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 Resolution 1dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4 and the Orders 5 dated August 29, 1994 6 and February 2, 1995 7 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 Decision 9, are as follows: On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi Arabia. . . . On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security personnel heard her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah 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 manager.
13

for damages against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country

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 Order dated October 13, 1995.
29

for Review with Prayer for Temporary Restraining

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 31dated April 30, 1996, given due course by this Court. After both parties submitted their Memoranda, 32 the instant case is now deemed submitted for decision. Petitioner SAUDIA raised the following issues: I 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 Code, then the instant case is properly a matter of domestic law. 37
35

and 21

36

of the Civil

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." 55 The purpose of "characterization" is to enable the forum to select the proper law. 56 Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact. 57 An essential element of conflict rules is the indication of a "test" or "connecting factor" or "point of contact". Choice-of-law rules invariably consist of a factual relationship (such as property right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the place of celebration, the place of performance, or the place of wrongdoing. 58 Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law. 59 These "test factors" or "points of contact" or "connecting factors" could be any of the following: (1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such as a corporation; (3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved; (4) the place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is particularly important in contracts and torts; (5) the place where an act is intended to come into effect, e.g., the place of performance of contractual duties, or the place where a power of attorney is to be exercised;

(6) the intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis; (7) the place where judicial or administrative proceedings are instituted or done. The lex fori the law of the forum is particularly important because, as we have seen earlier, matters of "procedure" not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it falls under one of the exceptions to the applications of foreign law; and (8) the flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment. 60(Emphasis ours.) After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed admitted for purposes of the motion to dismiss, we are convinced that there is reasonable basis for private respondent's assertion that although she was already working in Manila, petitioner brought her to Jeddah on the pretense that she would merely testify in an investigation of the charges she made against the two SAUDIA crew members for the attack on her person while they were in Jakarta. As it turned out, she was the one made to face trial for very serious charges, including adultery and violation of Islamic laws and tradition. There is likewise logical basis on record for the claim that the "handing over" or "turning over" of the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties as employer. Petitioner's purported act contributed to and amplified or even proximately caused additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of private respondent under the guise of petitioner's authority as employer, taking advantage of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped the injury or harm allegedly inflicted upon her person and reputation, for which petitioner could be liable as claimed, to provide compensation or redress for the wrongs done, once duly proven. Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or "point of contact" could be the place or places where the tortious conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, "act with justice, give her due and observe honesty and good faith." Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our view what is important here is the place where the over-all harm or the totality of the alleged injury to the person, reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below (herein private respondent). All told, it is not without basis 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." 64 As aptly said by private respondent, she has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles 19 and 21" of the Civil Code of the Philippines. In her Amended Complaint and subsequent pleadings, she never alleged that Saudi law should govern this case. 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.

Republic of the Philippines 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: I THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE. II THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW. III THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES. IV THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS. V THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP. There is no question that Edward E. Christensen was a citizen of the United States and of the State of California at the time of his death. But there is also no question that at the time of his death he was domiciled in the Philippines, as witness the following facts admitted by the executor himself in appellee's brief: In the proceedings for admission of the will to probate, the facts of record show that the deceased Edward E. Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an appointed school teacher, was on July 1, 1901, on board the U.S. Army Transport "Sheridan" with Port of Embarkation as the City of San Francisco, in the State of California, U.S.A. He stayed in the Philippines until 1904. In December, 1904, Mr. Christensen returned to the United States and stayed there for the following nine years until 1913, during which time he resided in, and was teaching school in Sacramento, California. Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928, he again departed the Philippines for the United States and came back here the following year, 1929. Some nine years later, in 1938, he again returned to his own country, and came back to the Philippines the following year, 1939.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the Philippines during World War II. Upon liberation, in April 1945, he left for the United States but returned to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2Daney" 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 therenvoi, 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 choiceof-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 renvoiis 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 therenvoi 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.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-35694 December 23, 1933

ALLISON G. GIBBS, petitioner-appelle, vs. THE GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositor-appellant. THE REGISTER OF DEEDS OF THE CITY OF MANILA, respondent-appellant. Office of the Solicitor-General Hilado for appellants. Allison D. Gibbs in his own behalf.

BUTTE, J.: This is an appeal from a final order of the Court of First Instance of Manila, requiring the register of deeds of the City of Manila to cancel certificates of title Nos. 20880, 28336 and 28331, covering lands located in the City of Manila, Philippine Islands, and issue in lieu thereof new certificates of transfer of title in favor of Allison D. Gibbs without requiring him to present any document showing that the succession tax due under Article XI of Chapter 40 of the Administrative Code has been paid. The said order of the court of March 10, 1931, recites that the parcels of land covered by said certificates of title formerly belonged to the conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs; that the latter died intestate in Palo Alto, California, on November 28, 1929; that at the time of her death she and her husband were citizens of the State of California and domiciled therein. It appears further from said order that Allison D. Gibbs was appointed administrator of the state of his said deceased wife in case No. 36795 in the same court, entitled "In the Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased"; that in said intestate proceedings, the said Allison D. Gibbs, on September 22,1930, filed an ex parte petition in which he alleged "that the parcels of land hereunder described belong to the conjugal partnership of your petitioner and his wife, Eva Johnson Gibbs", describing in detail the three facts here involved; and further alleging that his said wife, a citizen and resident of California, died on November 28,1929; that in accordance with the law of California, the community property of spouses who are citizens of California, upon the death of the wife previous to that of the husband, belongs absolutely to the surviving husband without administration; that the conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs, deceased, has no obligations or debts and no one will be prejudiced by adjucating said parcels of land (and seventeen others not here involved) to be the absolute property of the said Allison D. Gibbs as sole owner. The

court granted said petition and on September 22, 1930, entered a decree adjucating the said Allison D. Gibbs to be the sole and absolute owner of said lands, applying section 1401 of the Civil Code of California. Gibbs presented this decree to the register of deeds of Manila and demanded that the latter issue to him a "transfer certificate of title". Section 1547 of Article XI of Chapter 40 of the Administrative Code provides in part that: Registers of deeds shall not register in the registry of property any document transferring real property or real rights therein or any chattel mortgage, by way of gifts mortis causa, legacy or inheritance, unless the payment of the tax fixed in this article and actually due thereon shall be shown. And they shall immediately notify the Collector of Internal Revenue or the corresponding provincial treasurer of the non payment of the tax discovered by them. . . . Acting upon the authority of said section, the register of deeds of the City of Manila, declined to accept as binding said decree of court of September 22,1930, and refused to register the transfer of title of the said conjugal property to Allison D. Gibbs, on the ground that the corresponding inheritance tax had not been paid. Thereupon, under date of December 26, 1930, Allison D. Gibbs filed in the said court a petition for an order requiring the said register of deeds "to issue the corresponding titles" to the petitioner without requiring previous payment of any inheritance tax. After due hearing of the parties, the court reaffirmed said order of September 22, 1930, and entered the order of March 10, 1931, which is under review on this appeal. On January 3, 1933, this court remanded the case to the court of origin for new trial upon additional evidence in regard to the pertinent law of California in force at the time of the death of Mrs. Gibbs, also authorizing the introduction of evidence with reference to the dates of the acquisition of the property involved in this suit and with reference to the California law in force at the time of such acquisition. The case is now before us with the supplementary evidence. For the purposes of this case, we shall consider the following facts as established by the evidence or the admissions of the parties: Allison D. Gibbs has been continuously, since the year 1902, a citizen of the State of California and domiciled therein; that he and Eva Johnson Gibbs were married at Columbus, Ohio, in July 1906; that there was no antenuptial marriage contract between the parties; that during the existence of said marriage the spouses acquired the following lands, among others, in the Philippine Islands, as conjugal property:lawphil.net 1. A parcel of land in the City of Manila represented by transfer certificate of title No. 20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs casado con Eva Johnson Gibbs". 2. A parcel of land in the City of Manila, represented by transfer certificate of title No. 28336, dated May 14, 1927, in which it is certified "that spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners in fee simple" of the land therein described. 3. A parcel of land in the City of Manila, represented by transfer certificate of title No. 28331, dated April 6, 1927, which it states "that Allison D. Gibbs married to Eva Johnson Gibbs" is the owner of the land described therein; that said Eva Johnson Gibbs died intestate on November 28, 1929, living surviving her her husband, the appellee, and two sons, Allison J. Gibbs , now age 25 and Finley J. Gibbs, now aged 22, as her sole heirs of law. Article XI of Chapter 40 of the Administrative Code entitled "Tax on inheritances, legacies and other acquisitions mortis causa" provides in section 1536 that "Every transmission by virtue of inheritance ... of real property ... shall be subject to the following tax." It results that the question for determination in this case is as follows: Was Eva Johnson Gibbs at the time of her death the owner of a descendible interest in the Philippine lands above-mentioned? The appellee contends that the law of California should determine the nature and extent of the title, if any, that vested in Eva Johnson Gibbs under the three certificates of title Nos. 20880, 28336 and 28331 above referred to, citing article 9 of the Civil Code. But that, even if the nature and extent of her title under said certificates be governed by the law of the Philippine Islands, the laws of California govern the succession to such title, citing the second paragraph of article 10 of the Civil Code. Article 9 of the Civil Code is as follows: The laws relating to family rights and duties, or to the status, condition, and legal capacity of persons, are binding upon Spaniards even though they reside in a foreign country." It is argued that the conjugal right of the California wife in community real estate in the Philippine Islands is a personal right and must, therefore, be settled by the law governing her personal status, that is, the law of California. But our attention has not been called to any law of California that incapacitates a married woman from acquiring or holding land in a foreign jurisdiction in accordance with the lex rei sitae. There is not the slightest doubt that a California married woman can acquire title to land in a common law jurisdiction like the State of Illinois or the District of Columbia, subject to the common-law estate by the courtesy which would vest in her husband. Nor is there any doubt that if a California husband acquired land in such a jurisdiction his wife would be vested with the common law right of dower, the prerequisite conditions obtaining. Article 9 of the Civil Code treats of purely personal relations and status and capacity for juristic acts, the rules relating to property, both personal and real, being governed by article 10 of the Civil Code. Furthermore, article 9, by its very terms, is applicable only to "Spaniards" (now, by construction, to citizens of the Philippine Islands). The Organic Act of the Philippine Islands (Act of Congress, August 29, 1916, known as the "Jones Law") as regards the determination of private rights, grants practical autonomy to the Government of the Philippine Islands. This Government, therefore, may apply the principles and rules of private international law (conflicts of laws) on the same footing as an

