèt
As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue
has been waived. However, We agree with the ruling of the respondent Court that:
While in the main, the motion to dismiss fails to categorically use with exactitude the
words 'improper venue' it can be perceived from the general thrust and context of the
motion that what is meant is improper venue, The use of the word 'jurisdiction' was
merely an attempt to copy-cat the same word employed in the guarantee agreement
but conveys the concept of venue. Brushing aside all technicalities, it would appear
that jurisdiction was used loosely as to be synonymous with venue. It is in this spirit
that this Court must view the motion to dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We hold that venue here was properly laid for
the same reasons discussed above.
The respondent Court likewise ruled that (pp. 36-37, Rollo):
... In a conflict problem, a court will simply refuse to entertain the case if it is not
authorized by law to exercise jurisdiction. And even if it is so authorized, it may still
refuse to entertain the case by applying the principle of forum non conveniens. ...
However, whether a suit should be entertained or dismissed on the basis of the principle of forum
non conveniensdepends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49). Thus, the respondent
lâwphî1.ñèt
Court should not have relied on such principle.
Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion
and that consequently, it cannot be permitted to take a stand contrary to the stipulations of the
contract, substantial bases exist for petitioner Bank's choice of forum, as discussed earlier.
Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine
branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart
the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any
defense that has not been interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the
Regional Trial Court is REINSTATED, with costs against private respondents. This decision is
immediately executory.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griñ;o-Aquino, JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 114323 July 23, 1998
OIL AND NATURAL GAS COMMISSION, petitioner,
vs.
COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC., respondents.
MARTINEZ, J.:
This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge of
Dehra Dun, India in favor of the petitioner, OIL AND NATURAL GAS COMMISSION and against the
private respondent, PACIFIC CEMENT COMPANY, INCORPORATED.
The petitioner is a foreign corporation owned and controlled by the Government of India while the
private respondent is a private corporation duly organized and existing under the laws of the
Philippines. The present conflict between the petitioner and the private respondent has its roots in a
contract entered into by and between both parties on February 26, 1983 whereby the private
respondent undertook to supply the petitioner FOUR THOUSAND THREE HUNDRED (4,300) metric
tons of oil well cement. In consideration therefor, the petitioner bound itself to pay the private
respondent the amount of FOUR HUNDRED SEVENTY-SEVEN THOUSAND THREE HUNDRED
U.S. DOLLARS ($477,300.00) by opening an irrevocable, divisible, and confirmed letter of credit in
favor of the latter. The oil well cement was loaded on board the ship MV SURUTANA NAVA at the
port of Surigao City, Philippines for delivery at Bombay and Calcutta, India. However, due to a
dispute between the shipowner and the private respondent, the cargo was held up in Bangkok and
did not reach its point destination. Notwithstanding the fact that the private respondent had already
received payment and despite several demands made by the petitioner, the private respondent
failed to deliver the oil well cement. Thereafter, negotiations ensued between the parties and they
agreed that the private respondent will replace the entire 4,300 metric tons of oil well cement with
Class "G" cement cost free at the petitioner's designated port. However, upon inspection, the Class
"G" cement did not conform to the petitioner's specifications. The petitioner then informed the private
respondent that it was referring its claim to an arbitrator pursuant to Clause 16 of their contract which
stipulates:
Except where otherwise provided in the supply order/contract all questions and
disputes, relating to the meaning of the specification designs, drawings and
instructions herein before mentioned and as to quality of workmanship of the items
ordered or as to any other question, claim, right or thing whatsoever, in any way
arising out of or relating to the supply order/contract design, drawing, specification,
instruction or these conditions or otherwise concerning the materials or the execution
or failure to execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole arbitration of the
persons appointed by Member of the Commission at the time of dispute. It will be no
objection to any such appointment that the arbitrator so appointed is a Commission
employer (sic) that he had to deal with the matter to which the supply or contract
relates and that in the course of his duties as Commission's employee he had
expressed views on all or any of the matter in dispute or difference.
The arbitrator to whom the matter is originally referred being transferred or vacating
his office or being unable to act for any reason the Member of the Commission shall
appoint another person to act as arbitrator in accordance with the terms of the
contract/supply order. Such person shall be entitled to proceed with reference from
the stage at which it was left by his predecessor. Subject as aforesaid the provisions
of the Arbitration Act, 1940, or any Statutory modification or re-enactment there of
and the rules made there under and for the time being in force shall apply to the
arbitration proceedings under this clause.
The arbitrator may with the consent of parties enlarge the time, from time to time, to
make and publish the award.
The venue for arbitration shall be at Dehra dun. 1*
On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in petitioner's
favor setting forth the arbitral award as follows:
NOW THEREFORE after considering all facts of the case, the evidence, oral and
documentarys adduced by the claimant and carefully examining the various written
statements, submissions, letters, telexes, etc. sent by the respondent, and the oral
arguments addressed by the counsel for the claimants, I, N.N. Malhotra, Sole
Arbitrator, appointed under clause 16 of the supply order dated 26.2.1983, according
to which the parties, i.e. M/S Oil and Natural Gas Commission and the Pacific
Cement Co., Inc. can refer the dispute to the sole arbitration under the provision of
the Arbitration Act. 1940, do hereby award and direct as follows: —
The Respondent will pay the following to the claimant: —
1. Amount received by the Respondent
against the letter of credit No. 11/19
dated 28.2.1983 US $ 477,300.00
2. Re-imbursement of expenditure incurred
by the claimant on the inspection team's
visit to Philippines in August 1985 US $ 3,881.00
3. L.C. Establishment charges incurred
by the claimant US $ 1,252.82

4. Loss of interest suffered by claimant
from 21.6.83 to 23.7.88 US $ 417,169.95
Total amount of award US $ 899,603.77
In addition to the above, the respondent would also be liable to pay to the claimant
the interest at the rate of 6% on the above amount, with effect from 24.7.1988 up to
the actual date of payment by the Respondent in full settlement of the claim as
awarded or the date of the decree, whichever is earlier.
I determine the cost at Rs. 70,000/- equivalent to US $5,000 towards the expenses
on Arbitration, legal expenses, stamps duly incurred by the claimant. The cost will be
shared by the parties in equal proportion.
Pronounced at Dehra Dun to-day, the 23rd of July 1988. 2
To enable the petitioner to execute the above award in its favor, it filed a Petition before the
Court of the Civil Judge in Dehra Dun. India (hereinafter referred to as the foreign court for
brevity), praying that the decision of the arbitrator be made "the Rule of Court" in India. The
foreign court issued notices to the private respondent for filing objections to the petition. The
private respondent complied and sent its objections dated January 16, 1989. Subsequently,
the said court directed the private respondent to pay the filing fees in order that the latter's
objections could be given consideration. Instead of paying the required filing fees, the private
respondent sent the following communication addressed to the Civil judge of Dehra Dun:
The Civil Judge
Dehra Dun (U.P.) India
Re: Misc. Case No. 5 of 1989
M/S Pacific Cement Co.,
Inc. vs. ONGC Case
Sir:
1. We received your letter dated 28 April 1989 only

last 18 May 1989.
2. Please inform us how much is the court fee to be

paid. Your letter did not mention the amount to be
paid.
3. Kindly give us 15 days from receipt of your letter

advising us how much to pay to comply with the
same.
Thank you for your kind consideration.

Pacific Cement Co., Inc.
By:
Jose Cortes, Jr.
President 3
Without responding to the above communication, the foreign court refused to admit the private
respondent's objections for failure to pay the required filing fees, and thereafter issued an Order on
February 7, 1990, to wit:
ORDER
Since objections filed by defendant have been rejected through Misc. Suit No. 5 on
7.2.90, therefore, award should be made Rule of the Court.
ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of
conditions of award decree is passed. Award Paper No. 3/B-1 shall be a part of the
decree. The plaintiff shall also be entitled to get from defendant (US$ 899,603.77
(US$ Eight Lakhs ninety nine thousand six hundred and three point seventy seven
only) along with 9% interest per annum till the last date of realisation. 4
Despite notice sent to the private respondent of the foregoing order and several demands by the
petitioner for compliance therewith, the private respondent refused to pay the amount adjudged by
the foreign court as owing to the petitioner. Accordingly, the petitioner filed a complaint with Branch
30 of the Regional Trial Court (RTC) of Surigao City for the enforcement of the aforementioned
judgment of the foreign court. The private respondent moved to dismiss the complaint on the
following grounds: (1) plaintiffs lack of legal capacity to sue; (2) lack of cause of action; and (3)
plaintiffs claim or demand has been waived, abandoned, or otherwise extinguished. The petitioner
filed its opposition to the said motion to dismiss, and the private respondent, its rejoinder thereto. On
January 3, 1992, the RTC issued an order upholding the petitioner's legal capacity to sue, albeit
dismissing the complaint for lack of a valid cause of action. The RTC held that the rule prohibiting
foreign corporations transacting business in the Philippines without a license from maintaining a suit
in Philippine courts admits of an exception, that is, when the foreign corporation is suing on an
isolated transaction as in this case. 5 Anent the issue of the sufficiency of the petitioner's cause
of action, however, the RTC found the referral of the dispute between the parties to the
arbitrator under Clause 16 of their contract erroneous. According to the RTC,
[a] perusal of the shove-quoted clause (Clause 16) readily shows that the
matter covered by its terms is limited to "ALL QUESTIONS AND DISPUTES,
RELATING TO THE MEANING OF THE SPECIFICATION, DESIGNS, DRAWINGS
AND INSTRUCTIONS HEREIN BEFORE MENTIONED and as to the QUALITY OF
WORKMANSHIP OF THE ITEMS ORDERED or as to any other questions, claim,
right or thing whatsoever, but qualified to "IN ANY WAY ARISING OR
RELATING TO THE SUPPLY ORDER/CONTRACT, DESIGN, DRAWING,
SPECIFICATION, etc.," repeating the enumeration in the opening sentence of
the clause.
The court is inclined to go along with the observation of the defendant that the
breach, consisting of the non-delivery of the purchased materials, should have
been properly litigated before a court of law, pursuant to Clause No. 15 of the
Contract/Supply Order, herein quoted, to wit:
"JURISDICTION
All questions, disputes and differences, arising under out of or

in connection with this supply order, shall be subject to the
EXCLUSIVE JURISDICTION OF THE COURT, within the local
limits of whose jurisdiction and the place from which this supply
order is situated."6
The RTC characterized the erroneous submission of the dispute to the arbitrator as a
"mistake of law or fact amounting to want of jurisdiction". Consequently, the
proceedings had before the arbitrator were null and void and the foreign court had
therefore, adopted no legal award which could be the source of an enforceable right. 7
The petitioner then appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court concurred with the RTC's
ruling that the arbitrator did not have jurisdiction over the dispute between the parties, thus,
the foreign court could not validly adopt the arbitrator's award. In addition, the appellate
court observed that the full text of the judgment of the foreign court contains the dispositive
portion only and indicates no findings of fact and law as basis for the award. Hence, the said
judgment cannot be enforced by any Philippine court as it would violate the constitutional
provision that no decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based. 8 The appellate court ruled further
that the dismissal of the private respondent's objections for non-payment of the required
legal fees, without the foreign court first replying to the private respondent's query as to the
amount of legal fees to be paid, constituted want of notice or violation of due process. Lastly,
it pointed out that the arbitration proceeding was defective because the arbitrator was
appointed solely by the petitioner, and the fact that the arbitrator was a former employee of
the latter gives rise to a presumed bias on his part in favor of the petitioner. 9
A subsequent motion for reconsideration by the petitioner of the appellate court's decision
was denied, thus, this petition for review on certiorari citing the following as grounds in
support thereof:
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE

LOWER COURT'S ORDER OF DISMISSAL SINCE:
A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY

COGNIZABLE BY THE PROVISIONS OF CLAUSE 16 OF THE CONTRACT;
B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS AN

AFFIRMATION OF THE FACTUAL AND LEGAL FINDINGS OF THE
ARBITRATOR AND THEREFORE ENFORCEABLE IN THIS JURISDICTION;
C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A