organized territory or state of the United States. We should, therefore, resort to the law of California, the nationality and domicile of Mrs. Gibbs, to ascertain the norm which would be applied here as law were there any question as to her status. But the appellant's chief argument and the sole basis of the lower court's decision rests upon the second paragraph of article 10 of the Civil Code which is as follows: Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to the amount of the successional rights and the intrinsic validity of their provisions, shall be regulated by the national law of the person whose succession is in question, whatever may be the nature of the property or the country in which it may be situated. In construing the above language we are met at the outset with some difficulty by the expression "the national law of the person whose succession is in question", by reason of the rather anomalous political status of the Philippine Islands. (Cf. Manresa, vol. 1, Codigo Civil, pp. 103, 104.) We encountered no difficulty in applying article 10 in the case of a citizen of Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to the practical autonomy of the Philippine Islands, as above stated, we have concluded that if article 10 is applicable and the estate in question is that of a deceased American citizen, the succession shall be regulated in accordance with the norms of the State of his domicile in the United States. (Cf. Babcock Templeton vs. Rider Babcock, 52 Phil., 130, 137; In re Estate of Johnson, 39 Phil., 156, 166.) The trial court found that under the law of California, upon the death of the wife, the entire community property without administration belongs to the surviving husband; that he is the absolute owner of all the community property from the moment of the death of his wife, not by virtue of succession or by virtue of her death, but by virtue of the fact that when the death of the wife precedes that of the husband he acquires the community property, not as an heir or as the beneficiary of his deceased wife, but because she never had more than an inchoate interest or expentancy which is extinguished upon her death. Quoting the case of Estate of Klumpke (167 Cal., 415, 419), the court said: "The decisions under this section (1401 Civil Code of California) are uniform to the effect that the husband does not take the community property upon the death of the wife by succession, but that he holds it all from the moment of her death as though required by himself. ... It never belonged to the estate of the deceased wife." The argument of the appellee apparently leads to this dilemma: If he takes nothing by succession from his deceased wife, how can the second paragraph of article 10 be invoked? Can the appellee be heard to say that there is a legal succession under the law of the Philippine Islands and no legal succession under the law of California? It seems clear that the second paragraph of article 10 applies only when a legal or testamentary succession has taken place in the Philippines and in accordance with the law of the Philippine Islands; and the foreign law is consulted only in regard to the order of succession or the extent of the successional rights; in other words, the second paragraph of article 10 can be invoked only when the deceased was vested with a descendible interest in property within the jurisdiction of the Philippine Islands. In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law ed., 1028, 1031), the court said: It is principle firmly established that to the law of the state in which the land is situated we must look for the rules which govern its descent, alienation, and transfer, and for the effect and construction of wills and other conveyances. (United States vs. Crosby, 7 Cranch, 115; 3 L. ed., 287; Clark vs. Graham, 6 Wheat., 577; 5 L. ed., 334; McGoon vs. Scales, 9 Wall., 23; 19 L. ed., 545; Brine vs. Hartford F. Ins. Co., 96 U. S., 627; 24 L. ed., 858.)" (See also Estate of Lloyd, 175 Cal., 704, 705.) This fundamental principle is stated in the first paragraph of article 10 of our Civil Code as follows: "Personal property is subject to the laws of the nation of the owner thereof; real property to the laws of the country in which it is situated. It is stated in 5 Cal. Jur., 478: In accord with the rule that real property is subject to the lex rei sitae, the respective rights of husband and wife in such property, in the absence of an antenuptial contract, are determined by the law of the place where the property is situated, irrespective of the domicile of the parties or to the place where the marriage was celebrated. ( See also Saul vs. His Creditors, 5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.]; Heidenheimervs. Loring, 26 S. W., 99 [Texas].) Under this broad principle, the nature and extent of the title which vested in Mrs. Gibbs at the time of the acquisition of the community lands here in question must be determined in accordance with the lex rei sitae. It is admitted that the Philippine lands here in question were acquired as community property of the conjugal partnership of the appellee and his wife. Under the law of the Philippine Islands, she was vested of a title equal to that of her husband. Article 1407 of the Civil Code provides: All the property of the spouses shall be deemed partnership property in the absence of proof that it belongs exclusively to the husband or to the wife. Article 1395 provides: "The conjugal partnership shall be governed by the rules of law applicable to the contract of partnership in all matters in which such rules do not conflict with the express provisions of this chapter." Article 1414 provides that "the husband may dispose by will of his half only of the property of the conjugal partnership." Article 1426 provides that upon dissolution of the conjugal partnership and after inventory and liquidation, "the net remainder of the partnership property shall be divided share and share alike between the husband and wife, or their respective heirs." Under the provisions of the Civil Code and the jurisprudence prevailing here, the wife, upon the acquisition of any conjugal property, becomes immediately vested with an interest and title therein equal to that of her

husband, subject to the power of management and disposition which the law vests in the husband. Immediately upon her death, if there are no obligations of the decedent, as is true in the present case, her share in the conjugal property is transmitted to her heirs by succession. (Articles 657, 659, 661, Civil Code; cf. also Coronel vs. Ona, 33 Phil., 456, 469.) It results that the wife of the appellee was, by the law of the Philippine Islands, vested of a descendible interest, equal to that of her husband, in the Philippine lands covered by certificates of title Nos. 20880, 28336 and 28331, from the date of their acquisition to the date of her death. That appellee himself believed that his wife was vested of such a title and interest in manifest from the second of said certificates, No. 28336, dated May 14, 1927, introduced by him in evidence, in which it is certified that "the spouses Allison D. Gibbs and Eva Johnson Gibbs are the owners in fee simple of the conjugal lands therein described." The descendible interest of Eva Johnson Gibbs in the lands aforesaid was transmitted to her heirs by virtue of inheritance and this transmission plainly falls within the language of section 1536 of Article XI of Chapter 40 of the Administrative Code which levies a tax on inheritances. (Cf. Re Estate of Majot, 199 N. Y., 29; 92 N. E., 402; 29 L. R. A. [N. S.], 780.) It is unnecessary in this proceeding to determine the "order of succession" or the "extent of the successional rights" (article 10, Civil Code, supra) which would be regulated by section 1386 of the Civil Code of California which was in effect at the time of the death of Mrs. Gibbs. The record does not show what the proper amount of the inheritance tax in this case would be nor that the appellee (petitioner below) in any way challenged the power of the Government to levy an inheritance tax or the validity of the statute under which the register of deeds refused to issue a certificate of transfer reciting that the appellee is the exclusive owner of the Philippine lands included in the three certificates of title here involved. The judgment of the court below of March 10, 1931, is reversed with directions to dismiss the petition, without special pronouncement as to the costs. Avancea, C. J., Malcolm, Villa-Real, Abad Santos, Hull, and Vickers, JJ., concur. Street, J., dissents.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. L-104776 December 5, 1994 BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of 1,767 NAMEDCOMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL MUNDO, petitioners, vs. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT 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. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR., CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ, TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO R. ESTRO, ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA, 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 PAA, 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, L85-10-799 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, L85-10-779 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. 10491114, 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-84-06555). 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-8406-555. 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 CounterSupplemental 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. 12074144). 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. 972984); 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. 10502932, 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 rest if circumstances so require and in respect of which an additional sum equivalent to 150% of his normal wage shall be paid to him. . . . Art. 81: . . . When conditions of work require the worker to work on any official holiday, he shall be paid an additional sum equivalent to 150% of his normal wage. Art. 84: Every worker who has completed one year's continuous service with his employer shall be entitled to leave on full pay for a period of not less than 21 days for each year increased to a period not less than 28 days after five continuous years of service. A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his service in that year. Art. 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 abovementioned 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 factoamended 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. 10491114, 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 overseasemployment 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 Fridaypay 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. Muoz 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. Muoz 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

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

MELENCIO-HERRERA, J.:\ In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion for Reconsideration of the Dismissal Order, respectively. The basic background facts are that petitioner is a citizen of the Philippines while private respondent is a citizen of the United States; that they were married in Hongkong in 1972; that, after the marriage, they established their residence in the Philippines; that they begot two children born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn. Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be ordered to render an accounting of that business, and that private respondent be declared with right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause of action is barred by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and petitioner had "no community property" as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the subject of this certiorari proceeding. Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal. certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of the trial Court. However, when a grave abuse of discretion was patently committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this case within the exception, and we have given it due course.

For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines. Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property because of the representation he made in the divorce proceedings before the American Court that they had no community of property; that the Galleon Shop was not established through conjugal funds, and that respondent's claim is barred by prior judgment. For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over the prohibitive laws of the Philippines and its declared national policy; that the acts and declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction. For the resolution of this case, it is not necessary to determine whether the property relations between petitioner and private respondent, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon any other regime. The pivotal fact in this case is the Nevada divorce of the parties. The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private respondent who, giving his address as No. 381 Bush Street, San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground of incompatibility in the understanding that there were neither community property nor community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings: xxx xxx xxx You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do an things necessary and proper to represent me, without further contesting, subject to the following: 1. That my spouse seeks a divorce on the ground of incompatibility. 2. That there is no community of property to be adjudicated by the Court. 3. 'I'hat there are no community obligations to be adjudicated by the court. xxx xxx xxx
4

There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local law and public policy. It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public police and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799: The purpose and effect of a decree of divorce from the bond of matrimony by a court of competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty. that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage. Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint filed in Civil Case No. 1075-P of his Court.

Without costs. SO ORDERED. Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 80116 June 30, 1989 IMELDA MANALAYSAY PILAPIL, petitioner, vs. HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING, respondents.

REGALADO, J.: An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question. On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough, and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1 Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a separation de facto between them. After about three and a half years of marriage, such connubial disharmony eventuated in private respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local Court in January, 1983. He claimed that there was failure of their marriage and that they had been living apart since April, 1982. 2 Petitioner, on the other hand, filed an action for legal separation, support and separation of property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still pending as Civil Case No. 83-15866. 3 On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the child was granted to petitioner. The records show that under German law said court was locally and internationally competent for the divorce proceeding and that the dissolution of said marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4 On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8, 1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William Chia", docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7 On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city fiscal to inform the Department of Justice "if the accused have already been arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his office for review. 9

Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 87-52435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated September 8, 1987. The same order also directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by respondent judge as direct contempt, she and her counsel were fined and the former was ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14 On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final divorce decree under his national law prior to his filing the criminal complaint." 15 On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16 We find this petition meritorious. The writs prayed for shall accordingly issue. Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try the case. Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is authorized by law to initiate the action therefor. Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or petition. The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the same requirement and rationale would not apply. Understandably, it may not have been found necessary since criminal actions are generally and fundamentally commenced by the State, through the People of the Philippines, the offended party being merely the complaining witness therein. However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the present prosecution for adultery is of such genre, the offended spouse assumes a more predominant role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his power and option. This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence since the raison d'etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21 In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence the action be definitely established and, as already demonstrated, such status or capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action would be determined by his status before or subsequent to the commencement thereof, where such capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at the time of, the institution of the case. We would thereby have the anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to do so. To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to when precisely the status of a complainant as an offended spouse must exist where a criminal prosecution can be commenced only by one who in law can be categorized as possessed of such status. Stated differently and with reference to the present case, the inquiry ;would be whether it

is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant and the accused be unsevered and existing at the time of the institution of the action by the former against the latter. American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to institute proceedings against the offenders where the statute provides that the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the criminal proceedings to a conclusion. 22 In the cited Loftus case, the Supreme Court of Iowa held that 'No prosecution for adultery can be commenced except on the complaint of the husband or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense is said to have been committed, he had ceased to be such when the prosecution was begun; and appellant insists that his status was not such as to entitle him to make the complaint. We have repeatedly said that the offense is against the unoffending spouse, as well as the state, in explaining the reason for this provision in the statute; and we are of the opinion that the unoffending spouse must be such when the prosecution is commenced. (Emphasis supplied.) We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory law and jural policy on the matter. We are convinced that in cases of such nature, the status of the complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing of the complaint. In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the matter of status of persons. Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a trial court here alleging that her business concern was conjugal property and praying that she be ordered to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error of such stance, thus: There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. ... It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. ... Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. ... 25 Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit. The allegation of private respondent that he could not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger of introducing spurious heirs into the family, which is said to be one of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other. The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code, which punished adultery "although the marriage be afterwards declared void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital vows, even though it should be made to appear that she is entitled to have her marriage contract declared null and void, until and unless she actually secures a formal judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never existed. There being no marriage from the beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently contemplated and within the purview of the decision in said case is the situation where the criminal action for adultery was filed before the termination of the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would necessarily apply where the termination of the marriage was effected, as in this case, by a valid foreign divorce.

Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the one at bar or any issue determinative of the controversy herein. WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one enteredDISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made permanent. SO ORDERED. Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

FIRST DIVISION

[G.R. No. 124371. November 23, 2000]

PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents. DECISION PARDO, J.:

The Case

The case raises a conflict of laws issue. What is before us is an appeal from the decision of the Court of Appeals[1] modifying that of the Regional Trial Court, Camarines Sur, Branch 35, Iriga City[2] declaring respondent Alicia F. Llorente (herinafter referred to as Alicia), as co -owners of whatever property she and the deceased Lorenzo N. Llorente (hereinafter referred to as Lorenzo) may have acquired during the twenty-five (25) years that they lived together as husband and wife.

The Facts

The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from March 10, 1927 to September 30, 1957.[3] On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as Paula) were married before a parish priest, Roman Catholic Church, in Nabua, Camarines Sur.[4] Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.[5] On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of Naturalization No. 5579816 was issued in his favor by the United States District Court, Southern District of New York.[6] Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an accrued leave by the U. S. Navy, to visit his wife and he visited the Philippines.[7] He discovered that his wife Paula was pregnant and was living in and having an adulterous relationship with his brother, Ceferino Llorente.[8] On December 4, 1945, Paula gave birth to a boy registered in the Office of the Regist rar of Nabua as Crisologo Llorente, with the certificate stating that the child was not legitimate and the line for the fathers name was left blank. [9] Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple drew a written agreement to the effect that (1) all the family allowances allotted by the United States Navy as part of Lorenzos salary and all other obliga tions for Paulas daily maintenance and support would be suspended; (2) they would dissolve their marital union in accordance with judi cial proceedings; (3) they would make a separate agreement regarding their conjugal property acquired during their marital life; and (4) Lorenzo would not prosecute Paula for her adulterous act since she voluntarily admitted her fault and agreed to separate from

Lorenzo peacefully. The agreement was signed by both Lorenzo and Paula and was witnessed by Paulas father and stepmother. The agreement was notarized by Notary Public Pedro Osabel.[10] Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the Superior Court of the State of California in and for the County of San Diego. Paula was represented by counsel, John Riley, and actively participated in the proceedings. On November 27, 1951, the Superior Court of the State of California, for the County of San Diego found all factual allegations to be true and issued an interlocutory judgment of divorce.[11] On December 4, 1952, the divorce decree became final.[12] In the meantime, Lorenzo returned to the Philippines. On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila.[13] Apparently, Alicia had no knowledge of the first marriage even if they resided in the same town as Paula, who did not oppose the marriage or cohabitation.[14] From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. [15] Their twenty-five (25) year union produced three children, Raul, Luz and Beverly, all surnamed Llorente.[16] On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by Notary Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco Hugo, Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to Alicia and their three children, to wit: (1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my residential house and lot, located at San Francisco, Nab ua, Camarines Sur, Philippines, including ALL the personal properties and other movables or belongings that may be found or existing therein; (2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente, Luz F. Llorente and B everly F. Llorente, in equal shares, all my real properties whatsoever and wheresoever located, specifically my real properties located at Barangay Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur; (3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal shares, my real properties located in Quezon City Philippines, and covered by Transfer Certificate of Title No. 188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal, Philippines; (4) That their respective shares in the above-mentioned properties, whether real or personal properties, shall not be disposed of, ceded, sold and conveyed to any other persons, but could only be sold, ceded, conveyed and disposed of by and among themselves; (5) I designate my wife ALICIA R. FORTUNO to be the sole executor o f this my Last Will and Testament, and in her default or incapacity of the latter to act, any of my children in the order of age, if of age; (6) I hereby direct that the executor named herein or her lawful substitute should served ( sic) without bond; (7) I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore executed, signed, or published, by me; (8) It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorentes Side should ever b other and disturb in any manner whatsoever my wife Alicia R. Fortunato and my children with respect to any real or personal properties I gave and bequeathed respectively to each one of them by virtue of this Last Will and Testament. [17] On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition for the probate and allowance of his last will and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate.[18] On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was still alive.[19] On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to probate. [20] On June 11, 1985, before the proceedings could be terminated, Lorenzo died.[21] On September 4, 1985, Paula filed with the same court a petition[22] for letters of administration over Lorenzos estate in her favor. Paula contended (1) that she was Lorenzos surviving spouse, (2) that the various property were acquired during their marriage, (3) that Lorenzos will disposed of all his property in favor of Alicia and her children, encroaching on her legiti me and 1/2 share in the conjugal property.[23] On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for the issuance of letters testamentary.[24] On October 14, 1985, without terminating the testate proceedings, the trial court gave due course to Paulas petition in Sp. Proc. No. IR-888.[25] On November 6, 13 and 20, 1985, the order was published in the newspaper Bicol Star. [26]

On May 18, 1987, the Regional Trial Court issued a joint decision, thus: Wherefore, considering that this court has so found that the divorce decree granted to the late Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he contracted with Alicia Fortunato on January 16, 1958 at Manila is likewise void. This being so the petition of Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise, she is not entitled to receive any share from the estate even if the will especially said so her relationship with Lorenzo having gained the status of paramour which is under Art. 739 (1). On the other hand, the court finds the petition of Paula Titular Llorente, meritorious, and so declares the intrinsic disposition of the will of Lorenzo Llorente dated March 13, 1981 as void and declares her entitled as conjugal partner and entitled to one-half of their conjugal properties, and as primary compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and then one-third should go to the illegitimate children, Raul, Luz and Beverly, all surname (sic) Llorente, for them to partition in equal shares and also entitled to the remaining free portion in equal shares. Petitioner, Paula Llorente is appointed legal administrator of the estate of the deceased, Lorenzo Llorente. As such let the corresponding letters of administration issue in her favor upon her filing a bond in the amount ( sic) of P100,000.00 conditioned for her to make a return to the court within three (3) months a true and complete inventory of all goods, chattels, rights, and credits, and estate which shall at any time come to her possession or to the possession of any other person for her, and from the proceeds to pay and discharge all debts, legacies and charges on the same, or such dividends thereon as shall be decreed or required by this court; to render a true and just account of her administration to the court within one (1) year, and at any other time when required by the court and to perform all orders of this court by her to be performed. On the other matters prayed for in respective petitions for want of evidence could not be granted. SO ORDERED.[27] In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted decision. [28] On September 14, 1987, the trial court denied Alicias motion for reconsideration but modified its earlier decision, stating that Raul and Luz Llorente are not children legitimate or otherwise of Lorenzo since they were not legally adopted by him. [29] Amending its decision of May 18, 1987, the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to onethird (1/3) of the estate and one-third (1/3) of the free portion of the estate.[30] On September 28, 1987, respondent appealed to the Court of Appeals. [31] On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the decision of the trial court in this wise: WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that Alicia is declared as co-owner of whatever properties she and the deceased may have acquired during the twenty-five (25) years of cohabitation. SO ORDERED.[32] On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the decision. [33] On March 21, 1996, the Court of Appeals,[34] denied the motion for lack of merit. Hence, this petition.[35]

The Issue

Stripping the petition of its legalese and sorting through the various arguments raised, [36] the issue is simple. Who are entitled to inherit from the late Lorenzo N. Llorente? We do not agree with the decision of the Court of Appeals. We remand the case to the trial court for ruling on the intrinsic validity of the will of the deceased.

The Applicable Law

The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly established, admitted and undisputed. Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law. The Civil Code clearly provides:

Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. Art. 16. Real property as well as personal property is subject to the law of the country where it is situated. However, intestate and testamentary succession, both with respect to the order of succession and to the amount of succession al rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. (emphasis ours) True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged and proved.[37] While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case was referred back to the law of the decedents domicile, in this case, Philippine law. We note that while the trial court stated that the law of New York was not sufficiently proven, in the same breath it made the categorical, albeit equally unproven statement that American law follows the domiciliary theory hence, Philippine law appl ies when determining the validity of Lorenzos will.[38] First, there is no such thing as one American law. The "national law" indicated in Article 16 of the Civil Code cannot possibly apply to general American law. There is no such law governing the validity of testamentary provisions in the United States. Each State of the union has its own law applicable to its citizens and in force only within the State. It can therefore refer to no other than the law of the State of which the decedent was a resident.[39] Second, there is no showing that the application of the renvoi doctrine is called for or required by New York State law. The trial court held that the will was intrinsically invalid since it contained dispositions in favor of Alice, who in the tr ial courts opinion was a mere paramour. The trial court threw the will out, leaving Alice, and her two children, Raul and Luz, with nothing. The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of whatever property she and Lorenzo acquired during their cohabitation, applying Article 144 of the Civil Code of the Philippines. The hasty application of Philippine law and the complete disregard of the will, already probated as duly executed in accordance with the formalities of Philippine law, is fatal, especially in light of the factual and legal circumstances here obtaining.

Validity of the Foreign Divorce

In Van Dorn v. Romillo, Jr.[40] we held that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality. In the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid according to their national law. Citing this landmark case, the Court held in Quita v. Court of Appeals,[41] that once proven that respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would become applicable and petitioner could very well lose her right to inherit from him. In Pilapil v. Ibay-Somera,[42] we recognized the divorce obtained by the respondent in his country, the Federal Republic of Germany. There, we stated that divorce and its legal effects may be recognized in the Philippines insofar as respondent is concerned in view of the nationality principle in our civil law on the status of persons. For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. [43] We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the succession to the estate of the decedent) are matters best left to the determination of the trial court.

Validity of the Will

The Civil Code provides: Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed. When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a f oreign country, the solemnities established by Philippine laws shall be observed in their execution. (underscoring ours)

The clear intent of Lorenzo to bequeath his property to his second wife and children by her is glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a foreigner, not covered by our laws on family rights and duties, status, condition and legal capacity.[44] Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by foreign law which must be pleaded and proved. Whether the will was executed in accordance with the formalities required is answered by referring to Philippine law. In fact, the will was duly probated. As a guide however, the trial court should note that whatever public policy or good customs may be involved in our system of legitimes, Congress did not intend to extend the same to the succession of foreign nationals. Congress specifically left the amount of successional rights to the decedent's national law.[45] Having thus ruled, we find it unnecessary to pass upon the other issues raised.

The Fallo

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE. In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES as VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the Superior Court of the State of California in and for the County of San Diego, made final on December 4, 1952. Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic validity of Lorenzo N. Llorentes will and determination of the parties successional rights allowing proof of foreign law with instructions that the trial cou rt shall proceed with all deliberate dispatch to settle the estate of the deceased within the framework of the Rules of Court. No costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 138322 October 2, 2001

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner, vs. REDERICK A. RECIO, respondents. PANGANIBAN, J.: A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such decree is valid according to the national law of the foreigner. However, the divorce decree and the governing personal law of the alien spouse who obtained the divorce must be proven. Our courts do not take judicial notice of foreign laws and judgment; hence, like any other facts, both the divorce decree and the national law of the alien must be alleged and proven according to our law on evidence. The Case Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the January 7, 1999 Decision 1 and the March 24, 1999 Order2 of the Regional Trial Court of Cabanatuan City, Branch 28, in Civil Case No. 3026-AF. The assailed Decision disposed as follows: "WHEREFORE, this Court declares the marriage between Grace J. Garcia and Rederick A. Recio solemnized on January 12, 1994 at Cabanatuan City as dissolved and both parties can now remarry under existing and applicable laws to any and/or both parties."3 The assailed Order denied reconsideration of the above-quoted Decision. The Facts

Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in Malabon, Rizal, on March 1, 1987.4 They lived together as husband and wife in Australia. On May 18, 1989,5 a decree of divorce, purportedly dissolving the marriage, was issued by an Australian family court. On June 26, 1992, respondent became an Australian citizen, as shown by a "Certificate of Australian Citizenship" issued by the Australian government.6 Petitioner a Filipina and respondent were married on January 12, 1994 in Our Lady of Perpetual Help Church in Cabanatuan City.7 In their application for a marriage license, respondent was declared as "single" and "Filipino." 8 Starting October 22, 1995, petitioner and respondent lived separately without prior judicial dissolution of their marriage. While the two were still in Australia, their conjugal assets were divided on May 16, 1996, in accordance with their Statutory Declarations secured in Australia.9 On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage 10 in the court a quo, on the ground of bigamy respondent allegedly had a prior subsisting marriage at the time he married her on January 12, 1994. She claimed that she learned of respondent's marriage to Editha Samson only in November, 1997. In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner his prior marriage andits subsequent dissolution.11 He contended that his first marriage to an Australian citizen had been validly dissolved by a divorce decree obtained in Australian in 1989;12 thus, he was legally capacitated to marry petitioner in 1994.1wphi1.nt On July 7, 1998 or about five years after the couple's wedding and while the suit for the declaration of nullity was pending respondent was able to secure a divorce decree from a family court in Sydney, Australia because the "marriage ha[d] irretrievably broken down."13 Respondent prayed in his Answer that the Complained be dismissed on the ground that it stated no cause of action. 14 The Office of the Solicitor General agreed with respondent.15 The court marked and admitted the documentary evidence of both parties. 16 After they submitted their respective memoranda, the case was submitted for resolution.17 Thereafter, the trial court rendered the assailed Decision and Order. Ruling of the Trial Court The trial court declared the marriage dissolved on the ground that the divorce issued in Australia was valid and recognized in the Philippines. It deemed the marriage ended, but not on the basis of any defect in an essential element of the marriage; that is, respondent's alleged lack of legal capacity to remarry . Rather, it based its Decision on the divorce decree obtained by respondent. The Australian divorce had ended the marriage; thus, there was no more martial union to nullify or annual. Hence, this Petition.18 Issues Petitioner submits the following issues for our consideration: "I The trial court gravely erred in finding that the divorce decree obtained in Australia by the respondent ipso facto terminated his first marriage to Editha Samson thereby capacitating him to contract a second marriage with the petitioner. "2 The failure of the respondent, who is now a naturalized Australian, to present a certificate of legal capacity to marry constitutes absence of a substantial requisite voiding the petitioner' marriage to the respondent. "3 The trial court seriously erred in the application of Art. 26 of the Family Code in this case. "4 The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52 and 53 of the Family Code as the applicable provisions in this case. "5

The trial court gravely erred in pronouncing that the divorce gravely erred in pronouncing that the divorce decree obtained by the respondent in Australia ipso facto capacitated the parties to remarry, without first securing a recognition of the judgment granting the divorce decree before our courts."19 The Petition raises five issues, but for purposes of this Decision, we shall concentrate on two pivotal ones: (1) whether the divorce between respondent and Editha Samson was proven, and (2) whether respondent was proven to be legally capacitated to marry petitioner. Because of our ruling on these two, there is no more necessity to take up the rest. The Court's Ruling The Petition is partly meritorious. First Issue: Proving the Divorce Between Respondent and Editha Samson Petitioner assails the trial court's recognition of the divorce between respondent and Editha Samson. Citing Adong v. Cheong Seng Gee,20 petitioner argues that the divorce decree, like any other foreign judgment, may be given recognition in this jurisdiction only upon proof of the existence of (1) the foreign law allowing absolute divorce and (2) the alleged divorce decree itself. She adds that respondent miserably failed to establish these elements. Petitioner adds that, based on the first paragraph of Article 26 of the Family Code, marriages solemnized abroad are governed by the law of the place where they were celebrated (the lex loci celebrationist). In effect, the Code requires the presentation of the foreign law to show the conformity of the marriage in question to the legal requirements of the place where the marriage was performed. At the outset, we lay the following basic legal principles as the take-off points for our discussion. Philippine law does not provide for absolute divorce; hence, our courts cannot grant it.21 A marriage between two Filipinos cannot be dissolved even by a divorce obtained abroad, because of Articles 1522 and 1723 of the Civil Code.24 In mixed marriages involving a Filipino and a foreigner, Article 2625 of the Family Code allows the former to contract a subsequent marriage in case the divorce is "validly obtained abroad by the alien spouse capacitating him or her to remarry."26 A divorce obtained abroad by a couple, who are both aliens, may be recognized in the Philippines, provided it is consistent with their respective national laws.27 A comparison between marriage and divorce, as far as pleading and proof are concerned, can be made. Van Dorn v. Romillo Jr. decrees that "aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law."28 Therefore, before a foreign divorce decree can be recognized by our courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it.29 Presentation solely of the divorce decree is insufficient. Divorce as a Question of Fact Petitioner insists that before a divorce decree can be admitted in evidence, it must first comply with the registration requirements under Articles 11, 13 and 52 of the Family Code. These articles read as follows: "ART. 11. Where a marriage license is required, each of the contracting parties shall file separately a sworn application for such license with the proper local civil registrar which shall specify the following: xxx xxx xxx

"(5) If previously married, how, when and where the previous marriage was dissolved or annulled; xxx xxx xxx

"ART. 13. In case either of the contracting parties has been previously married, the applicant shall be required to furnish, instead of the birth of baptismal certificate required in the last preceding article, the death certificate of the deceased spouse or the judicial decree of annulment or declaration of nullity of his or her previous marriage. x x x. "ART. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the properties of the spouses, and the delivery of the children's presumptive legitimes shall be recorded in the appropriate civil registry and registries of property; otherwise, the same shall not affect their persons." Respondent, on the other hand, argues that the Australian divorce decree is a public document a written official act of an Australian family court. Therefore, it requires no further proof of its authenticity and due execution. Respondent is getting ahead of himself. Before a foreign judgment is given presumptive evidentiary value, the document must first be presented and admitted in evidence.30 A divorce obtained abroad is proven by the divorce decree itself. Indeed the best evidence

of a judgment is the judgment itself.31 The decree purports to be a written act or record of an act of an officially body or tribunal of a foreign country.32 Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof attested33 by the officer having legal custody of the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office.34 The divorce decree between respondent and Editha Samson appears to be an authentic one issued by an Australian family court.35 However, appearance is not sufficient; compliance with the aforemetioned rules on evidence must be demonstrated. Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was submitted in evidence, counsel for petitioner objected, not to its admissibility, but only to the fact that it had not been registered in the Local Civil Registry of Cabanatuan City.36 The trial court ruled that it was admissible, subject to petitioner's qualification.37Hence, it was admitted in evidence and accorded weight by the judge. Indeed, petitioner's failure to object properly rendered the divorce decree admissible as a written act of the Family Court of Sydney, Australia.38 Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary; respondent was no longer bound by Philippine personal laws after he acquired Australian citizenship in 1992.39 Naturalization is the legal act of adopting an alien and clothing him with the political and civil rights belonging to a citizen.40 Naturalized citizens, freed from the protective cloak of their former states, don the attires of their adoptive countries. By becoming an Australian, respondent severed his allegiance to the Philippines and the vinculum juris that had tied him to Philippine personal laws. Burden of Proving Australian Law Respondent contends that the burden to prove Australian divorce law falls upon petitioner, because she is the party challenging the validity of a foreign judgment. He contends that petitioner was satisfied with the original of the divorce decree and was cognizant of the marital laws of Australia, because she had lived and worked in that country for quite a long time. Besides, the Australian divorce law is allegedly known by Philippine courts: thus, judges may take judicial notice of foreign laws in the exercise of sound discretion. We are not persuaded. The burden of proof lies with "the party who alleges the existence of a fact or thing necessary in the prosecution or defense of an action."41 In civil cases, plaintiffs have the burden of proving the material allegations of the complaint when those are denied by the answer; and defendants have the burden of proving the material allegations in their answer when they introduce new matters.42 Since the divorce was a defense raised by respondent, the burden of proving the pertinent Australian law validating it falls squarely upon him. It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws.43 Like any other facts, they must be alleged and proved. Australian marital laws are not among those matters that judges are supposed to know by reason of their judicial function.44 The power of judicial notice must be exercised with caution, and every reasonable doubt upon the subject should be resolved in the negative. Second Issue: Respondent's Legal Capacity to Remarry Petitioner contends that, in view of the insufficient proof of the divorce, respondent was legally incapacitated to marry her in 1994. Hence, she concludes that their marriage was void ab initio. Respondent replies that the Australian divorce decree, which was validly admitted in evidence, adequately established his legal capacity to marry under Australian law. Respondent's contention is untenable. In its strict legal sense, divorce means the legal dissolution of a lawful union for a cause arising after marriage. But divorces are of different types. The two basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited divorce or a mensa et thoro. The first kind terminates the marriage, while the second suspends it and leaves the bond in full force.45 There is no showing in the case at bar which type of divorce was procured by respondent. Respondent presented a decree nisi or an interlocutory decree a conditional or provisional judgment of divorce. It is in effect the same as a separation from bed and board, although an absolute divorce may follow after the lapse of the prescribed period during which no reconciliation is effected.46 Even after the divorce becomes absolute, the court may under some foreign statutes and practices, still restrict remarriage. Under some other jurisdictions, remarriage may be limited by statute; thus, the guilty party in a divorce which was granted on the ground of adultery may be prohibited from remarrying again. The court may allow a remarriage only after proof of good behavior.47