PRESUMPTIVE RIGHT UNDER A FOREIGN JUDGMENT. 10
The threshold issue is whether or not the arbitrator had jurisdiction over the dispute between
the petitioner and the private respondent under Clause 16 of the contract. To reiterate, Clause
16 provides as follows:
Except where otherwise provided in the supply order/contract all questions

and disputes, relating to the meaning of the specification designs, drawings
and instructions herein before mentioned and as to quality of workmanship of
the items ordered or as to any other question, claim, right or thing whatsoever,
in any way arising out of or relating to the supply order/contract design,
drawing, specification, instruction or these conditions or otherwise concerning
the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof shall
be referred to the sole arbitration of the persons appointed by Member of the
Commission at the time of dispute. It will be no objection to any such
appointment that the arbitrator so appointed is a Commission employer (sic)
that he had to deal with the matter to which the supply or contract relates and
that in the course of his duties as Commission's employee he had expressed
views on all or any of the matter in dispute or difference. 11
The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons of
oil well cement to the petitioner. The primary question that may be posed, therefore, is
whether or not the non-delivery of the said cargo is a proper subject for arbitration under the
above-quoted Clause 16. The petitioner contends that the same was a matter within the
purview of Clause 16, particularly the phrase, ". . . or as to any other questions, claim, right or
thing whatsoever, in any way arising or relating to the supply order/contract, design, drawing,
specification, instruction . . .". 12 It is argued that the foregoing phrase allows considerable
latitude so as to include non-delivery of the cargo which was a "claim, right or thing relating
to the supply order/contract". The contention is bereft of merit. First of all, the petitioner has
misquoted the said phrase, shrewdly inserting a comma between the words "supply
order/contract" and "design" where none actually exists. An accurate reproduction of the
phrase reads, ". . . or as to any other question, claim, right or thing whatsoever, in any way
arising out of or relating to the supply order/contract design, drawing, specification,
instruction or these conditions . . .". The absence of a comma between the words "supply
order/contract" and "design" indicates that the former cannot be taken separately but should
be viewed in conjunction with the words "design, drawing, specification, instruction or these
conditions". It is thus clear that to fall within the purview of this phrase, the "claim, right or
thing whatsoever" must arise out of or relate to the design, drawing, specification, or
instruction of the supply order/contract. The petitioner also insists that the non-delivery of
the cargo is not only covered by the foregoing phrase but also by the phrase, ". . . or
otherwise concerning the materials or the execution or failure to execute the same during the
stipulated/extended period or after completion/abandonment thereof . . .".
The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally
applicable in the ascertainment of the meaning and scope of vague contractual stipulations,
such as the aforementioned phrase. According to the maxim noscitur a sociis, where a
particular word or phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and specific by considering the
company of the words in which it is found or with which it is associated, or stated differently,
its obscurity or doubt may be reviewed by reference to associated words. 13 A close
examination of Clause 16 reveals that it covers three matters which may be submitted to
arbitration namely,
(1) all questions and disputes, relating to the meaning of the specification designs, drawings
and instructions herein before mentioned and as to quality of workmanship of the items
ordered; or
(2) any other question, claim, right or thing whatsoever, in any way arising out of or relating
to the supply order/contract design, drawing, specification, instruction or these conditions;
or
(3) otherwise concerning the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof.
The first and second categories unmistakably refer to questions and disputes relating to the
design, drawing, instructions, specifications or quality of the materials of the supply/order
contract. In the third category, the clause, "execution or failure to execute the same", may be
read as "execution or failure to execute the supply order/contract". But in accordance with
the doctrine of noscitur a sociis, this reference to the supply order/contract must be
construed in the light of the preceding words with which it is associated, meaning to say, as
being limited only to the design, drawing, instructions, specifications or quality of the
materials of the supply order/contract. The non-delivery of the oil well cement is definitely not
in the nature of a dispute arising from the failure to execute the supply order/contract design,
drawing, instructions, specifications or quality of the materials. That Clause 16 should pertain
only to matters involving the technical aspects of the contract is but a logical inference
considering that the underlying purpose of a referral to arbitration is for such technical
matters to be deliberated upon by a person possessed with the required skill and expertise
which may be otherwise absent in the regular courts.
This Court agrees with the appellate court in its ruling that the non-delivery of the oil well
cement is a matter properly cognizable by the regular courts as stipulated by the parties in
Clause 15 of their contract:
All questions, disputes and differences, arising under out of or in connection

with this supply order, shall be subject to the exclusive jurisdiction of the
court, within the local limits of whose jurisdiction and the place from which
this supply order is situated. 14
The following fundamental principles in the interpretation of contracts and other

instruments served as our guide in arriving at the foregoing conclusion:
Art. 1373. If some stipulation of any contract should admit of several

meanings, it shall be understood as bearing that import which is most
adequate to render it effectual. 15
Art. 1374. The various stipulations of a contract shall be interpreted together,

attributing the doubtful ones that sense which may result from all of them
taken jointly. 16
Sec. 11. Instrument construed so as to give effect to all provisions. In the

construction of an instrument, where there are several provisions or
particulars, such a construction is, if possible, to be adopted as will give effect
to all. 17
Thus, this Court has held that as in statutes, the provisions of a contract should not be read
in isolation from the rest of the instrument but, on the contrary, interpreted in the light of the
other related provisions. 18The whole and every part of a contract must be considered in fixing
the meaning of any of its harmonious whole. Equally applicable is the canon of construction
that in interpreting a statute (or a contract as in this case), care should be taken that every
part thereof be given effect, on the theory that it was enacted as an integrated measure and
not as a hodge-podge of conflicting provisions. The rule is that a construction that would
render a provision inoperative should be avoided; instead, apparently inconsistent
provisions should be reconciled whenever possible as parts of a coordinated and
harmonious whole. 19
The petitioner's interpretation that Clause 16 is of such latitude as to contemplate even the
non-delivery of the oil well cement would in effect render Clause 15 a mere superfluity. A
perusal of Clause 16 shows that the parties did not intend arbitration to be the sole means of
settling disputes. This is manifest from Clause 16 itself which is prefixed with the proviso,
"Except where otherwise provided in the supply order/contract . . .", thus indicating that the
jurisdiction of the arbitrator is not all encompassing, and admits of exceptions as may be
provided elsewhere in the supply order/contract. We believe that the correct interpretation to
give effect to both stipulations in the contract is for Clause 16 to be confined to all claims or
disputes arising from or relating to the design, drawing, instructions, specifications or quality
of the materials of the supply order/contract, and for Clause 15 to cover all other claims or
disputes.
The petitioner then asseverates that granting, for the sake of argument, that the non-delivery
of the oil well cement is not a proper subject for arbitration, the failure of the replacement
cement to conform to the specifications of the contract is a matter clearly falling within the
ambit of Clause 16. In this contention, we find merit. When the 4,300 metric tons of oil well
cement were not delivered to the petitioner, an agreement was forged between the latter and
the private respondent that Class "G" cement would be delivered to the petitioner as
replacement. Upon inspection, however, the replacement cement was rejected as it did not
conform to the specifications of the contract. Only after this latter circumstance was the
matter brought before the arbitrator. Undoubtedly, what was referred to arbitration was no
longer the mere non-delivery of the cargo at the first instance but also the failure of the
replacement cargo to conform to the specifications of the contract, a matter clearly within the
coverage of Clause 16.
The private respondent posits that it was under no legal obligation to make replacement and
that it undertook the latter only "in the spirit of liberality and to foster good business
relationship". 20 Hence, the undertaking to deliver the replacement cement and its subsequent
failure to conform to specifications are not anymore subject of the supply order/contract or
any of the provisions thereof. We disagree.
As per Clause 7 of the supply order/contract, the private respondent undertook to deliver the
4,300 metric tons of oil well cement at "BOMBAY (INDIA) 2181 MT and CALCUTTA 2119
MT". 21 The failure of the private respondent to deliver the cargo to the designated places
remains undisputed. Likewise, the fact that the petitioner had already paid for the cost of the
cement is not contested by the private respondent. The private respondent claims, however,
that it never benefited from the transaction as it was not able to recover the cargo that was
unloaded at the port of Bangkok. 22 First of all, whether or not the private respondent was able
to recover the cargo is immaterial to its subsisting duty to make good its promise to deliver
the cargo at the stipulated place of delivery. Secondly, we find it difficult to believe this
representation. In its Memorandum filed before this Court, the private respondent asserted
that the Civil Court of Bangkok had already ruled that the non-delivery of the cargo was due
solely to the fault of the carrier. 23 It is, therefore, but logical to assume that the necessary
consequence of this finding is the eventual recovery by the private respondent of the cargo
or the value thereof. What inspires credulity is not that the replacement was done in the spirit
of liberality but that it was undertaken precisely because of the private respondent's
recognition of its duty to do so under the supply order/contract, Clause 16 of which remains
in force and effect until the full execution thereof.
We now go to the issue of whether or not the judgment of the foreign court is enforceable in
this jurisdiction in view of the private respondent's allegation that it is bereft of any statement
of facts and law upon which the award in favor of the petitioner was based. The pertinent
portion of the judgment of the foreign court reads:
ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis
of conditions of award decree is passed. Award Paper No. 3/B-1 shall be a part
of the decree. The plaintiff shall also be entitled to get from defendant (US$
899,603.77 (US$ Eight Lakhs ninety nine thousand six hundred and three point
seventy seven only) along with 9% interest per annum till the last date of
realisation. 24
As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a
part of the decree". This is a categorical declaration that the foreign court adopted the
findings of facts and law of the arbitrator as contained in the latter's Award Paper. Award
Paper No. 3/B-1, contains an exhaustive discussion of the respective claims and defenses of
the parties, and the arbitrator's evaluation of the same. Inasmuch as the foregoing is deemed
to have been incorporated into the foreign court's judgment the appellate court was in error
when it described the latter to be a "simplistic decision containing literally, only the
dispositive portion". 25
The constitutional mandate that no decision shall be rendered by any court without
expressing therein dearly and distinctly the facts and the law on which it is based does not
preclude the validity of "memorandum decisions" which adopt by reference the findings of
fact and conclusions of law contained in the decisions of inferior tribunals. In Francisco v.
Permskul, 26 this Court held that the following memorandum decision of the Regional Trial
Court of Makati did not transgress the requirements of Section 14, Article VIII of the
Constitution:
MEMORANDUM DECISION
After a careful perusal, evaluation and study of the records of this case, this
Court hereby adopts by reference the findings of fact and conclusions of law
contained in the decision of the Metropolitan Trial Court of Makati, Metro
Manila, Branch 63 and finds that there is no cogent reason to disturb the same.
WHEREFORE, judgment appealed from is hereby affirmed in toto. 27 (Emphasis

supplied.)
This Court had occasion to make a similar pronouncement in the earlier case
of Romero v. Court of Appeals, 28 where the assailed decision of the Court of Appeals
adopted the findings and disposition of the Court of Agrarian Relations in this wise:
We have, therefore, carefully reviewed the evidence and made a re-assessment
of the same, and We are persuaded, nay compelled, to affirm the correctness
of the trial court's factual findings and the soundness of its conclusion. For
judicial convenience and expediency, therefore, We hereby adopt by way of
reference, the findings of facts and conclusions of the court a quo spread in its
decision, as integral part of this Our decision. 29 (Emphasis supplied)
Hence, even in this jurisdiction, incorporation by reference is allowed if only to avoid

the cumbersome reproduction of the decision of the lower courts, or portions thereof,
in the decision of the higher court. 30 This is particularly true when the decision sought
to be incorporated is a lengthy and thorough discussion of the facts and conclusions
arrived at, as in this case, where Award Paper No. 3/B-1 consists of eighteen (18)
single spaced pages.
Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected

by the fact that the procedure in the courts of the country in which such judgment was
rendered differs from that of the courts of the country in which the judgment is relied
on. 31 This Court has held that matters of remedy and procedure are governed by the lex
fori or the internal law of the forum. 32 Thus, if under the procedural rules of the Civil Court of
Dehra Dun, India, a valid judgment may be rendered by adopting the arbitrator's findings,
then the same must be accorded respect. In the same vein, if the procedure in the foreign
court mandates that an Order of the Court becomes final and executory upon failure to pay
the necessary docket fees, then the courts in this jurisdiction cannot invalidate the order of
the foreign court simply because our rules provide otherwise.
The private respondent claims that its right to due process had been blatantly violated, first
by reason of the fact that the foreign court never answered its queries as to the amount of
docket fees to be paid then refused to admit its objections for failure to pay the same, and
second, because of the presumed bias on the part of the arbitrator who was a former
employee of the petitioner.
Time and again this Court has held that the essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one may have in support of
one's defense 33 or stated otherwise, what is repugnant to due process is the denial of
opportunity to be heard. 34 Thus, there is no violation of due process even if no hearing was
conducted, where the party was given a chance to explain his side of the controversy and he
waived his right to do so. 35
In the instant case, the private respondent does not deny the fact that it was notified by the
foreign court to file its objections to the petition, and subsequently, to pay legal fees in order
for its objections to be given consideration. Instead of paying the legal fees, however, the
private respondent sent a communication to the foreign court inquiring about the correct
amount of fees to be paid. On the pretext that it was yet awaiting the foreign court's reply,
almost a year passed without the private respondent paying the legal fees. Thus, on February
2, 1990, the foreign court rejected the objections of the private respondent and proceeded to
adjudicate upon the petitioner's claims. We cannot subscribe to the private respondent's
claim that the foreign court violated its right to due process when it failed to reply to its
queries nor when the latter rejected its objections for a clearly meritorious ground. The
private respondent was afforded sufficient opportunity to be heard. It was not incumbent
upon the foreign court to reply to the private respondent's written communication. On the
contrary, a genuine concern for its cause should have prompted the private respondent to
ascertain with all due diligence the correct amount of legal fees to be paid. The private
respondent did not act with prudence and diligence thus its plea that they were not accorded
the right to procedural due process cannot elicit either approval or sympathy from this
Court. 36
The private respondent bewails the presumed bias on the part of the arbitrator who was a
former employee of the petitioner. This point deserves scant consideration in view of the
following stipulation in the contract:
. . . . It will be no objection any such appointment that the arbitrator so

appointed is a Commission employer (sic) that he had to deal with the matter
to which the supply or contract relates and that in the course of his duties as
Commission's employee he had expressed views on all or any of the matter in
dispute or difference. 37 (Emphasis supplied.)
Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines,
Inc. v. Court of Appeals 38 that:
A foreign judgment is presumed to be valid and binding in the country from

which it comes, until the contrary is shown. It is also proper to presume the
regularity of the proceedings and the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in

personam of a tribunal of a foreign country having jurisdiction to pronounce
the same is presumptive evidence of a right as between the parties and their
successors-in-interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the presumption
that it was acting in the lawful exercise of jurisdiction and has regularly
performed its official duty. 39
Consequently, the party attacking a foreign judgment, the private respondent herein,
had the burden of overcoming the presumption of its validity which it failed to do in
the instant case.
The foreign judgment being valid, there is nothing else left to be done than to order its
enforcement, despite the fact that the petitioner merely prays for the remand of the case to
the RTC for further proceedings. As this Court has ruled on the validity and enforceability of
the said foreign judgment in this jurisdiction, further proceedings in the RTC for the reception
of evidence to prove otherwise are no longer necessary.
WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court of
Appeals sustaining the trial court's dismissal of the OIL AND NATURAL GAS COMMISSION's
complaint in Civil Case No. 4006 before Branch 30 of the RTC of Surigao City is REVERSED,
and another in its stead is hereby rendered ORDERING private respondent PACIFIC CEMENT
COMPANY, INC. to pay to petitioner the amounts adjudged in the foreign judgment subject of
said case.
SO ORDERED.
Regalado, Melo and Puno, JJ., concur.

Mendoza, J., took no part.
Footnotes
1 Supply Order contract, ANNEX "C" to PETITION in G.R. No. 114323, p. 5; Rollo, p.
114.
* Note: The contract and the foreign judgments or awards by the Indian courts follow
the British spelling of words for which sic will no longer be indicated.
2 Arbitral Award dated July 23, 1988, ANNEX "D" of the Petitions, p. 17; Rollo, p. 143-
144.
3 DECISION in CA-G.R. CV No. 37080 promulgated on October 29, 1993, p. 10; Rollo, p.
103; RTC Records, pp. 143-144.
4 ANNEX "F" of the Petition; Rollo, p, 157.
5 ORDER in Civil Case No. 4006, ANNEX "G" of the Petition, p, 1; Rollo, p. 158.
6 Ibid., p. 4; Rollo, p. 161.
7 Ibid., p. 5; Rollo, p. 162.
8 Art. VIII, Section 14 of the 1987 Constitution.
9 CA Decision, Supra, pp. 8-12; Rollo, pp. 101-105.
10 Petition, Supra, p. 9; Rollo, p. 73.
11 See Supply Order Contract.
12 Petition, Supra, pp. 11-12; Rollo, pp. 75-76.
13 Motoomul, et al. vs. Dela Paz, et al., 187 SCRA 743, 753 [1990]; Luzon Stevedoring
Co. vs. Trinidad, 43 Phil. 804 [1922].
14 Terms and Conditions of Supply Order, "ANNEX C-1" of the Petition, p. 8; Rollo, p.
125-126; RTC Records, pp. 17-26.
15 Art. 1373 of the Civil Code.
16 Art. 1374 of the Civil Code.
17 Rule 130, Section 11 of the Rules of Court.
18 De Leon vs. Court of Appeals, 205 SCRA 612, 620 [1992].
19 JMM Promotions & Management, Inc. vs. NLRC, 228 SCRA 129, 134 [1993].
20 Private Respondent's Memorandum in G.R. No. 114323, p. 17.
21 (Footnote not available per copy of SC decision.)
22 Supra, Private Respondent's Memorandum, p. 18.
23 Ibid.
24 Court of Dehra Dun, Suit No. 677 of 1988, ONGC vs. Pacific Cement, 7-2-90; Rollo,
p. 157.
25 CA Decision.
26 173 SCRA 324 [1989].
27 Ibid., p. 326.
28 147 SCRA 183 [1987].
29 Ibid., p. 189.
30 Francisco v. Permskul, 173 SCRA 324, 333.
31 Francisco, Vicente J., The Revised RULES OF COURT in the Philippines, Volume II,
pp. 891-892, 1966 ed, citing 31 Am. Jur. 153-154.
32 Northwest Orient Airlines, Inc. vs. Court of Appeals, 241 SCRA 192, 199 [1995].
33 Roces vs. Aportadera, 243 SCRA 108 [1995]; Mutuc vs. Court of Appeals, 190 SCRA
43, 49 [1990]; Richards vs. Asoy, 152 SCRA 45 [1987]; Tajonera vs. Lamaroza, 110
SCRA 438 [1981].
34 Korean Airlines Co., Ltd. vs. Court of Appeals, 247 SCRA 599, 603 [1995].
35 Roces vs. Aportadera, supra, p. 114; Stayfast Sunset View Condominium

Corporation vs. NLRC, 228 SCRA 466 [1993]; Villareal vs. Court of Appeals, 219 SCRA
292 [1993].
36 B.R. Sebastian Enterprises, Inc. vs. Court of Appeals, 206 SCRA 28 [1992].
37 Supply Order, Supra.
38 241 SCRA 192, 199 [1995].
39 Ibid.
SECOND DIVISION
G.R. No. 140288 October 23, 2006
ST. AVIATION SERVICES CO., PTE., LTD., petitioner,

vs.
GRAND INTERNATIONAL AIRWAYS, INC., respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Challenged in the instant Petition for Review on Certiorari are the Decision of the Court of Appeals
dated July 30, 1999 and its Resolution dated September 29, 1999 in CA-G.R. SP No. 51134 setting
aside the Orders dated October 30, 1998 and December 16, 1998 of the Regional Trial Court (RTC),
Branch 117, Pasay City in Civil Case No. 98-1389.
St. Aviation Services Co., Pte., Ltd., petitioner, is a foreign corporation based in Singapore. It is
engaged in the manufacture, repair, and maintenance of airplanes and aircrafts. Grand International
Airways, Inc., respondent, is a domestic corporation engaged in airline operations.
Sometime in January 1996, petitioner and respondent executed an "Agreement for the Maintenance
and Modification of Airbus A 300 B4-103 Aircraft Registration No. RP-C8882" (First Agreement).
Under this stipulation, petitioner agreed to undertake maintenance and modification works on
respondent's aircraft. The parties agreed on the mode and manner of payment by respondent of the
contract price, including interest in case of default. They also agreed that the "construction, validity
and performance thereof" shall be governed by the laws of Singapore. They further agreed to submit
any suit arising from their agreement to the non-exclusive jurisdiction of the Singapore courts.
At about the same time, or on January 12, 1996, the parties verbally agreed that petitioner will repair
and undertake maintenance works on respondent's other aircraft, Aircraft No. RP-C8881; and that
the works shall be based on a General Terms of Agreement (GTA). The GTA terms are similar to
those of their First Agreement.
Petitioner undertook the contracted works and thereafter promptly delivered the aircrafts to
respondent. During the period from March 1996 to October 1997, petitioner billed respondent in the
total amount of US$303,731.67 or S$452,560.18. But despite petitioner's repeated demands,
respondent failed to pay, in violation of the terms agreed upon.
On December 12, 1997, petitioner filed with the High Court of the Republic of Singapore an action
for the sum of S$452,560.18, including interest and costs, against respondent, docketed as Suit No.
2101. Upon petitioner's motion, the court issued a Writ of Summons to be served extraterritorially or
outside Singapore upon respondent. The court sought the assistance of the sheriff of Pasay City to
effect service of the summons upon respondent. However, despite receipt of summons, respondent
failed to answer the claim.
On February 17, 1998, on motion of petitioner, the Singapore High Court rendered a judgment by
default against respondent.
On August 4, 1998, petitioner filed with the RTC, Branch 117, Pasay City, a Petition for Enforcement
of Judgment, docketed as Civil Case No. 98-1389.
Respondent filed a Motion to Dismiss the Petition on two grounds: (1) the Singapore High Court did
not acquire jurisdiction over its person; and (2) the foreign judgment sought to be enforced is void for
having been rendered in violation of its right to due process.
On October 30, 1998, the RTC denied respondent's motion to dismiss, holding that "neither one of
the two grounds (of Grand) is among the grounds for a motion to dismiss under Rule 16 of the 1997
Rules of Civil Procedure."
Respondent filed a motion for reconsideration but was denied by the RTC in its Order dated
December 16, 1998.
On February 15, 1999, respondent filed with the Court of Appeals a Petition for Certiorari assailing
the RTC Order denying its motion to dismiss. Respondent alleged that the extraterritorial service of
summons on its office in the Philippines is defective and that the Singapore court did not acquire
jurisdiction over its person. Thus, its judgment sought to be enforced is void. Petitioner, in its
comment, moved to dismiss the petition for being unmeritorious.
On July 30, 1999, the Court of Appeals issued its Decision granting the petition and setting aside the
Orders dated October 30, 1998 and December 16, 1998 of the RTC "without prejudice to the right of
private respondent to initiate another proceeding before the proper court to enforce its claim." It
found:
In the case at bar, the complaint does not involve the personal status of plaintiff, nor any
property in which the defendant has a claim or interest, or which the private respondent has
attached but purely an action for collection of debt. It is a personal action as well as an
action in personam, not an action in rem or quasi in rem. As a personal action, the service of
summons should be personal or substituted, not extraterritorial, in order to confer jurisdiction
on the court.
Petitioner seasonably filed a motion for reconsideration but it was denied on September 29, 1999.
Hence, the instant Petition for Review on Certiorari.
The issues to be resolved are: (1) whether the Singapore High Court has acquired jurisdiction over
the person of respondent by the service of summons upon its office in the Philippines; and (2)
whether the judgment by default in Suit No. 2101 by the Singapore High Court is enforceable in the
Philippines.
Generally, in the absence of a special contract, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country; however, under the rules of
comity, utility and convenience, nations have established a usage among civilized states by which
final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different countries.1 Certainly, the Philippine
legal system has long ago accepted into its jurisprudence and procedural rules the viability of an
action for enforcement of foreign judgment, as well as the requisites for such valid enforcement, as
derived from internationally accepted doctrines.2
The conditions for the recognition and enforcement of a foreign judgment in our legal system are
contained in Section 48, Rule 39 of the 1997 Rules of Civil Procedure, as amended, thus:
SEC. 48. Effect of foreign judgments. – The effect of a judgment or final order of a tribunal of
a foreign country, having jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or final
order is conclusive upon the title to the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order
is presumptive evidence of a right as between the parties and their successors in
interest by a subsequent title;
In either case, 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.
Under the above Rule, a foreign judgment or order against a person is merely presumptive evidence
of a right as between the parties. It may be repelled, among others, by want of jurisdiction of the
issuing authority or by want of notice to the party against whom it is enforced. The party attacking a
foreign judgment has the burden of overcoming the presumption of its validity.3
Respondent, in assailing the validity of the judgment sought to be enforced, contends that the
service of summons is void and that the Singapore court did not acquire jurisdiction over it.
Generally, matters of remedy and procedure such as those relating to the service of process upon a
defendant are governed by the lex fori or the internal law of the forum,4 which in this case is the law
of Singapore. Here, petitioner moved for leave of court to serve a copy of the Writ of Summons
outside Singapore. In an Order dated December 24, 1997, the Singapore High Court granted "leave
to serve a copy of the Writ of Summons on the Defendant by a method of service authorized by the
law of the Philippines for service of any originating process issued by the Philippines at ground floor,
APMC Building, 136 Amorsolo corner Gamboa Street, 1229 Makati City, or elsewhere in the
Philippines."5 This service of summons outside Singapore is in accordance with Order 11, r. 4(2) of
the Rules of Court 19966 of Singapore, which provides.
(2) Where in accordance with these Rules, an originating process is to be served on a