On its face, the herein Australian divorce decree contains a restriction that reads: "1. A party to a marriage who marries again before this decree becomes absolute (unless the other party has died) commits the offence of bigamy."48 This quotation bolsters our contention that the divorce obtained by respondent may have been restricted. It did not absolutely establish his legal capacity to remarry according to his national law. Hence, we find no basis for the ruling of the trial court, which erroneously assumed that the Australian divorce ipso facto restored respondent's capacity to remarry despite the paucity of evidence on this matter. We also reject the claim of respondent that the divorce decree raises a disputable presumption or presumptive evidence as to his civil status based on Section 48, Rule 3949 of the Rules of Court, for the simple reason that no proof has been presented on the legal effects of the divorce decree obtained under Australian laws. Significance of the Certificate of Legal Capacity Petitioner argues that the certificate of legal capacity required by Article 21 of the Family Code was not submitted together with the application for a marriage license. According to her, its absence is proof that respondent did not have legal capacity to remarry. We clarify. To repeat, the legal capacity to contract marriage is determined by the national law of the party concerned. The certificate mentioned in Article 21 of the Family Code would have been sufficient to establish the legal capacity of respondent, had he duly presented it in court. A duly authenticated and admitted certificate is prima facie evidence of legal capacity to marry on the part of the alien applicant for a marriage license.50 As it is, however, there is absolutely no evidence that proves respondent's legal capacity to marry petitioner. A review of the records before this Court shows that only the following exhibits were presented before the lower court: (1) for petitioner: (a) Exhibit "A" Complaint;51 (b) Exhibit "B" Certificate of Marriage Between Rederick A. Recto (Filipino-Australian) and Grace J. Garcia (Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija;52(c) Exhibit "C" Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila;53 (d) Exhibit "D" Office of the City Registrar of Cabanatuan City Certification that no information of annulment between Rederick A. Recto and Editha D. Samson was in its records;54 and (e) Exhibit "E" Certificate of Australian Citizenship of Rederick A. Recto;55 (2) for respondent: (Exhibit "1" Amended Answer;56 (b) Exhibit "S" Family Law Act 1975 Decree Nisi of Dissolution of Marriage in the Family Court of Australia;57 (c) Exhibit "3" Certificate of Australian Citizenship of Rederick A. Recto;58 (d) Exhibit "4" Decree Nisi of Dissolution of Marriage in the Family Court of Australia Certificate;59 and Exhibit "5" Statutory Declaration of the Legal Separation Between Rederick A. Recto and Grace J. Garcia Recio since October 22, 1995.60 Based on the above records, we cannot conclude that respondent, who was then a naturalized Australian citizen, was legally capacitated to marry petitioner on January 12, 1994. We agree with petitioner's contention that the court a quo erred in finding that the divorce decree ipso facto clothed respondent with the legal capacity to remarry without requiring him to adduce sufficient evidence to show the Australian personal law governing his status; or at the very least, to prove his legal capacity to contract the second marriage. Neither can we grant petitioner's prayer to declare her marriage to respondent null and void on the ground of bigamy. After all, it may turn out that under Australian law, he was really capacitated to marry petitioner as a direct result of the divorce decree. Hence, we believe that the most judicious course is to remand this case to the trial court to receive evidence, if any, which show petitioner's legal capacity to marry petitioner. Failing in that, then the court a quo may declare a nullity of the parties' marriage on the ground of bigamy, there being already in evidence two existing marriage certificates, which were both obtained in the Philippines, one in Malabon, Metro Manila dated March 1, 1987 and the other, in Cabanatuan City dated January 12, 1994. WHEREFORE, in the interest of orderly procedure and substantial justice, we REMAND the case to the court a quo for the purpose of receiving evidence which conclusively show respondent's legal capacity to marry petitioner; and failing in that, of declaring the parties' marriage void on the ground of bigamy, as above discussed. No costs. SO ORDERED. Melo, Puno, Vitug, and Sandoval-Gutierrez, JJ., concur.

SECOND DIVISION REPUBLIC OF THE PHILIPPINES, Petitioner, G.R. No. 152577 Present: PUNO, Chairman,

- versus-

AUSTRIA-MARTINEZ, CALLEJO, SR., TINGA, and CHICO-NAZARIO, JJ. Promulgated:

CRASUS L. IYOY, R e s p o n d e n t.

September 21, 2005 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.: In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, petitioner Republic of the Philippines, represented by the Office of the Solicitor General, prays for the reversal of the Decision of the Court of Appeals in CA-G.R. CV No. 62539, dated 30 July 2001,[1] affirming the Judgment of the Regional Trial Court (RTC) of Cebu City, Branch 22, in Civil Case No. CEB-20077, dated 30 October 1998,[2] declaring the marriage between respondent Crasus L. Iyoy and Fely Ada Rosal-Iyoy null and void on the basis of Article 36 of the Family Code of the Philippines. The proceedings before the RTC commenced with the filing of a Complaint[3] for declaration of nullity of marriage by respondent Crasus on 25 March 1997. According to the said Complaint, respondent Crasus married Fely on 16 December 1961 at Bradford Memorial Church, Jones Avenue, Cebu City. As a result of their union, they had five children Crasus, Jr., Daphne, Debbie, Calvert, and Carlos who are now all of legal ages. After the celebration of their marriage, respondent Crasus discovered that Fely was hot-tempered, a nagger and extravagant. In 1984, Fely left the Philippines for the United States of America (U.S.A.), leaving all of their five children, the youngest then being only six years old, to the care of respondent Crasus. Barely a year after Fely left for the U.S.A., respondent Crasus received a letter from her requesting that he sign the enclosed divorce papers; he disregarded the said request. Sometime in 1985, respondent Crasus learned, through the letters sent by Fely to their children, that Fely got married to an American, with whom she eventually had a child. In 1987, Fely came back to the Philippines with her American family, staying at Cebu Plaza Hotel in Cebu City. Respondent Crasus did not bother to talk to Fely because he was afraid he might not be able to bear the sorrow and the pain she had caused him. Fely returned to the Philippines several times more: in 1990, for the wedding of their eldest child, Crasus, Jr.; in 1992, for the brain operation of their fourth child, Calvert; and in 1995, for unknown reasons. Fely continued to live with her American family in New Jersey, U.S.A. She had been openly using the surname of her American husband in the Philippines and in the U.S.A. For the wedding of Crasus, Jr., Fely herself had invitations made in which she was named as Mrs. Fely Ada Micklus. At the time the Complaint was filed, it had been 13 years since Fely left and abandoned respondent Crasus, and there was no more possibility of reconciliation between them. Respondent Crasus finally alleged in his Complaint that Felys acts brought danger and dishonor to the family, and clearly demonstrated her psychological incapacity to perform the essential obligations of marriage. Such incapacity, being incurable and continuing, constitutes a ground for declaration of nullity of marriage under Article 36, in relation to Articles 68, 70, and 72, of the Family Code of the Philippines. Fely filed her Answer and Counterclaim[4] with the RTC on 05 June 1997. She asserted therein that she was already an American citizen since 1988 and was now married to Stephen Micklus. While she admitted being previously married to respondent Crasus and having five children with him, Fely refuted the other allegations made by respondent Crasus in his Complaint. She explained that she was no more hot-tempered than any normal person, and she may had been indignant at respondent Crasus on certain occasions but it was because of the latters drunkenness, womanizing, and lack of sincere effort to find employment a nd to contribute to the maintenance of their household. She could not have been extravagant since the family hardly had enough money for basic needs. Indeed, Fely left for abroad for financial reasons as respondent Crasus had no job and what she was then earning as the sole breadwinner in the Philippines was insufficient to support their family. Although she left all of her children with respondent Crasus, she continued to provide financial support to them, as well as, to respondent Crasus. Subsequently, Fely was able to bring her children to the U.S.A., except for one, Calvert, who had to stay behind for medical reasons. While she did file for divorce from respondent Crasus, she denied having herself sent a letter to respondent Crasus requesting him to sign the enclosed divorce papers. After securing a divorce from respondent Crasus, Fely married her American husband and acquired American citizenship. She argued that her marriage to her American husband was legal because now being an American citizen, her status shall be governed by the law of her present nationality. Fely also pointed out that respondent Crasus himself was presently living with another woman who bore him a child. She also accused respondent Crasus of misusing the amount of P90,000.00 which she advanced to him to finance the brain operation of their son, Calvert. On the basis of the foregoing, Fely also prayed that the RTC declare her marriage to respondent Crasus null and void; and that respondent Crasus be ordered to pay to Fely the P90,000.00 she advanced to him, with interest, plus, moral and exemplary damages, attorneys fees, and litigation expenses. After respondent Crasus and Fely had filed their respective Pre-Trial Briefs,[5] the RTC afforded both parties the opportunity to present their evidence. Petitioner Republic participated in the trial through the Provincial Prosecutor of Cebu. [6] Respondent Crasus submitted the following pieces of evidence in support of his Complaint: (1) his own testimony on 08 September 1997, in which he essentially reiterated the allegations in his Complaint;[7] (2) the Certification, dated 13 April 1989, by the Health Department of Cebu City, on the recording of the Marriage Contract between respondent Crasus and Fely in the Register of Deeds, such marriage celebration taking place on 16 December 1961; [8] and (3) the invitation to the wedding of Crasus, Jr., their eldest son, wherein Fely openly used her American husbands surname, Micklus.[9] Felys counsel filed a Notice,[10] and, later on, a Motion,[11] to take the deposition of witnesses, namely, Fely and her children, Crasus, Jr. and Daphne, upon written interrogatories, before the consular officers of the Philippines in New York and California,

U.S.A, where the said witnesses reside. Despite the Orders[12] and Commissions[13] issued by the RTC to the Philippine Consuls of New York and California, U.S.A., to take the depositions of the witnesses upon written interrogatories, not a single deposition was ever submitted to the RTC. Taking into account that it had been over a year since respondent Crasus had presented his evidence and that Fely failed to exert effort to have the case progress, the RTC issued an Order, dated 05 October 1998, [14] considering Fely to have waived her right to present her evidence. The case was thus deemed submitted for decision. Not long after, on 30 October 1998, the RTC promulgated its Judgment declaring the marriage of respondent Crasus and Fely null and void ab initio, on the basis of the following findings The ground bearing defendants psychological incapacity deserves a reasonable consideration. As observed, plaintiffs testimony is decidedly credible. The Court finds that defendant had indeed exhibited unmistakable signs of psychological incapacity to comply with her marital duties such as striving for family unity, observing fidelity, mutual love, respect, help and support. From the evidence presented, plaintiff adequately established that the defendant practically abandoned him. She obtained a divorce decree in the United States of America and married another man and has establish [sic] another family of her own. Plaintiff is in an anomalous situation, wherein he is married to a wife who is already married to another man in another country. Defendants intolerable traits may not have been apparent or manifest before the marriage, the FAMILY CODE nonetheless allows the annulment of the marriage provided that these were eventually manifested after the wedding. It appears to be the case in this instance. Certainly defendants posture being an irresponsible wife erringly reveals her very low regard for that sacred and inviolable institution of marriage which is the foundation of human society throughout the civilized world. It is quite evident that the defendant is bereft of the mind, will and heart to comply with her marital obligations, such incapacity was already there at the time of the marriage in question is shown by defendants own attitude towards her marriage to plaintiff. In sum, the ground invoked by plaintiff which is defendants psychological incapacity to comply with the essential marital obligations which already existed at the time of the marriage in question has been satisfactorily proven. The evidence in herein case establishes the irresponsibility of defendant Fely Ada Rosal Iyoy, firmly. Going over plaintiffs testimony which is decidedly credible, the Court finds that the defendant had indeed exhibited unmistakable signs of such psychological incapacity to comply with her marital obligations. These are her excessive disposition to material things over and above the marital stability. That such incapacity was already there at the time of the marriage in question is shown by defendants own attitude towards her marriage to plaintiff. And for these reasons there is a legal ground to declare the marriage of plaintiff Crasus L. Iyoy and defendant Fely Ada Rosal Iyoy null and void ab initio.[15]

Petitioner Republic, believing that the afore-quoted Judgment of the RTC was contrary to law and evidence, filed an appeal with the Court of Appeals. The appellate court, though, in its Decision, dated 30 July 2001, affirmed the appealed Judgment of the RTC, finding no reversible error therein. It even offered additional ratiocination for declaring the marriage between respondent Crasus and Fely null and void, to wit Defendant secured a divorce from plaintiff-appellee abroad, has remarried, and is now permanently residing in the United States. Plaintiff-appellee categorically stated this as one of his reasons for seeking the declaration of nullity of their marriage Article 26 of the Family Code provides: Art. 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38. WHERE A MARRIAGE BETWEEN A FILIPINO CITIZEN AND A FOREIGNER IS VALIDLY CELEBRATED AND A DIVORCE IS THEREAFTER VALIDLY OBTAINED ABROAD BY THE ALIEN SPOUSE CAPACITATING HIM OR HER TO REMARRY, THE FILIPINO SPOUSE SHALL LIKEWISE HAVE CAPACITY TO REMARRY UNDER PHILIPPINE LAW. The rationale behind the second paragraph of the above-quoted provision is to avoid the absurd and unjust situation of a Filipino citizen still being married to his or her alien spouse, although the latter is no longer married to the Filipino spouse because he or she has obtained a divorce abroad. In the case at bench, the defendant has undoubtedly acquired her American husbands citizenship and thus has become an alien as well. This Court cannot see why the benefits of Art. 26 aforequoted can not be extended to a Filipino citizen whose spouse eventually embraces another citizenship and thus becomes herself an alien. It would be the height of unfairness if, under these circumstances, plaintiff would still be considered as married to defendant, given her total incapacity to honor her marital covenants to the former. To condemn plaintiff to remain shackled in a marriage that in truth and in fact does not exist and to remain married to a spouse who is incapacitated to discharge essential marital covenants, is verily to condemn him to a perpetual disadvantage which this Court finds abhorrent and will not countenance. Justice dictates that plaintiff be given relief by affirming the trial courts declaration of the nullity of the marriage of the parties.[16]

After the Court of Appeals, in a Resolution, dated 08 March 2002,[17] denied its Motion for Reconsideration, petitioner Republic filed the instant Petition before this Court, based on the following arguments/grounds I. incapacity. Abandonment by and sexual infidelity of respondents wife do not per se constitute psychological

II. The Court of Appeals has decided questions of substance not in accord with law and jurisprudence considering that the Court of Appeals committed serious errors of law in ruling that Article 26, paragraph 2 of the Family Code is inapplicable to the case at bar.[18]

In his Comment[19] to the Petition, respondent Crasus maintained that Felys psychological incapacity was clearly established after a full-blown trial, and that paragraph 2 of Article 26 of the Family Code of the Philippines was indeed applicable to the marriage of respondent Crasus and Fely, because the latter had already become an American citizen. He further questioned the personality of petitioner Republic, represented by the Office of the Solicitor General, to institute the instant Petition, because Article 48 of the Family Code of the Philippines authorizes the prosecuting attorney or fiscal assigned to the trial court, not the Solicitor General, to intervene on behalf of the State, in proceedings for annulment and declaration of nullity of marriages. After having reviewed the records of this case and the applicable laws and jurisprudence, this Court finds the instant Petition to be meritorious. I The totality of evidence presented during trial is insufficient to support the finding of psychological incapacity of Fely.

Article 36, concededly one of the more controversial provisions of the Family Code of the Philippines, reads ART. 36. A marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity becomes manifest only after its solemnization.

Issues most commonly arise as to what constitutes psychological incapacity. In a series of cases, this Court laid down guidelines for determining its existence. In Santos v. Court of Appeals,[20] the term psychological incapacity was defined, thus . . . [P]sychological incapacity should refer to no less than a mental (not physic al) incapacity that causes a party to be truly cognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage which, as so expressed by Article 68 of the Family Code, include their mutual obligations to live together, observe love, respect and fidelity and render help and support. There is hardly any doubt that the intendment of the law has been to confine the meaning of psychological incapacity to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. This psychological condition must exist at the time the marriage is celebrated [21]

The psychological incapacity must be characterized by (a) Gravity It must be grave or serious such that the party would be incapable of carrying out the ordinary duties required in a marriage; (b) Juridical Antecedence It must be rooted in the history of the party antedating the marriage, although the overt manifestations may emerge only after the marriage; and (c) Incurability It must be incurable or, even if it were otherwise, the cure would be beyond the means of the party involved.[22] More definitive guidelines in the interpretation and application of Article 36 of the Family Code of the Philippines were handed down by this Court in Republic v. Court of Appeals and Molina,[23] which, although quite lengthy, by its significance, deserves to be reproduced below (1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire Article on the Family, recognizing it as the foundation of the nation. It

decrees marriage as legally inviolable, thereby protecting it from dissolution at the whim of the parties. Both the family and marriage are to be protected by the state. The Family Code echoes this constitutional edict on marriage and the family and emphasizes their permanence, inviolability and solidarity. (2) The root cause of the psychological incapacity must be (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly explained in the decision. Article 36 of the Family Code requires that the incapacity must be psychological - not physical, although its manifestations and/or symptoms may be physical. The evidence must convince the court that the parties, or one of them, was mentally or psychically ill to such an extent that the person could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof. Although no example of such incapacity need be given here so as not to limit the application of the provision under the principle of ejusdem generis, nevertheless such root cause must be identified as a psychological illness and its incapacitating nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists. (3) The incapacity must be proven to be existing at the time of the celebration of the marriage. The evidence must show that the illness was existing when the parties exchanged their I do's. The manifestation of the illness need not be perceivable at such time, but the illness itself must have attached at such moment, or prior thereto. (4) Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute or even relative only in regard to the other spouse, not necessarily absolutely against everyone of the same sex. Furthermore, such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage, like the exercise of a profession or employment in a job (5) Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Thus, mild characteriological peculiarities, mood changes, occasional emotional outbursts cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage. (6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision. (7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, should be given great respect by our courts (8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor vinculicontemplated under Canon 1095.[24]

A later case, Marcos v. Marcos,[25] further clarified that there is no requirement that the defendant/respondent spouse should be personally examined by a physician or psychologist as a condition sine qua non for the declaration of nullity of marriage based on psychological incapacity. Such psychological incapacity, however, must be established by the totality of the evidence presented during the trial. Using the guidelines established by the afore-mentioned jurisprudence, this Court finds that the totality of evidence presented by respondent Crasus failed miserably to establish the alleged psychological incapacity of his wife Fely; therefore, there is no basis for declaring their marriage null and void under Article 36 of the Family Code of the Philippines. The only substantial evidence presented by respondent Crasus before the RTC was his testimony, which can be easily put into question for being self-serving, in the absence of any other corroborating evidence. He submitted only two other pieces of evidence: (1) the Certification on the recording with the Register of Deeds of the Marriage Contract between respondent Crasus and Fely, such marriage being celebrated on 16 December 1961; and (2) the invitation to the wedding of Crasus, Jr., their eldest son, in which Fely used her American husbands surname. Even considering the admissions made by Fely herself in her Answer to respondent Crasuss Complaint filed with the RTC, the evidence is not enough to convince this Court that Fely had such a grave mental illness that prevented her from assuming the essential obligations of marriage. It is worthy to emphasize that Article 36 of the Family Code of the Philippines contemplates downright incapacity or inability to take cognizance of and to assume the basic marital obligations; not a mere refusal, neglect or difficulty, much less, ill will, on the part of the errant spouse.[26] Irreconcilable differences, conflicting personalities, emotional immaturity and irresponsibility, physical abuse, habitual alcoholism, sexual infidelity or perversion, and abandonment, by themselves, also do not warrant a finding of psychological incapacity under the said Article.[27]

As has already been stressed by this Court in previous cases, Article 36 is not to be confused with a divorce law that cuts the marital bond at the time the causes therefore manifest themselves. It refers to a serious psychological illness afflicting a party even before the celebration of marriage. It is a malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the matrimonial bond one is about to assume.[28] The evidence may have proven that Fely committed acts that hurt and embarrassed respondent Crasus and the rest of the family. Her hot-temper, nagging, and extravagance; her abandonment of respondent Crasus; her marriage to an American; and even her flaunting of her American family and her American surname, may indeed be manifestations of her alleged incapacity to comply with her marital obligations; nonetheless, the root cause for such was not identified. If the root cause of the incapacity was not identified, then it cannot be satisfactorily established as a psychological or mental defect that is serious or grave; neither could it be proven to be in existence at the time of celebration of the marriage; nor that it is incurable. While the personal examination of Fely by a psychiatrist or psychologist is no longer mandatory for the declaration of nullity of their marriage under Article 36 of the Family Code of the Philippines, by virtue of this Courts ruling in Marcos v. Marcos,[29] respondent Crasus must still have complied with the requirement laid down in Republic v. Court of Appeals and Molina[30] that the root cause of the incapacity be identified as a psychological illness and that its incapacitating nature be fully explained. In any case, any doubt shall be resolved in favor of the validity of the marriage.[31] No less than the Constitution of 1987 sets the policy to protect and strengthen the family as the basic social institution and marriage as the foundation of the family.[32] II Article 26, paragraph 2 of the Family Code of the Philippines is not applicable to the case at bar.

According to Article 26, paragraph 2 of the Family Code of the Philippines 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 likewise have capacity to remarry under Philippine law. As it is worded, Article 26, paragraph 2, refers to a special situation wherein one of the couple getting married is a Filipino citizen and the other a foreigner at the time the marriage was celebrated. By its plain and literal interpretation, the said provision cannot be applied to the case of respondent Crasus and his wife Fely because at the time Fely obtained her divorce, she was still a Filipino citizen. Although the exact date was not established, Fely herself admitted in her Answer filed before the RTC that she obtained a divorce from respondent Crasus sometime after she left for the United States in 1984, after which she married her American husband in 1985. In the same Answer, she alleged that she had been an American citizen since 1988. At the time she filed for divorce, Fely was still a Filipino citizen, and pursuant to the nationality principle embodied in Article 15 of the Civil Code of the Philippines, she was still bound by Philippine laws on family rights and duties, status, condition, and legal capacity, even when she was already living abroad. Philippine laws, then and even until now, do not allow and recognize divorce between Filipino spouses. Thus, Fely could not have validly obtained a divorce from respondent Crasus. III The Solicitor General is authorized to intervene, on behalf of the Republic, in proceedings for annulment and declaration of nullity of marriages.