defendant in any country with respect to which there does not subsist a Civil Procedure
Convention providing for service in that country of process of the High Court, the originating
process may be served –
a) through the government of that country, where that government is willing to effect service;
b) through a Singapore Consular authority in that country, except where service through
such an authority is contrary to the law of the country; or
c) by a method of service authorized by the law of that country for service of any
originating process issued by that country.
In the Philippines, jurisdiction over a party is acquired by service of summons by the sheriff,7 his
deputy or other proper court officer either personally by handing a copy thereof to the defendant8 or
by substituted service.9 In this case, the Writ of Summons issued by the Singapore High Court was
served upon respondent at its office located at Mercure Hotel (formerly Village Hotel), MIA Road,
Pasay City. The Sheriff's Return shows that it was received on May 2, 1998 by Joyce T. Austria,
Secretary of the General Manager of respondent company.10 But respondent completely ignored the
summons, hence, it was declared in default.
Considering that the Writ of Summons was served upon respondent in accordance with our Rules,
jurisdiction was acquired by the Singapore High Court over its person. Clearly, the judgment of
default rendered by that court against respondent is valid.
WHEREFORE, we GRANT the petition. The challenged Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 51134 are set aside.
The RTC, Branch 117, Pasay City is hereby DIRECTED to hear Civil Case No. 98-1389 with
dispatch.
SO ORDERED.
Puno, J., Chairperson, Corona, Azcuna, and Garcia, JJ., concur.
Footnotes
1Asiavest Merchant Bankers (M) Berhad v. Court of Appeals, G.R. No. 110263, July 20,
2001, 361 SCRA 489.
2 Mijares v. Ranada, G.R. No. 139325, April 12, 2005, 455 SCRA 397.
3Ibid.; Northwest Orient Airlines, Inc. v. Court of Appeals, G.R. No. 112573, February 9,
1995, 241 SCRA 192.
4Northwest Orient Airlines, Inc. v. Court of Appeals, ibid.; Asiavest Merchant Bankers (M)
Berhad v. Court of Appeals; supra, footnote 1.
5 Rollo, p. 147.
6 The Singapore Supreme Court of Judicature Act, Chapter 322.

7 Section 3, Rule 14, 1997 Rules of Civil Procedure, as amended:
Sec. 3. By whom served. — The summons may be served by the sheriff, his deputy,
or other proper court officer, or for justifiable reasons by any suitable person
authorized by the court issuing the summons.
8 Section 6, ibid.
Sec. 6. Service in person on defendant. — Whenever practicable, the summons shall

be served by handing a copy thereof to the defendant in person, or, if he refuses to
receive and sign for it, by tendering it to him.
9 Section 7, ibid.
Sec. 7. Substituted service. — If, for justifiable causes, the defendant cannot be
served within a reasonable time as provided in the preceding section, service may be
effected (a) by leaving copies of the summons at the defendant's residence with
some person of suitable age and discretion then residing therein, or (b) by leaving
the copies at defendant's office or regular place of business with some competent
person in charge thereof.
10 Rollo, p. 8.
SECOND DIVISION
G.R. No. 119602 October 6, 2000
WILDVALLEY SHIPPING CO., LTD. petitioner,

vs.
COURT OF APPEALS and PHILIPPINE PRESIDENT LINES INC., respondents.
DECISION
BUENA, J.:
This is a petition for review on certiorari seeking to set aside the decision of the Court of Appeals
which reversed the decision of the lower court in CA-G.R. CV No. 36821, entitled "Wildvalley
Shipping Co., Ltd., plaintiff-appellant, versus Philippine President Lines, Inc., defendant-appellant."
The antecedent facts of the case are as follows:
Sometime in February 1988, the Philippine Roxas, a vessel owned by Philippine President Lines,
Inc., private respondent herein, arrived in Puerto Ordaz, Venezuela, to load iron ore. Upon the
completion of the loading and when the vessel was ready to leave port, Mr. Ezzar del Valle
Solarzano Vasquez, an official pilot of Venezuela, was designated by the harbour authorities in
Puerto Ordaz to navigate the Philippine Roxas through the Orinoco River.1He was asked to pilot the
said vessel on February 11, 19882 boarding it that night at 11:00 p.m.3
The master (captain) of the Philippine Roxas, Captain Nicandro Colon, was at the bridge together
with the pilot (Vasquez), the vessel's third mate (then the officer on watch), and a helmsman when
the vessel left the port4 at 1:40 a.m. on February 12, 1988.5 Captain Colon left the bridge when the
vessel was under way.6
The Philippine Roxas experienced some vibrations when it entered the San Roque Channel at mile
172.7 The vessel proceeded on its way, with the pilot assuring the watch officer that the vibration was
a result of the shallowness of the channel.8
Between mile 158 and 157, the vessel again experienced some vibrations.9 These occurred at 4:12
a.m.10 It was then that the watch officer called the master to the bridge.11
The master (captain) checked the position of the vessel12 and verified that it was in the centre of the
channel.13 He then went to confirm, or set down, the position of the vessel on the chart.14 He ordered
Simplicio A. Monis, Chief Officer of the President Roxas, to check all the double bottom tanks.15
At around 4:35 a.m., the Philippine Roxas ran aground in the Orinoco River,16 thus obstructing the
ingress and egress of vessels.
As a result of the blockage, the Malandrinon, a vessel owned by herein petitioner Wildvalley
Shipping Company, Ltd., was unable to sail out of Puerto Ordaz on that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a suit with the Regional Trial Court of Manila,
Branch III against Philippine President Lines, Inc. and Pioneer Insurance Company (the
underwriter/insurer of Philippine Roxas) for damages in the form of unearned profits, and interest
thereon amounting to US $400,000.00 plus attorney's fees, costs, and expenses of litigation. The
complaint against Pioneer Insurance Company was dismissed in an Order dated November 7,
1988.17
At the pre-trial conference, the parties agreed on the following facts:
"1. The jurisdictional facts, as specified in their respective pleadings;
"2. That defendant PPL was the owner of the vessel Philippine Roxas at the time of the
incident;
"3. That defendant Pioneer Insurance was the insurance underwriter for defendant PPL;
"4. That plaintiff Wildvalley Shipping Co., Inc. is the owner of the vessel Malandrinon, whose
passage was obstructed by the vessel Philippine Roxas at Puerto Ordaz, Venezuela, as
specified in par. 4, page 2 of the complaint;
"5. That on February 12, 1988, while the Philippine Roxas was navigating the channel at
Puerto Ordaz, the said vessel grounded and as a result, obstructed navigation at the
channel;
"6. That the Orinoco River in Puerto Ordaz is a compulsory pilotage channel;
"7. That at the time of the incident, the vessel, Philippine Roxas, was under the command of
the pilot Ezzar Solarzano, assigned by the government thereat, but plaintiff claims that it is
under the command of the master;
"8. The plaintiff filed a case in Middleburg, Holland which is related to the present case;
"9. The plaintiff caused the arrest of the Philippine Collier, a vessel owned by the defendant
PPL;
"10. The Orinoco River is 150 miles long and it takes approximately 12 hours to navigate out
of the said river;
"11. That no security for the plaintiff's claim was given until after the Philippine Collier was
arrested; and
"12. That a letter of guarantee, dated 12-May-88 was issued by the Steamship Mutual
Underwriters Ltd."18
The trial court rendered its decision on October 16, 1991 in favor of the petitioner, Wildvalley
Shipping Co., Ltd. The dispositive portion thereof reads as follows:
"WHEREFORE, judgment is rendered for the plaintiff, ordering defendant Philippine President Lines,
Inc. to pay to the plaintiff the sum of U.S. $259,243.43, as actual and compensatory damages, and
U.S. $162,031.53, as expenses incurred abroad for its foreign lawyers, plus additional sum of U.S.
$22,000.00, as and for attorney's fees of plaintiff's local lawyer, and to pay the cost of this suit.
"Defendant's counterclaim is dismissed for lack of merit.
"SO ORDERED."19
Both parties appealed: the petitioner appealing the non-award of interest with the private respondent
questioning the decision on the merits of the case.
After the requisite pleadings had been filed, the Court of Appeals came out with its questioned
decision dated June 14, 1994,20 the dispositive portion of which reads as follows:
"WHEREFORE, finding defendant-appellant's appeal to be meritorious, judgment is hereby rendered

reversing the Decision of the lower court. Plaintiff-appellant's Complaint is dismissed and it is
ordered to pay defendant-appellant the amount of Three Hundred Twenty-three Thousand, Forty-two
Pesos and Fifty-three Centavos (₱323,042.53) as and for attorney's fees plus cost of suit. Plaintiff-
appellant's appeal is DISMISSED.
"SO ORDERED."21
Petitioner filed a motion for reconsideration22 but the same was denied for lack of merit in the
resolution dated March 29, 1995.23
Hence, this petition.
The petitioner assigns the following errors to the court a quo:
1. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT UNDER

PHILIPPINE LAW NO FAULT OR NEGLIGENCE CAN BE ATTRIBUTED TO THE MASTER
NOR THE OWNER OF THE "PHILIPPINE ROXAS" FOR THE GROUNDING OF SAID
VESSEL RESULTING IN THE BLOCKAGE OF THE RIO ORINOCO;
2. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE

FINDINGS OF FACTS OF THE TRIAL COURT CONTRARY TO EVIDENCE;
3. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE

"PHILIPPINE ROXAS" IS SEAWORTHY;
4. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING

VENEZUELAN LAW DESPITE THE FACT THAT THE SAME HAS BEEN SUBSTANTIALLY
PROVED IN THE TRIAL COURT WITHOUT ANY OBJECTION FROM PRIVATE
RESPONDENT, AND WHOSE OBJECTION WAS INTERPOSED BELATEDLY ON
APPEAL;
5. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN AWARDING
ATTORNEY'S FEES AND COSTS TO PRIVATE RESPONDENT WITHOUT ANY FAIR OR
REASONABLE BASIS WHATSOEVER;
6. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT

PETITIONER'S CAUSE IS MERITORIOUS HENCE, PETITIONER SHOULD BE ENTITLED
TO ATTORNEY'S FEES, COSTS AND INTEREST.
The petition is without merit.
The primary issue to be determined is whether or not Venezuelan law is applicable to the case at
bar.
It is well-settled that 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.24
A distinction is to be made as to the manner of proving a written and an unwritten law. The former
falls under Section 24, Rule 132 of the Rules of Court, as amended, the entire provision of which is
quoted hereunder. Where the foreign law sought to be proved is "unwritten," the oral testimony of
expert witnesses is admissible, as are printed and published books of reports of decisions of the
courts of the country concerned if proved to be commonly admitted in such courts.25
Section 24 of Rule 132 of the Rules of Court, as amended, provides:
"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." (Underscoring supplied)
The court has interpreted Section 25 (now Section 24) to include competent evidence like the
testimony of a witness to prove the existence of a written foreign law.26
In the noted case of Willamette Iron & Steel Works vs. Muzzal,27 it was held that:
"… Mr. Arthur W. Bolton, an attorney-at-law of San Francisco, California, since the year 1918 under
oath, quoted verbatim section 322 of the California Civil Code and stated that said section was in
force at the time the obligations of defendant to the plaintiff were incurred, i.e. on November 5, 1928
and December 22, 1928. This evidence sufficiently established the fact that the section in question
was the law of the State of California on the above dates. A reading of sections 300 and 301 of our
Code of Civil Procedure will convince one that these sections do not exclude the presentation of
other competent evidence to prove the existence of a foreign law.
"`The foreign law is a matter of fact …You ask the witness what the law is; he may, from his
recollection, or on producing and referring to books, say what it is.' (Lord Campbell concurring in an
opinion of Lord Chief Justice Denman in a well-known English case where a witness was called
upon to prove the Roman laws of marriage and was permitted to testify, though he referred to a book
containing the decrees of the Council of Trent as controlling, Jones on Evidence, Second Edition,
Volume 4, pages 3148-3152.) x x x."
We do not dispute the competency of Capt. Oscar Leon Monzon, the Assistant Harbor Master and
Chief of Pilots at Puerto Ordaz, Venezuela,28 to testify on the existence of the Reglamento General
de la Ley de Pilotaje (pilotage law of Venezuela)29 and the Reglamento Para la Zona de Pilotaje No 1
del Orinoco (rules governing the navigation of the Orinoco River). Captain Monzon has held the
aforementioned posts for eight years.30 As such he is in charge of designating the pilots for
maneuvering and navigating the Orinoco River. He is also in charge of the documents that come into
the office of the harbour masters.31
Nevertheless, we take note that these written laws were not proven in the manner provided by
Section 24 of Rule 132 of the Rules of Court.
The Reglamento General de la Ley de Pilotaje was published in the Gaceta Oficial32 of the Republic
of Venezuela. A photocopy of the Gaceta Oficial was presented in evidence as an official publication
of the Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje No 1 del Orinoco is published in a book issued by
the Ministerio de Comunicaciones of Venezuela.33 Only a photocopy of the said rules was likewise
presented as evidence.
Both of these documents are considered in Philippine jurisprudence to be public documents for they
are the written official acts, or records of the official acts of the sovereign authority, official bodies
and tribunals, and public officers of Venezuela.34
For a copy of a foreign public document to be admissible, the following requisites are mandatory: (1)
It must be attested by the officer having legal custody of the records or by his deputy; and (2) It must
be accompanied by a certificate by a secretary of the embassy or legation, consul general, consul,
vice consular or consular agent or foreign service officer, and with the seal of his office.35 The latter
requirement is not a mere technicality but is intended to justify the giving of full faith and credit to the
genuineness of a document in a foreign country.36
It is not enough that the Gaceta Oficial, or a book published by the Ministerio de Comunicaciones of
Venezuela, was presented as evidence with Captain Monzon attesting it. It is also required by
Section 24 of Rule 132 of the Rules of Court that a certificate that Captain Monzon, who attested the
documents, is the officer who had legal custody of those records 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 Venezuela, and authenticated by the seal of his office
accompanying the copy of the public document. No such certificate could be found in the records of
the case.
With respect to proof of written laws, parol proof is objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a foreign statute is involved, the best evidence
rule requires that it be proved by a duly authenticated copy of the statute.37
At this juncture, we have to point out that the Venezuelan law was not pleaded before the lower
court.
A foreign law is considered to be pleaded if there is an allegation in the pleading about the existence
of the foreign law, its import and legal consequence on the event or transaction in issue.38
A review of the Complaint39 revealed that it was never alleged or invoked despite the fact that the
grounding of the M/V Philippine Roxas occurred within the territorial jurisdiction of Venezuela.
We reiterate that under the rules of private international law, a foreign law must be properly pleaded
and proved as a fact. In the absence of pleading and proof, the laws of a foreign country, or state,
will be presumed to be the same as our own local or domestic law and this is known as processual
presumption.40
Having cleared this point, we now proceed to a thorough study of the errors assigned by the
petitioner.
Petitioner alleges that there was negligence on the part of the private respondent that would warrant
the award of damages.
There being no contractual obligation, the private respondent is obliged to give only the diligence
required of a good father of a family in accordance with the provisions of Article 1173 of the New
Civil Code, thus:
"Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and
2201, paragraph 2, shall apply.
"If the law or contract does not state the diligence which is to be observed in the performance, that
which is expected of a good father of a family shall be required."
The diligence of a good father of a family requires only that diligence which an ordinary prudent man
would exercise with regard to his own property. This we have found private respondent to have
exercised when the vessel sailed only after the "main engine, machineries, and other auxiliaries"
were checked and found to be in good running condition;41 when the master left a competent officer,
the officer on watch on the bridge with a pilot who is experienced in navigating the Orinoco River;
when the master ordered the inspection of the vessel's double bottom tanks when the vibrations
occurred anew.42
The Philippine rules on pilotage, embodied in Philippine Ports Authority Administrative Order No. 03-
85, otherwise known as the Rules and Regulations Governing Pilotage Services, the Conduct of
Pilots and Pilotage Fees in Philippine Ports enunciate the duties and responsibilities of a master of a
vessel and its pilot, among other things.
The pertinent provisions of the said administrative order governing these persons are quoted
hereunder:
"Sec. 11. Control of Vessels and Liability for Damage. -- On compulsory pilotage grounds, the
Harbor Pilot providing the service to a vessel shall be responsible for the damage caused to a vessel
or to life and property at ports due to his negligence or fault. He can be absolved from liability if the
accident is caused by force majeure or natural calamities provided he has exercised prudence and
extra diligence to prevent or minimize the damage.
"The Master shall retain overall command of the vessel even on pilotage grounds whereby he can
countermand or overrule the order or command of the Harbor Pilot on board. In such event, any
damage caused to a vessel or to life and property at ports by reason of the fault or negligence of the
Master shall be the responsibility and liability of the registered owner of the vessel concerned without
prejudice to recourse against said Master.
"Such liability of the owner or Master of the vessel or its pilots shall be determined by competent
authority in appropriate proceedings in the light of the facts and circumstances of each particular
case.
"x x x
"Sec. 32. Duties and Responsibilities of the Pilots or Pilots’ Association. -- The duties and
responsibilities of the Harbor Pilot shall be as follows:
"x x x
"f) A pilot shall be held responsible for the direction of a vessel from the time he assumes his work
as a pilot thereof until he leaves it anchored or berthed safely; Provided, however, that his
responsibility shall cease at the moment the Master neglects or refuses to carry out his order."
The Code of Commerce likewise provides for the obligations expected of a captain of a vessel, to
wit:
"Art. 612. The following obligations shall be inherent in the office of captain:
"x x x
"7. To be on deck on reaching land and to take command on entering and leaving ports, canals,
roadsteads, and rivers, unless there is a pilot on board discharging his duties. x x x."
The law is very explicit. The master remains the overall commander of the vessel even when there is
a pilot on board. He remains in control of the ship as he can still perform the duties conferred upon
him by law43 despite the presence of a pilot who is temporarily in charge of the vessel. It is not
required of him to be on the bridge while the vessel is being navigated by a pilot.
However, Section 8 of PPA Administrative Order No. 03-85, provides:
"Sec. 8. Compulsory Pilotage Service - For entering a harbor and anchoring thereat, or passing
through rivers or straits within a pilotage district, as well as docking and undocking at any pier/wharf,
or shifting from one berth or another, every vessel engaged in coastwise and foreign trade shall be
under compulsory pilotage.
"xxx."
The Orinoco River being a compulsory pilotage channel necessitated the engaging of a pilot who
was presumed to be knowledgeable of every shoal, bank, deep and shallow ends of the river. In his
deposition, pilot Ezzar Solarzano Vasquez testified that he is an official pilot in the Harbour at Port
Ordaz, Venezuela,44 and that he had been a pilot for twelve (12) years.45 He also had experience in
navigating the waters of the Orinoco River.46
The law does provide that the master can countermand or overrule the order or command of the
harbor pilot on board. The master of the Philippine Roxas deemed it best not to order him (the pilot)
to stop the vessel,47 mayhap, because the latter had assured him that they were navigating normally
before the grounding of the vessel.48Moreover, the pilot had admitted that on account of his
experience he was very familiar with the configuration of the river as well as the course headings,
and that he does not even refer to river charts when navigating the Orinoco River.49
Based on these declarations, it comes as no surprise to us that the master chose not to regain
control of the ship. Admitting his limited knowledge of the Orinoco River, Captain Colon relied on the
knowledge and experience of pilot Vasquez to guide the vessel safely.
"Licensed pilots, enjoying the emoluments of compulsory pilotage, are in a different class from
ordinary employees, for they assume to have a skill and a knowledge of navigation in the particular
waters over which their licenses extend superior to that of the master; pilots are bound to use due
diligence and reasonable care and skill. A pilot's ordinary skill is in proportion to the pilot's
responsibilities, and implies a knowledge and observance of the usual rules of navigation,
acquaintance with the waters piloted in their ordinary condition, and nautical skill in avoiding all
known obstructions. The character of the skill and knowledge required of a pilot in charge of a vessel
on the rivers of a country is very different from that which enables a navigator to carry a vessel
safely in the ocean. On the ocean, a knowledge of the rules of navigation, with charts that disclose
the places of hidden rocks, dangerous shores, or other dangers of the way, are the main elements of
a pilot's knowledge and skill. But the pilot of a river vessel, like the harbor pilot, is selected for the
individual's personal knowledge of the topography through which the vessel is steered."50
We find that the grounding of the vessel is attributable to the pilot. When the vibrations were first felt
the watch officer asked him what was going on, and pilot Vasquez replied that "(they) were in the
middle of the channel and that the vibration was as (sic) a result of the shallowness of the channel."51
Pilot Ezzar Solarzano Vasquez was assigned to pilot the vessel Philippine Roxas as well as other
vessels on the Orinoco River due to his knowledge of the same. In his experience as a pilot, he
should have been aware of the portions which are shallow and which are not. His failure to
determine the depth of the said river and his decision to plod on his set course, in all probability,
caused damage to the vessel. Thus, we hold him as negligent and liable for its grounding.
In the case of Homer Ramsdell Transportation Company vs. La Compagnie Generale