Invoking Article 48 of the Family Code of the Philippines, respondent Crasus argued that only the prosecuting attorney or fiscal assigned to the RTC may intervene on behalf of the State in proceedings for annulment or declaration of nullity of marriages; hence, the Office of the Solicitor General had no personality to file the instant Petition on behalf of the State. Article 48 provides ART. 48. In all cases of annulment or declaration of absolute nullity of marriage, the Court shall order the prosecuting attorney or fiscal assigned to it to appear on behalf of the State to take steps to prevent collusion between the parties and to take care that the evidence is not fabricated or suppressed.

That Article 48 does not expressly mention the Solicitor General does not bar him or his Office from intervening in proceedings for annulment or declaration of nullity of marriages. Executive Order No. 292, otherwise known as the Administrative Code of 1987, appoints the Solicitor General as the principal law officer and legal defender of the Government.[33] His Office is tasked to represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers.[34] The intent of Article 48 of the Family Code of the Philippines is to ensure that the interest of the State is represented and protected in proceedings for annulment and declaration of nullity of marriages by preventing collusion between the parties, or the fabrication or suppression of evidence; and, bearing in mind that the Solicitor General is the principal law officer and legal defender of the land, then his intervention in such proceedings could only serve and contribute to the realization of such intent, rather than thwart it. Furthermore, the general rule is that only the Solicitor General is authorized to bring or defend actions on behalf of the People or the Republic of the Philippines once the case is brought before this Court or the Court of Appeals. [35] While it is the prosecuting attorney or fiscal who actively participates, on behalf of the State, in a proceeding for annulment or declaration of nullity of marriage

before the RTC, the Office of the Solicitor General takes over when the case is elevated to the Court of Appeals or this Court. Since it shall be eventually responsible for taking the case to the appellate courts when circumstances demand, then it is only reasonable and practical that even while the proceeding is still being held before the RTC, the Office of the Solicitor General can already exercise supervision and control over the conduct of the prosecuting attorney or fiscal therein to better guarantee the protection of the interests of the State. In fact, this Court had already recognized and affirmed the role of the Solicitor General in several cases for annulment and declaration of nullity of marriages that were appealed before it, summarized as follows in the case of Ancheta v. Ancheta[36] In the case of Republic v. Court of Appeals [268 SCRA 198 (1997)], this Court laid down the guidelines in the interpretation and application of Art. 48 of the Family Code, one of which concerns the role of the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the State: (8) The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification, which will be quoted in the decision, briefly stating therein his reasons for his agreement or opposition, as the case may be, to the petition. The Solicitor General, along with the prosecuting attorney, shall submit to the court such certification within fifteen (15) days from the date the case is deemed submitted for resolution of the court. The Solicitor General shall discharge the equivalent function of the defensor vinculi contemplated under Canon 1095. [Id., at 213] This Court in the case of Malcampo-Sin v. Sin [355 SCRA 285 (2001)] reiterated its pronouncement in Republic v. Court of Appeals [Supra.] regarding the role of the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the State[37]

Finally, the issuance of this Court of the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages,[38] which became effective on 15 March 2003, should dispel any other doubts of respondent Crasus as to the authority of the Solicitor General to file the instant Petition on behalf of the State. The Rule recognizes the authority of the Solicitor General to intervene and take part in the proceedings for annulment and declaration of nullity of marriages before the RTC and on appeal to higher courts. The pertinent provisions of the said Rule are reproduced below Sec. 5. Contents and form of petition. (4) It shall be filed in six copies. The petitioner shall serve a copy of the petition on the Office of the Solicitor General and the Office of the City or Provincial Prosecutor, within five days from the date of its filing and submit to the court proof of such service within the same period. Sec. 18. Memoranda. The court may require the parties and the public prosecutor, in consultation with the Office of the Solicitor General, to file their respective memoranda in support of their claims within fifteen days from the date the trial is terminated. It may require the Office of the Solicitor General to file its own memorandum if the case is of significant interest to the State. No other pleadings or papers may be submitted without leave of court. After the lapse of the period herein provided, the case will be considered submitted for decision, with or without the memoranda. Sec. 19. Decision. (2) The parties, including the Solicitor General and the public prosecutor, shall be served with copies of the decision personally or by registered mail. If the respondent summoned by publication failed to appear in the action, the dispositive part of the decision shall be published once in a newspaper of general circulation. (3) The decision becomes final upon the expiration of fifteen days from notice to the parties. Entry of judgment shall be made if no motion for reconsideration or new trial, or appeal is filed by any of the parties, the public prosecutor, or the Solicitor General. Sec. 20. Appeal. (2) Notice of Appeal. An aggrieved party or the Solicitor General may appeal from the decision by filing a Notice of Appeal within fifteen days from notice of denial of the motion for reconsideration or new trial. The appellant shall serve a copy of the notice of appeal on the adverse parties.

Given the foregoing, this Court arrives at a conclusion contrary to those of the RTC and the Court of Appeals, and sustains the validity and existence of the marriage between respondent Crasus and Fely. At most, Felys abandonment, sexual infidelity, and bigamy, give respondent Crasus grounds to file for legal separation under Article 55 of the Family Code of the Philippines, but not for declaration of nullity of marriage under Article 36 of the same Code. While this Court commiserates with respondent Crasus for being continuously shackled to what is now a hopeless and loveless marriage, this is one of those situations where neither law nor society can provide the specific answer to every individual problem.[39] WHEREFORE, the Petition is GRANTED and the assailed Decision of the Court of Appeals in CA-G.R. CV No. 62539, dated 30 July 2001, affirming the Judgment of the RTC of Cebu City, Branch 22, in Civil Case No. CEB-20077, dated 30 October 1998, is REVERSED and SET ASIDE. The marriage of respondent Crasus L. Iyoy and Fely Ada Rosal-Iyoy remains valid and subsisting. SO ORDERED. FIRST DIVISION REPUBLIC OF THE PHILIPPINES, Petitioner, G.R. No. 154380

Present:

Davide, Jr., C.J., - versus (Chairman), Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ. CIPRIANO ORBECIDO III, Respondent. Promulgated: October 5, 2005 x --------------------------------------------------x

DECISION QUISUMBING, J.:

Given a valid marriage between two Filipino citizens, where one party is later naturalized as a foreign citizen and obtains a valid divorce decree capacitating him or her to remarry, can the Filipino spouse likewise remarry under Philippine law? Before us is a case of first impression that behooves the Court to make a definite ruling on this apparently novel question, presented as a pure question of law. In this petition for review, the Solicitor General assails the Decision[1] dated May 15, 2002, of the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and its Resolution[2] dated July 4, 2002 denying the motion for reconsideration. The courta quo had declared that herein respondent Cipriano Orbecido III is capacitated to remarry. The fallo of the impugned Decision reads: WHEREFORE, by virtue of the provision of the second paragraph of Art. 26 of the Family Code and by reason of the divorce decree obtained against him by his American wife, the petitioner is given the capacity to remarry under the Philippine Law. IT IS SO ORDERED.[3]

The factual antecedents, as narrated by the trial court, are as follows. On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United Church of Christ in the Philippines in Lam-an, Ozamis City. Their marriage was blessed with a son and a daughter, Kristoffer Simbortriz V. Orbecido and Lady Kimberly V. Orbecido. In 1986, Ciprianos wife left for the United States bringing along their son Kristoffer. A few years later, Cipriano discovered that his wife had been naturalized as an American citizen. Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce decree and then married a certain Innocent Stanley. She, Stanley and her child by him currently live at 5566 A. Walnut Grove Avenue, San Gabriel, California. Cipriano thereafter filed with the trial court a petition for authority to remarry invoking Paragraph 2 of Article 26 of the Family Code. No opposition was filed. Finding merit in the petition, the court granted the same. The Republic, herein petitioner, through the Office of the Solicitor General (OSG), sought reconsideration but it was denied. In this petition, the OSG raises a pure question of law: WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26 OF THE FAMILY CODE[4]

The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to the instant case because it only applies to a valid mixed marriage; that is, a marriage celebrated between a Filipino citizen and an alien. The proper remedy, according to the OSG, is to file a petition for annulment or for legal separation.[5] Furthermore, the OSG argues there is no law that governs respondents situation. The OSG posits that this is a matter of legislation and not of judicial determination.[6] For his part, respondent admits that Article 26 is not directly applicable to his case but insists that when his naturalized alien wife obtained a divorce decree which capacitated her to remarry, he is likewise capacitated by operation of law pursuant to Section 12, Article II of the Constitution.[7] At the outset, we note that the petition for authority to remarry filed before the trial court actually constituted a petition for declaratory relief. In this connection, Section 1, Rule 63 of the Rules of Court provides: RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES

Section 1. Who may file petitionAny person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. ...

The requisites of a petition for declaratory relief are: (1) there must be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) that the party seeking the relief has a legal interest in the controversy; and (4) that the issue is ripe for judicial determination.[8] This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between two Filipino citizens where one later acquired alien citizenship, obtained a divorce decree, and remarried while in the U.S.A. The interests of the parties are also adverse, as petitioner representing the State asserts its duty to protect the institution of marriage while respondent, a private citizen, insists on a declaration of his capacity to remarry. Respondent, praying for relief, has legal interest in the controversy. The issue raised is also ripe for judicial determination inasmuch as when respondent remarries, litigation ensues and puts into question the validity of his second marriage. Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code apply to the case of respondent? Necessarily, we must dwell on how this provision had come about in the first place, and what was the intent of the legislators in its enactment?

Brief Historical Background On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise known as the Family Code, which took effect on August 3, 1988. Article 26 thereof states:

All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35, 37, and 38.

On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph was added to Article 26. As so amended, it now provides: ART. 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38. Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (Emphasis supplied)

On its face, the foregoing provision does not appear to govern the situation presented by the case at hand. It seems to apply only to cases where at the time of the celebration of the marriage, the parties are a Filipino citizen and a foreigner. The instant case is one where at the time the marriage was solemnized, the parties were two Filipino citizens, but later on, the wife was naturalized as an American citizen and subsequently obtained a divorce granting her capacity to remarry, and indeed she remarried an American citizen while residing in the U.S.A. Noteworthy, in the Report of the Public Hearings[9] on the Family Code, the Catholic Bishops Conference of the Philippines (CBCP) registered the following objections to Paragraph 2 of Article 26: 1. The rule is discriminatory. It discriminates against those whose spouses are Filipinos who divorce them abroad. These spouses who are divorced will not be able to re-marry, while the spouses of foreigners who validly divorce them abroad can. This is the beginning of the recognition of the validity of divorce even for Filipino citizens. For those whose foreign spouses validly divorce them abroad will also be considered to be validly divorced here and can re-marry. We propose that this be deleted and made into law only after more widespread consultation. (Emphasis supplied.)

2.