Transatlantique, 182 U.S. 406, it was held that:
"x x x The master of a ship, and the owner also, is liable for any injury done by the negligence of the
crew employed in the ship. The same doctrine will apply to the case of a pilot employed by the
master or owner, by whose negligence any injury happens to a third person or his property: as, for
example, by a collision with another ship, occasioned by his negligence. And it will make no
difference in the case that the pilot, if any is employed, is required to be a licensed pilot; provided the
master is at liberty to take a pilot, or not, at his pleasure, for in such a case the master acts
voluntarily, although he is necessarily required to select from a particular class. On the other hand, if
it is compulsive upon the master to take a pilot, and, a fortiori, if he is bound to do so under
penalty, then, and in such case, neither he nor the owner will be liable for injuries occasioned
by the negligence of the pilot; for in such a case the pilot cannot be deemed properly the servant
of the master or the owner, but is forced upon them, and the maxim Qui facit per alium facit per
se does not apply." (Underscoring supplied)
Anent the river passage plan, we find that, while there was none,52 the voyage has been sufficiently
planned and monitored as shown by the following actions undertaken by the pilot, Ezzar Solarzano
Vasquez, to wit: contacting the radio marina via VHF for information regarding the channel, river
traffic,53 soundings of the river, depth of the river, bulletin on the buoys.54 The officer on watch also
monitored the voyage.55
We, therefore, do not find the absence of a river passage plan to be the cause for the grounding of
the vessel.
The doctrine of res ipsa loquitur does not apply to the case at bar because the circumstances
surrounding the injury do not clearly indicate negligence on the part of the private respondent. For
the said doctrine to apply, the following conditions must be met: (1) the accident was of such
character as to warrant an inference that it would not have happened except for defendant's
negligence; (2) the accident must have been caused by an agency or instrumentality within the
exclusive management or control of the person charged with the negligence complained of; and (3)
the accident must not have been due to any voluntary action or contribution on the part of the person
injured.56
As has already been held above, there was a temporary shift of control over the ship from the
master of the vessel to the pilot on a compulsory pilotage channel. Thus, two of the requisites
necessary for the doctrine to apply, i.e., negligence and control, to render the respondent liable, are
absent.
As to the claim that the ship was unseaworthy, we hold that it is not.
The Lloyd’s Register of Shipping confirmed the vessel’s seaworthiness in a Confirmation of Class
issued on February 16, 1988 by finding that "the above named ship (Philippine Roxas) maintained
the class "+100A1 Strengthened for Ore Cargoes, Nos. 2 and 8 Holds may be empty (CC) and
+LMC" from 31/12/87 up until the time of casualty on or about 12/2/88."57 The same would not have
been issued had not the vessel been built according to the standards set by Lloyd's.
Samuel Lim, a marine surveyor, at Lloyd's Register of Shipping testified thus:
"Q Now, in your opinion, as a surveyor, did top side tank have any bearing at all to the
seaworthiness of the vessel?
"A Well, judging on this particular vessel, and also basing on the class record of the vessel, wherein
recommendations were made on the top side tank, and it was given sufficient time to be repaired, it
means that the vessel is fit to travel even with those defects on the ship.
"COURT
What do you mean by that? You explain. The vessel is fit to travel even with defects? Is that what
you mean? Explain.
"WITNESS
"A Yes, your Honor. Because the class society which register (sic) is the third party looking into the
condition of the vessel and as far as their record states, the vessel was class or maintained, and she
is fit to travel during that voyage."
"x x x
"ATTY. MISA
Before we proceed to other matter, will you kindly tell us what is (sic) the 'class +100A1
Strengthened for Ore Cargoes', mean?
"WITNESS
"A Plus 100A1 means that the vessel was built according to Lloyd's rules and she is capable of
carrying ore bulk cargoes, but she is particularly capable of carrying Ore Cargoes with No. 2 and No.
8 holds empty.
"x x x
"COURT
The vessel is classed, meaning?
"A Meaning she is fit to travel, your Honor, or seaworthy."58
It is not required that the vessel must be perfect. To be seaworthy, a ship must be reasonably fit to
perform the services, and to encounter the ordinary perils of the voyage, contemplated by the parties
to the policy.59
As further evidence that the vessel was seaworthy, we quote the deposition of pilot Vasquez:
"Q Was there any instance when your orders or directions were not complied with because of the
inability of the vessel to do so?
"A No.
"Q. Was the vessel able to respond to all your commands and orders?
"A. The vessel was navigating normally."60
Eduardo P. Mata, Second Engineer of the Philippine Roxas submitted an accident report wherein he
stated that on February 11, 1988, he checked and prepared the main engine, machineries and all
other auxiliaries and found them all to be in good running condition and ready for maneuvering. That
same day the main engine, bridge and engine telegraph and steering gear motor were also
tested.61 Engineer Mata also prepared the fuel for consumption for maneuvering and checked the
engine generators.62
Finally, we find the award of attorney’s fee justified. 1âwphi1
Article 2208 of the New Civil Code provides that:
"Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
"x x x
"(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
"x x x"
Due to the unfounded filing of this case, the private respondent was unjustifiably forced to litigate,
thus the award of attorney’s fees was proper.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is DENIED and the decision of the
Court of Appeals in CA G.R. CV No. 36821 is AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De leon, Jr., JJ., concur.
Footnotes
1
vide Exhibit "FF" (Deposition upon Oral Examination of Oscar Leon Monzon, June 14,
1990), p. 9; Exhibit "EE" (Deposition upon Oral Examination of Ezzar del Valle Solarzano
Vasquez, June 13, 1990), p. 47.
2
Exhibit "EE," p. 9.
3
Ibid., p. 9.
4
Ibid., p. 13.
5
Ibid., p. 9.
6
Ibid., p. 13.
7
Ibid., p. 13.
8
Ibid., p. 14.
9
Ibid., p. 18; Exhibit "E-1."
10
Ibid., p. 21.
11
Ibid., p. 22.
12
Ibid., p. 22; Exhibit "E-2."
13
Ibid., p. 22.
14
Ibid., p. 26.
15
Exhibit "E-2."
16
Exhibit "EE", p. 29; Exhibit "E-1."
17
Original Records, p. 209.
18
Ibid., pp. 639-640.
19
Ibid., p. 1029.
20
Annex "A"; Rollo, p 75.
21
Ibid., p. 85.
22
Annex "C"; Ibid., p. 89.
23
Annex "B"; Ibid., p. 86.
Zalamea vs. Court of Appeals, 228 SCRA 23 [1993] citing The Collector of Internal
24
Revenue vs. Fisher and Fisher vs. The Collector of Internal Revenue, 110 Phil. 686 [1961];
Yao Kee vs. Sy- Gonzales, 167 SCRA 736 [1988]; vide Sy Joc Lieng vs. Sy Quia, 16 Phil.
137, Yam Ka Lim vs. Collector of Customs, 30 Phil. 46, In re Estate of Johnson, 39 Phil. 156,
Fluemer vs. Hix, 54 Phil. 610.
Vicente J. Francisco, The Revised Rules of Court in the Philippines, Volume VII, Part I,
25
1997 ed., p. 626 citing Secs. 36 and 49, Rule 130, Rules of Court, as amended.
26
Yao Kee vs. Sy-Gonzales, supra, pp. 744-745.
27
61 Phil. 471, 475.
28
Exhibit "FF", p. 9.
29
Ibid., p. 39.
30
Exhibit "FF", p. 9.
31
Ibid., p. 9.
32
Exhibit "V."
33
Exhibit "W."
34
Section 19, Rule 132 of the Rules of court, as amended.
35
Section 24, Rule 132 of the Rules of Court, as amended.
36
Valencia vs. Lopez, (CA), 65 OG 9959.
Vicente J. Francisco, The Revised Rules of Court in the Philippines, Volume VII, Part II,
37
1997 ed., p. 365, citing 20 Am. Jur. 371-372.
38
Jovito R. Salonga, Private International Law, p. 82.
39
Original Records, p. 1.
Yao Kee vs. Sy-Gonzales, supra; In re: Testate Estate of Suntay, 95 Phil. 500, 510-511;
40
Miciano vs. Brimo, 50 Phil. 867; Lim and Lim vs. Collector of Customs, 36 Phil. 472.
41
Exhibit "E-4."
42
Exhibit "E-2."
43
Article 612 of the Code of Commerce.
44
Exhibit "EE", p. 8.
45
Ibid., p. 8.
46
Ibid., p. 8.
47
Ibid., p. 26.
48
Ibid., pp. 52 and 58.
49
Ibid., p. 33.
50
70 Am Jur 2d, Shipping Sec. 290.
51
Exhibit "EE", p. 14.
52
Comment to Petition for Review on Certiorari, p. 21; Rollo, p. 283.
53
Exhibit "EE", pp. 10-11.
54
Ibid., p. 12.
55
vide Exhibit "E-2."
56
57B Am Jur 2d, Negligence, Sec. 1848.
57
Exhibit "3."
58
T.S.N. dated March 14, 1991, pp. 26-27, 36, and 75.
59
Section 107, Act 2427 (The Insurance Act).
60
Exhibit "EE", p. 48.
61
Exhibit "E-4."
62
T.S.N. dated December 7, 1990, p. 8.
FIRST DIVISION
G.R. No. 136804 February 19, 2003
MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL BANK, petitioners,

vs.
RAFAEL MA. GUERRERO, respondent.
DECISION
CARPIO, J.:
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.
423102 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.
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;
x x x."
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 -
"x x x HOLDING THAT [THE BANK’S] PROOF OF FACTS TO SUPPORT ITS MOTION FOR
SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;
x x x 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 x x x’."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.
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.8Foreign 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 Appeals10 which
held that:
"x x x:
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." (Emphasis supplied)
The Bank, however, cannot rely on Willamette 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
1a\^/phi 1.net
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. 1a\^/phi1.net
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).
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 …chester11 _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." (Emphasis 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.
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., (Chairman), Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., no part.
Footnotes
1
Twelfth Division composed of Justices Consuelo Ynares-Santiago (ponente), Romeo J.
Callejo, Sr. and Mariano M. Umali.
2
Entitled "Manufacturers Hanover Trust Co. and/or Chemical Bank, Petitioners, versus Hon.
Hermogenes R. Liwag, Presiding Judge, Regional Trial Court of Manila, Branch 55, and
Rafael Ma. Guerrero, Respondents."
3
Rollo, pp. 8-9.
4
Garcia v. Court of Appeals, 312 SCRA 180 (1999).
5
Diman v. Alumbres, 299 SCRA 459 (1998).
6
Paz v. Court of Appeals, 181 SCRA 26 (1990).
7
National Irrigation Administration v. Gamit, 215 SCRA 436 (1992).
8
Llorente v. Court of Appeals, 345 SCRA 592 (2000).
9
Ibid.
10
296 SCRA 539 (1998).
11
Illegible.
12
Rollo, pp. 26-30.
13
Shauf v. Court of Appeals, 191 SCRA 713 (1990).
14
Natalia Realty Corporation v. Vallez, 173 SCRA 534 (1989).
SUPREME COURT
Manila
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.:
The Case
This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 Decision2 of the Court
of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999 Decision3 and
September 30, 1999 Resolution4 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 contract9 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 Declaration13 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.
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 Appeal15 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.
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 the Labor 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 Judgment17 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 Opposition19 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 Resolution21 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.
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.
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"25was 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 in Sunrise 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:
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
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 Code38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39

(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. x x
x
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.41 This 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.42
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 letter44 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."46However, 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
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.
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.56 Consequently, 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 PhP 30,000.00 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. 804258 (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:
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.
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;
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 attaché 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 non-compliance thereof or if there is prima facieevidence 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 PhP 30,000.00 to respondent Gran as nominal damages for non-compliance with
statutory due process.
No costs.
SO ORDERED.
Quisumbing, Carpio, Tinga, Nachura, JJ., concur.
Footnotes
* As per October 17, 2007 raffle.
1 Rollo, pp. 9-39.
2Id. at 140-148. The Decision was penned by Associate Justice Conchita Carpio Morales
(now a Member of this Court) and concurred in by Associate Justices Candido V. Rivera and
Elvi John S. Asuncion.
3Id. at 86-99. The Decision was penned by NLRC Commissioner Ireneo B. Bernardo and
concurred in by Commissioners Lourdes C. Javier and Tito F. Genilo.
4 Id. at 106-107.
5 Id. at 140.
6 Id. at 140-141.
7 Id. at 40.
8 Id. at 41.
9Signed by Eleazar S. Gran (second party) and Mrs. Andrea Nicolaus (first party)
representing Omar Ahmed Ali Bin Bechr Est., dated January 20, 1994; id. at 42-50.
10 Id. at 141.
11 Id. at 51.
12 Supra note 7.
13 Rollo, p. 73.
14 Id. at 75.
15 CA rollo, pp. 108-113.

16 Supra note 3, at 98.
17 Rollo, p. 80.
18 Id. at 100 & 224.
19 Id. at 100-105.
20 Id. at 219.
Supra note 2, at 145; citing Carnation Phil. Employees Labor Union-FFW v. NLRC, G.R.
22
No. L-64397, October 11, 1983, 125 SCRA 42 and Flexo Manufacturing Corporation v.
NLRC, G.R. No. 164857, April 18, 1997, 135 SCRA 145.
23 Rollo, p. 220.
24 G.R. No. L-57735, March 19, 1982, 112 SCRA 688, 691.
25 G.R. No. L-60950, November 19, 1982, 118 SCRA 645, 646.
26 Id.
27 Supra note 22.
28 G.R. No. L-63701, January 31, 1980, 127 SCRA 463.
29 G.R. No. 146703, November 18, 2004, 443 SCRA 35.
30 Rollo, pp. 84-85.
31 Id. The handwriting is illegible.
32 Now Sec. 7 of New NLRC Rules of Procedure.
33Marlene Crisostomo v. Florito M. Garcia, Jr., G.R. No. 164787, January 31, 2006, 481
SCRA 402; Bunao v. Social Security Sytem, G.R. No. 156652, December 13, 2005, 477
SCRA 564, citing Vallejo v. Court of Appeals,G.R. No. 156413, April 14, 2004, 427 SCRA
658, 669; and San Luis v. Court of Appeals, G.R. No. 142649, September 13, 2001, 417
Phil. 598, 605; Cadalin v. POEA Administrator, G.R. Nos. 104776, 104911, 105029-32,
December 5, 1994, 238 SCRA 721; Pagdonsalan v. National Labor Relations Commission,
G.R. No. L-63701, January 31, 1984, 127 SCRA 463.
34 Civil Code, Art. 1306.
35 Id. Loquia and Pangalanan, p. 144.
J.R. Coquia & E.A. Pangalangan, Conflict of Laws 157 (1995); citing Cramton, Currie, Kay,
36
Conflict of Laws Cases and Commentaries 56.

37Philippine Export and Loan Guarantee Corporation v. V.P. Eusebio Construction Inc., et
al., G.R. No. 140047, July 14, 2004, 434 SCRA 202, 215.
38See Presidential Decree No. 442, "A Decree Instituting a Labor Code, Thereby Revising
and Consolidating Labor and Social Laws to Afford Protection to Labor, Promote
Employment and Human Resources Development and Ensure Industrial Peace Based on
Social Justice."
39As amended by Sec. 33, R.A. 6715, "An Act to Extend Protection to Labor, Strengthen the
Constitutional Rights of Workers to Self-Organization, Collective Bargaining and Peaceful
Concerted Activities, Foster Industrial Peace and Harmony, Promote the Preferential Use of
Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor Relations
Commission, Amending for these Purposes Certain Provisions of Presidential Decree No.
442, as amended, Otherwise Known as The Labor Code of the Philippines, Appropriating
Funds Therefore and for Other Purposes," approved on March 2, 1989.
40 Ting v. Court of Appeals, G.R. No. 146174, July 12, 2006, 494 SCRA 610.
41 Bank of the Philippine Islands v. Uy, G.R. No. 156994, August 31, 2005, 468 SCRA 633.
42 I Alcantara, Philippine Labor and Social Legislation 1052 (1999).
43 Supra note 11.
44 Rollo, pp. 155-156.
46 Id. at 29.
47 G.R. No. 155279, October 11, 2005, 472 SCRA 328, 335-336.
48Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA 569;
see also G & M (Phil.), Inc. v. Willie Batomalaque, G.R. No. 151849, June 23, 2005, 461
SCRA 111.
49 G.R. No. 93699, September 10, 1993, 266 SCRA 232.
50 Id. at 237.
51 Rollo, p. 235.
52 G.R. No. 115795, March 6, 1998, 287 SCRA 117.
53 G.R. No. 121698, March 26, 1998, 228 SCRA 181.
54 G.R. No. 158693, November 17, 2004, 442 SCRA 573, 608.
55 King of Kings Transport Inc. v. Mamac, G.R. No. 166208, June 29, 2007.
56See Article 277 (b) of the Labor Code; Sec. 2 (I) (a) Rule XXIII Rules Implementing Book V
of the Labor Code; and Sec. 2 (d) (i) Rule I, Rules Implementing Book VI of the Labor Code.
57 Supra note 54.
Took effect on July 15, 1995, R.A. No. 8042 is "An Act to Institute the Policies of Overseas
58
Employment and Establish a Higher Standard of Protection and Promotion of the Welfare of
Migrant Workers their Families and Overseas Filipinos in Distress, and for Other Purposes."
59Land and Housing Development Corporation v. Esquillo, G.R. No. 152012, September 30,
2005, 471 SCRA 488, 490.
60 Supra note 58, Sec. 10.
61 Rollo, p. 45.
62 Id. at 70, OAB's Final Account of Gran's salaries receivable.
63 Supra note 59.
64 G.R. No. 91298, June 22 1990, 186 SCRA 724, 730.
66 Chretian v. Donald L. Bren Co. (1984) 151 [185 Cal. App. 3d 450].
67A form copy of the Quitclaim and Release used by the NLRC is reproduced below for the
guidance of management and labor:

Department of Labor and Employment
NATIONAL LABOR RELATIONS COMMISSION
Quezon City
CONCILIATION AND MEDIATION

QUITCLAIM AND RELEASE
PAGTALIKOD AT PAGPAPAWALANG-SAYSAY
I (Ako), _______________________________ of legal age (may sapat na gulang)

residing at (nakatira sa) ____________________________ for and in consideration
of the amount of (bilang konsiderasyon sa halagang) _________________ pesos
(piso) given to me by (na ibinigay sa akin ng)
_________________________________, do hereby release and discharge (ay
aking pinawawalang-saysay at tinatalikuran) aforesaid company/corporation and its
officers, person/s (ang nabanggit na kompanya/korporasyon at ang mga tauhan nito)
from any money claims (mula sa anumang paghahabol na nauukol sa pananalapi) by
way of unpaid wages (sa pamamagitan ng di nabayarang sahod), separation pay,
overtime pay otherwise (o anupaman), as may be due to me (na karapat-dapat para
sa akin) in officers/person/s (na may kaugnayan sa aking huling pinapasukang
kompanya o korporasyon at sa mga opisyales o tauhan nito).
I am executing this quitclaim and release (Isinasagawa ko ang pagtalikod o
pagpapawalang-saysay na ito), freely and voluntary (ng may kalayaan at kusang-
loob) before this Honorable Office (sa harapan ng marangal na tanggapang ito)
without any force or duress (ng walang pamimilit o pamumuwersa) and as part of the
compromise agreement reached during the preventive conciliation and mediation
process conducted in the NLRC (at bilang bahagi ng napagkasunduan buhat sa
proseso ng "preventive conciliation at mediation" dito sa NLRC).
IN VIEW WHEREOF (DAHIL DITO), I hereunto set my hand this (ako'y lumagda
ngayong) ______ day of (araw ng) _________________, 200__, in Quezon City (sa
Lungsod ng Quezon).
_____________________
Signature of the Requesting Party
(Lagda ng Partidong Humiling ng Com-Med Conference)
Signed in presence of (Nilagdaan sa harapan ni):
____________________________________
Name in Print below Signature

(Limbagin ang pangalan sa ilalim ng lagda)
___________________________________________________________________
___________________
SUBSCRIBED AND SWORN TO before me this ____ day of ____________ 200__

in Quezon City, Philippines.
_____________________
Labor Arbiter
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-54204 September 30, 1982
NORSE MANAGEMENT CO. (PTE) and PACIFIC SEAMEN SERVICES, INC., petitioners,
vs.
NATIONAL SEAMEN BOARD, HON. CRESCENCIO M. SIDDAYAO, OSCAR M. TORRES,
REBENE C. CARRERA and RESTITUTA C. ABORDO, respondents.
Bito, Misa & Lozada Law Offices for petitioners.
The Solicitor General and Jose A. Rico for respondents.
RELOVA, J.:
In this petition for certiorari, petitioners pray that the order dated June 20, 1979 of the National
Seamen Board, and the decision dated December 11, 1979 of the Ministry of Labor be nullified and
set aside, and that "if petitioners are found liable to private respondent, such a liability be reduced to
P30,000.00 only, in accordance with respondent NSB's Standard Format of a Service Agreement."
Napoleon B. Abordo, the deceased husband of private respondent Restituta C. Abordo, was the
Second Engineer of M.T. "Cherry Earl" when he died from an apoplectic stroke in the course of his
employment with petitioner NORSE MANAGEMENT COMPANY (PTE). The M.T. "Cherry Earl" is a
vessel of Singaporean Registry. The late Napoleon B. Abordo at the time of his death was receiving
a monthly salary of US$850.00 (Petition, page 5).
In her complaint for "death compensation benefits, accrued leave pay and time-off allowances,
funeral expenses, attorney's fees and other benefits and reliefs available in connection with the
death of Napoleon B. Abordo," filed before the National Seamen Board, Restituta C. Abordo alleged
that the amount of compensation due her from petitioners Norse Management Co. (PTE) and Pacific
Seamen Services, Inc., principal and agent, respectively, should be based on the law where the
vessel is registered. On the other hand, petitioners contend that the law of Singapore should not be
applied in this case because the National Seamen Board cannot take judicial notice of the
Workmen's Insurance Law of Singapore. As an alternative, they offered to pay private respondent
Restituta C. Abordo the sum of P30,000.00 as death benefits based on the Board's Memorandum
Circular No. 25 which they claim should apply in this case.
The Hearing Officer III, Rebene C. Carrera of the Ministry of Labor and Employment, after hearing
the case, rendered judgment on June 20, 1979, ordering herein petitioners "to pay jointly and
severally the following:
I. US$30,600 (the 36-month salary of the decreased)) or its equivalent in Philippine

currency as death compensation benefits;
II. US$500.00 or its equivalent in Philippine currency as funeral expenses;

III. US$3,110 or 10% of the total amount recovered as attorney's fees.
It is also ordered that payment must be made thru the National Seamen Board within
ten (10) days from receipt of this decision.
Petitioners appealed to the Ministry of Labor. On December 11, 1979, the Ministry rendered its
decision in this case as follows:
Motion for reconsideration filed by respondents from the Order of this Board dated 20
June 1979 requiring them to pay complainant, jointly and severally, the amount of
Thirty-four thousand and two hundred ten dollars ($34,210.00) representing death
benefits, funeral expenses and attorney's fees.
The facts in the main are not disputed. The deceased, husband of complainant
herein, was employed as a Second Engineer by respondents and served as such in
the vessel "M.T. Cherry Earl" until that fatal day in May 1978 when, while at sea, he
suffered an apoplectic stroke and died four days later or on 29 May 1978. In her
complaint filed before this Board, Abordo argued that the amount of compensation
due her should be based on the law where the vessel is registered, which is
Singapore law. Agreeing with said argument, this Board issued the questioned
Order. Hence this Motion for Reconsideration.
In their motion for reconsideration, respondents strongly argue that the law of
Singapore should not be applied in the case considering that their responsibility was
not alleged in the complaint that no proof of the existence of the Workmen's
Insurance Law of Singapore was ever presented and that the Board cannot take
judicial notice of the Workmen's Insurance Law of Singapore. As an alternative, they
offered to pay complainant the amount of Thirty Thousand Pesos (P30,000.00) as
death benefits based on this Board's Memorandum Circular No. 25 which, they
maintained, should apply in this case.
The only issue we are called upon to rule is whether or not the law of Singapore
ought to be applied in this case.
After an exhaustive study of jurisprudence on the matter. we rule in the affirmative.

Respondents came out with a well-prepared motion which, to our mind, is more
appropriate and perhaps acceptable in the regular court of justice. Nothing is raised
in their motion but question of evidence. But evidence is usually a matter of
procedure of which this Board, being merely a quasi-judicial body, is not strict about.
It is true that the law of Singapore was not alleged and proved in the course of the
hearing. And following Supreme Court decisions in a long line of cases that a foreign
law, being a matter of evidence, must be alleged and proved, the law of Singapore
ought not to be recognized in this case. But it is our considered opinion that the
jurisprudence on this matter was never meant to apply to cases before administrative
or quasi-judicial bodies such as the National Seamen Board. For well-settled also is
the rule that administrative and quasi-judicial bodies are not bound strictly by
technical rules. It has always been the policy of this Board, as enunciated in a long
line of cases, that in cases of valid claims for benefits on account of injury or death
while in the course of employment, the law of the country in which the vessel is
registered shall be considered. We see no reason to deviate from this well-
considered policy. Certainly not on technical grounds as movants herein would like
us to.
WHEREFORE, the motion for reconsideration is hereby denied and the Order of tills
Board dated 20 June 1979 affirmed. Let execution issue immediately.
In Section 5(B) of the "Employment Agreement" between Norse Management Co. (PTE) and the late
Napoleon B. Abordo, which is Annex "C" of the Supplemental Complaint, it was stipulated that:
In the event of illness or injury to Employee arising out of and in the course of his
employment and not due to his own willful misconduct and occurring whilst on board
any vessel to which he may be assigned, but not any other time, the EMPLOYER win
provide employee with free medical attention, including hospital treatment, also
essential medical treatment in the course of repatriation and until EMPLOYEE's
arrival at his point of origin. If such illness or injury incapacitates the EMPLOYEE to
the extent the EMPLOYEE's services must be terminated as determined by a
qualified physician designated by the EMPLOYER and provided such illness or injury
was not due in part or whole to his willful act, neglect or misconduct compensation
shall be paid to employee in accordance with and subject to the limitations of the
Workmen's Compensation Act of the Republic of the Philippines or the Workmen's
Insurance Law of registry of the vessel whichever is greater. (Emphasis supplied)
In the aforementioned "Employment Agreement" between petitioners and the late Napoleon B.
Abordo, it is clear that compensation shall be paid under Philippine Law or the law of registry of
petitioners' vessel, whichever is greater. Since private respondent Restituta C. Abordo was offered
P30,000.00 only by the petitioners, Singapore law was properly applied in this case.
The "Employment Agreement" is attached to the Supplemental Complaint of Restituta C. Abordo

and, therefore, it forms part thereof. As it is familiar with Singapore Law, the National Seamen Board
is justified in taking judicial notice of and in applying that law. In the case of VirJen Shipping and
Marine Services, Inc. vs. National Seamen Board, et al (L41297), the respondent Board promulgated
a decision, as follows:
The facts established and/or admitted by the parties are the following: that the late
Remigio Roldan was hired by the respondent as Ordinary Seamen on board the M/V
"Singapura Pertama," a vessel of Singapore Registry; that on September 27, 1973,
the deceased Remigio Roldan met an accident resulting in his death while on board
the said M/V "Singapura Pertama" during the performance of his duties; that on
December 3, 1973, the respondent Virjen Shipping and Marine Services, Inc. paid
the complainant Natividad Roldan the amount of P6,000.00 representing Workmen's
Compensation benefits and donations of the company; that the amount of P4,870
was spent by the respondent company as burial expenses of the deceased Remegio
Roldan.
The only issue therefore remaining to be resolved by the Board in connection with
the particular case, is whether or not under the existing laws (Philippine and foreign),
the complainant Natividad Roldan is entitled to additional benefits other than those
mentioned earlier. The Board takes judicial notice, (as a matter of fact, the
respondent having admitted in its memorandum) of the fact that "Singapura Pertama"
is a foreign vessel of Singapore Registry and it is the policy of this Board that in case
of award of benefits to seamen who were either injured in the performance of its
duties or who died while in the course of employment is to consider the benefits
allowed by the country where the vessel is registered. Likewise, the Board takes
notice that Singapore maritime laws relating to workmen's compensation benefits are
similar to that of the Hongkong maritime laws which provides that in case of death,
the heirs of the deceased seaman should receive the equivalent of 36 months wages
of the deceased seaman; in other words, 36 months multiplied by the basic monthly
wages. In the employment contract submitted with this Board, the terms of which
have never been at issue, is shown that the monthly salary of the deceased Remigio
Roldan at the time of his death was US$80.00; such that, 36 months multiplied by
$80 would come up to US$2,880 and at the rate of P7.00 to $1.00, the benefits due
the claimant would be P20,160. However, since there was voluntary payment made
in the amount of P6,000 and funeral expenses which under the Workmen's
Compensation Law had a maximum of P200.00, the amount of P6,200.00 should be
deducted from P20,160 and the difference would be P13,960.00.
WHEREFORE, the Board orders the respondent Virjen Shipping and Marine
Services, Inc. to pay the complainant Natividad Roldan the amount of P13,960.00
within ten (10) days from receipt of this Decision. The Board also orders the
respondent that payment should be made through the National Seamen Board.
The foregoing decision was assailed as null and void for allegedly having been rendered without
jurisdiction and for awarding compensation benefits beyond the maximum allowable and on the
ground of res judicata. This Court in its resolution dated October 27, 1975 and December 12, 1975,
respectively dismissed for lack of merit the petition as well as the motion for reconsideration in said
G.R. No. L- 41297.
Furthermore, Article 20, Labor Code of the Philippines, provides that the National Seamen Board
has original and exclusive jurisdiction over all matters or cases including money claims, involving
employer-employee relations, arising out of or by virtue of any law or contracts involving Filipino
seamen for overseas employment. Thus, it is safe to assume that the Board is familiar with pertinent
Singapore maritime laws relative to workmen's compensation. Moreover, the Board may apply the
rule on judicial notice and, "in administrative proceedings, the technical rules of procedure —
particularly of evidence — applied in judicial trials, do not strictly apply." (Oromeca Lumber Co. Inc.
vs. Social Security Commission, 4 SCRA 1188).
Finally, Article IV of the Labor Code provides that "all doubts in the implementation and interpretation
of the provisions of this code, including its implementing rules and resolved in favor of labor.
For lack of merit, this petition is DENIED.
SO ORDERED.
Makasiar, Plana, Vasquez and Gutierrez, Jr., JJ., concur.
Teehankee, J., took no part.
Melencio-Herrera J., concur in the result.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 128803 September 25, 1998
ASIAVEST LIMITED, petitioner,

vs.
THE COURT OF APPEALS and ANTONIO HERAS, respondents.
DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision1 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
Carton 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.
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 relate 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 attorney's
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 order2 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 decision3 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 in 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.
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 front 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

PHILIPPINES 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.
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 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. 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 Willamette 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.
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 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; 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 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. 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 representatives
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 personamover non-resident 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."
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.
Footnotes
1 Annex "B" of Petition; Rollo, 66-74. Per Judge (now Associate Justice of the Court of
Appeals) Delilah Vidallon Magtolis.
2 Original Record (OR), 326.
3 Annex "A" of Petition; Rollo, 49-65. Per Mabutas R. Jr., J., with the concurrence of
Imperial, J., and Aliño-Hormachuelos, P., JJ.
4 This section (now Section 6, Rule 14 of the 1997 Rules of Civil Procedure) provided:
Sec. 7. Personal Service of Summons. — The summons shall be served by handing a copy
thereof to the defendant in person, or, if he refuses to receive it, by tendering it to him.
5 This Section is now Section 48 of Rule 39 of the 1997 Rules of Civil Procedure with the
following amendments: (1) inclusion of final orders of a tribunal of a foreign country; and (2)
clarification that the grounds to repel a foreign judgment or final order are applicable to both
judgment or final order upon a title to a specific thing and one against a person.
6 Northwest Orient Airlines, Inc. v. Court of Appeals, 241 SCRA 192, 199 [1995].
7 Ibid.
8 Exh. "2", OR, Civil Case No. Q-52452, 197-200.
9 TSN , 14 February 1990, 5.
10 Id., 11-12.
11 Id., 13-15.
12 JOVITO R. SALONGA, PRIVATE INTERNATIONAL LAW 101-102 [1995].
13 61 Phil. 471 [1935].
14 1 SCRA 93 [1961].
15 Citing Pardo v. Republic, 85 Phil. 323 [1950]; Delgado v. Republic, G.R. No. L-2546,
January 28, 1950.
16 Citing Yap v. Solicitor General, 81 Phil. 468; Yee Bo Mann v. Republic, 83 Phil. 749; Go
v. Anti-Chinese League, 47 O.G. 716; Leelin v. Republic, 47 O.G. 694.
17 Northwest Orient Airlines, Inc. v. Court of Appeals, supra note 6, at 200.
18 252 SCRA 92, 99 [1996].
19 Dial Corp. v. Soriano, 161 SCRA 737 [1988].
20 Brown v. Brown, 3 SCRA 451, 456 [1961].
21 Montalban v. Maximo, 22 SCRA 1070, 1078-1081 [1968]; Valmonte v. Court of

Appeals, supra note 18, at 100; 1 MANUEL V. MORAN, COMMENTS ON THE RULES OF
COURT 459 [1979] (hereafter 1 MORAN).
22 Sec. 18 in relation to Section 17, Rule 14 of the Rules of Court; Montalban v.

Maximo, supra note 21 at 1080-1081; Valmonte v. Court of Appeals, supra note 18, at 100; 1
MORAN 459.
23 Sec. 18 in relation to Section 17, Rule 14 of the Rules of Court. These provisions read:
Sec. 18. Residents temporarily out of the Philippines. — When an action is commenced
against a defendant who ordinarily resides within the Philippines, but who is temporarily out
of it, service may, by leave of court, be effected out of the Philippines, as under the
preceding section.
Sec. 17. Extraterritorial service. — When the defendant does not reside and is not found in
the Philippines and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.
24 Boudart v. Tait, 67 Phil. 170, 174-175 1 [1939].
25 1 MORAN 456.
26 19 SCRA 45 [1967].
27 Valmonte v. Court of Appeals, supra note 18 at 100-101.
28 Sec. 17, Rule 14 of the Rules of Court.
29 TSN, 5 July 1989, 7, 13-14, 23.
30 Id., 13-14, 20-23.
31 Exh. "1," OR, 189.
32 TSN, 14 February 1990, 7.
33 OR, 31-40.
34 Id., 101-110.
35 Citing Boudart v. Tait, supra note 24.
36 OR, 47-53.
37 Id., 52. Emphasis supplied.
38 OR, 61-69.
39 OR, 127.
40 Exh. "1."
41 Supra note 20.

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Republic of the Philippines

G.R. No. 122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,

On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines

Respondent Court of Appeals promulgated a Resolution with Temporary Restraining

The Petition for the Issuance of a Writ of Preliminary Injunction is hereby

Petitioner SAUDIA raised the following issues:

Leave of court before filing a supplemental pleading is not a jurisdictional

WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT THE

WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN

xxx xxx xxx

6. Plaintiff learned that, through the intercession of the Saudi Arabian

9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to

On one hand, Article 19 of the New Civil Code provides:

On the other hand, Article 21 of the New Civil Code provides:

Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the

xxx xxx xxx

(8) In all other cases in which demand, exclusive of interest,

xxx xxx xxx

Sec. 2 Venue in Courts of First Instance. — [Now Regional Trial Court]

(a) xxx xxx xxx

Moreover, by hearing the case in the Philippines no unnecessary difficulties and

As held by this Court in Republic vs. Ker and Company, Ltd.: 51

Similarly, the case of De Midgely vs. Ferandos, held that;

When the appearance is by motion for the purpose of objecting to the

(2) the seat of a legal or juridical person, such as a corporation;

(7) the place where judicial or administrative proceedings are instituted or

Davide, Jr., Bellosillo, Vitug and Panganiban, JJ., concur.

1 Annex "A", PETITION, October 13, 1995; rollo, p. 36.

5 Issued by respondent Judge Hon. Rodolfo A. Ortiz of Branch 89, Regional

6 Annex "B", PETITION, October 13, 1995; rollo, pp. 37-39.

7 Annex "B", PETITION, October 13, 1995; rollo, p. 40.

8 Entitled "Milagros P. Morada vs. Saudi Arabian Airlines".

10 Decision, pp. 2-4; see rollo, pp. 89-91.

11 Private respondent's Comment; rollo, p. 50.

12 Ibid., pp. 50-51.

14 Dated January 14, 1994.

15 Dated February 4, 1994.

16 Reply dated March 1, 1994.

17 Records, pp. 65-84.

20 Hon. Rodolfo A. Ortiz.

21 Dated September 19, 1994.

22 Records, pp. 108-116.

23 Records, pp. 117-128.

26 Dated February 18, 1995; see supra, note 4.

29 Rollo, pp. 1-44.

31 Rollo, pp. 80-86.

33 Rollo, pp. 157-159. All caps in the original.

34 Memorandum for Petitioner, p. 14, rollo, p. 162.

37 Memorandum for Private Respondent, p. 9, rollo, p. 190.

38 Records, pp. 65-71.

39 Supra, note 17, pp. 65-68.

40 Salonga, Private International Law, 1995 edition, p. 3.

43 Paras, Philippine Conflict of Laws, sixth edition (1984), p.

44 Supra, note 17.

45 83 SCRA 237, 247.

47 Baguioro v. Barrios, 77 Phil. 120.