Legislative Intent Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee, is to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo, Jr.[10] The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court held therein that a divorce decree validly obtained by the alien spouse is valid in the Philippines, and consequently, the Filipino spouse is capacitated to remarry under Philippine law. Does the same principle apply to a case where at the time of the celebration of the marriage, the parties were Filipino citizens, but later on, one of them obtains a foreign citizenship by naturalization? The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals.[11] In Quita, the parties were, as in this case, Filipino citizens when they got married. The wife became a naturalized American citizen in 1954 and obtained a divorce in the same year. The Court therein hinted, by way of obiter dictum, that a Filipino divorced by his naturalized foreign spouse is no longer married under Philippine law and can thus remarry. Thus, taking into consideration the legislative intent and applying the rule of reason, we hold that Paragraph 2 of Article 26 should be interpreted to include cases involving parties who, at the time of the celebration of the marriage were Filipino citizens, but later on, one of them becomes naturalized as a foreign citizen and obtains a divorce decree. The Filipino spouse should likewise be allowed to remarry as if the other party were a foreigner at the time of the solemnization of the marriage. To rule otherwise would be to sanction absurdity and injustice. Where the interpretation of a statute according to its exact and literal import would lead to mischievous results or contravene the clear purpose of the legislature, it should be construed according to its spirit and reason, disregarding as far as necessary the letter of the law. A statute may therefore be extended to cases not within the literal meaning of its terms, so long as they come within its spirit or intent.[12] If we are to give meaning to the legislative intent to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce is no longer married to the Filipino spouse, then the instant case must be deemed as coming within the contemplation of Paragraph 2 of Article 26. In view of the foregoing, we state the twin elements for the application of Paragraph 2 of Article 26 as follows:

1. 2.

There is a valid marriage that has been celebrated between a Filipino citizen and a foreigner; and A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry.

The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to remarry. In this case, when Ciprianos wife was naturalized as an American citizen, there was still a valid marriage that has been celebrated between her and Cipriano. As fate would have it, the naturalized alien wife subsequently obtained a valid divorce capacitating her to remarry. Clearly, the twin requisites for the application of Paragraph 2 of Article 26 are both present in this case. Thus Cipriano, the divorced Filipino spouse, should be allowed to remarry. We are also unable to sustain the OSGs theory that the proper remedy of the Filipino spouse is to file either a petition for annulment or a petition for legal separation. Annulment would be a long and tedious process, and in this particular case, not even feasible, considering that the marriage of the parties appears to have all the badges of validity. On the other hand, legal separation would not be a sufficient remedy for it would not sever the marriage tie; hence, the legally separated Filipino spouse would still remain married to the naturalized alien spouse. However, we note that the records are bereft of competent evidence duly submitted by respondent concerning the divorce decree and the naturalization of respondents wife. It is settled rule that one who alleges a fact has the burden of proving it and mere allegation is not evidence.[13] Accordingly, for his plea to prosper, respondent herein must prove his allegation that his wife was naturalized as an American citizen. Likewise, before a foreign divorce decree can be recognized by our own courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it.[14] Such foreign law must also be proved as our courts cannot take judicial notice of foreign laws. Like any other fact, such laws must be alleged and proved.[15] Furthermore, respondent must also show that the divorce decree allows his former wife to remarry as specifically required in Article 26. Otherwise, there would be no evidence sufficient to declare that he is capacitated to enter into another marriage. Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the Family Code (E.O. No. 209, as amended by E.O. No. 227), should be interpreted to allow a Filipino citizen, who has been divorced by a spouse who had acquired foreign citizenship and remarried, also to remarry. However, considering that in the present petition there is no sufficient evidence submitted and on record, we are unable to declare, based on respondents bare allegations that his wife, who was naturalized as an American citizen, had obtained a divorce decree and had remarried an American, that respondent is now capacitated to remarry. Such declaration could only be made properly upon respondents submission of the aforecited evidence in his favor. ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The assailed Decision dated May 15, 2002, and Resolution dated July 4, 2002, of the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 46631 November 16, 1939

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

MORAN, J.:

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of Manila against the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name, payment of which was being withheld by the company; and, for the recognition of his right to the control and disposal of said shares, to the exclusion of all others. To the complaint, the company filed its answer alleging, by way of defense, that the withholding of such dividends and the non-recognition of plaintiff's right to the disposal and control of the shares were due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the adverse claimants be made parties to the action and served with notice thereof by publication, and that thereafter all such parties be required to interplead and settle the rights among themselves. On September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in the shares of stock in question and excluded from any claim they assert thereon. Thereafter, summons by publication were served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to the amended complaint, and on December 10, 1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue, motion to quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court over her person. Petitioner's objection, motion and demurrer having been overruled as well as her motion for reconsideration of the order of denial, she now brought the present petition for certiorari, praying that the summons by publication issued against her be declared null and void, and that, with respect to her, respondent Judge be permanently prohibited from taking any action on the case. The controlling issue here involved is whether or not the Court of First Instance of Manila has acquired jurisdiction over the person of the present petitioner as a non-resident defendant, or, notwithstanding the want of such jurisdiction, whether or not said court may validly try the case. The parties have filed lengthy memorandums relying on numerous authorities, but the principles governing the question are well settled in this jurisdiction. Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or personal property within the Philippines in which said defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any interest therein, service of summons maybe made by publication. We have fully explained the meaning of this provision in El Banco Espaol Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the following rules: (1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter and over the persons of the parties. Jurisdiction over the subject-matter is acquired by concession of the sovereign authority which organizes a court and determines the nature and extent of its powers in general and thus fixes its jurisdiction with reference to actions which it may entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired by their voluntary appearance in court and their submission to its authority, or by the coercive power of legal process exerted over their persons. (2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot acquire jurisdiction over his person even if the summons be served by publication, for he is beyond the reach of judicial process. No tribunal established by one State can extend its process beyond its territory so as to subject to its decisions either persons or property located in another State. "There are many expressions in the American reports from which it might be inferred that the court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a non-resident cannot be acquired by publication and notice was never clearly understood even in the American courts until after the decision had been rendered by the Supreme Court of the United States in the leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of that decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by publication and notice is no longer open to question; and it is now fully established that a personal judgment upon constructive or substituted service against a non-resident who does not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted process, including service by publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the nonresident defendant has expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585; 35 L.R.A. [N.S.], 312.) (3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a Philippine court. Where, however, the action is in rem or quasi in rem in connection with property located in the Philippines, the court acquires jurisdiction over the res, and its jurisdiction over the person of the non-resident is non-essential. In order that the court may exercise power over the res, it is not necessary that the court should take actual custody of the property, potential custody thereof being sufficient. There is potential custody when, from the nature of the action brought, the power of the court over the property is impliedly recognized by law. "An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property , assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world." (4) As before stated, in an action in rem or quasi in rem against a non-resident defendant, jurisdiction over his person is non-essential, and if the law requires in such case that the summons upon the defendant be served by publication, it is merely to satisfy the constitutional requirement of due process. If any be said, in this connection, that "may reported cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in the case of this kind is a

question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by publication and personal service of process upon the defendant; and, as has already been suggested, prior to the decision of Pennoyer v. Neff (supra), the difference between the legal effects of the two forms of service was obscure. It is accordingly not surprising that the modes of expression which had already been moulded into legal tradition before that case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not affected by the peculiar languages in which the courts have expounded their ideas."lawphi1.net The reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-resident, as laid down by the Supreme Court of the United States in Pennoyer v. Neff, supra, may be found in a recognized principle of public law to the effect that "no State can exercise direct jurisdiction and authority over persons or property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. "Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of binding such persons or property in any other tribunals." Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.). When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principle that a "State, through its tribunals, may subject property situated within its limits owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled. Every State owes protection to its citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.) In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in a property located in the Philippines. That property consists in certain shares of stocks of the Benguet Consolidated Mining Company, a sociedad anonima, organized in the Philippines under the provisions of the Spanish Code of Commerce, with its principal office in the City of Manila and which conducts its mining activities therein. The situs of the shares is in the jurisdiction where the corporation is created, whether the certificated evidencing the ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that the action thus brought is quasi in rem, for while the judgement that may be rendered therein is not strictly a judgment in rem, "it fixes and settles the title to the property in controversy and to that extent partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court of the United States in Pennoyer v. Neff (supra); It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has for its object the disposition of the property, without reference to the title of individual claimants; but , in a large and more general sense, the terms are applied to actions between parties, where the direct object is to reach and dispose of property owned by them, or of some interest therein. The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of the non-resident. In order to satisfy the constitutional requirement of due process, summons has been served upon her by publication. There is no question as to the adequacy of publication made nor as to the mailing of the order of publication to the petitioner's last known place of residence in the United States. But, of course, the action being quasi in rem and notice having be made by publication, the relief that may be granted by the Philippine court must be confined to the res, it having no jurisdiction to render a personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur Perkins, no money judgment or other relief in personam is prayed for against the petitioner. The only relief sought therein is that she be declared to be without any interest in the shares in controversy and that she be excluded from any claim thereto. Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an action in personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims are or may be made upon a person for or relating to personal property, or the performance of an obligation or any portion thereof, so that he may be made subject to several actions by different persons, such person may bring an action against the conflicting claimants, disclaiming personal interest in the controversy, and the court may order them to interplead with one another and litigate their several claims among themselves, there upon proceed to determine their several claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that in connection with the shares of stock in question, conflicting claims were being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard, and prayed that these last two be made parties to the action and served with summons by publication, so that the three claimants may litigate their conflicting claims and settle their rights among themselves. The court has not issued an order compelling the conflicting claimants to interplead with one another and litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint including the other two claimants as parties defendant. The plaintiff did so, praying that the new defendants thus joined be excluded fro any interest in the shares in question, and it is upon this amended complaint that the court ordered the service of the summons by publication. It is therefore, clear that the publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the amended complaint wherein an action quasi in rem is alleged.

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

SECOND DIVISION

[G.R. No. 103493. June 19, 1997]

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents. DECISION MENDOZA, J.: This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court. Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari. The facts are as follows: On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA)[1] and Philsec Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducats obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by whic h it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat. As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the property at a price over its market value. Private respondent Perlas, who had allegedly appraised the property, was later dropped as counterdefendant.

ATHONA sought the recovery of damages and excess payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion was denied, they later filed a joint answer with counterclaim against private respondents and Edgardo V. Guevarra, PHILSECs own former president, for the rescission of the sale on the ground that the property had been overvalued. On March 13, 1990, the United States District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the ground that it was frivolous and [was] brought against him simply to humiliate and embarrass him. For this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra. On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary Attachment against private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal properties of private respondents.[2] Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement. On the other hand, private respondents 1488, Inc. and its president Daic filed a joint Special Appearance and Qualified Motion to Dismiss, contending that the action being in personam, extraterritorial service of summons by publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic, who is a non-resident alien. On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens, even as it noted that Ducat was not a party in the U.S. case. A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss. On March 9, 1988, the trial court[3] granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that the main factual element of the cause of action in this case which is the validity of the sale of real property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial court) The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic. Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants, despite the previous attachment of shares of stocks belonging to 1488, Inc. and Daic. On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus: The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFLs former name) and the Athona Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability of Ducats securities given in exchange for the Texas property. The recovery of a sum of money and damag es, for fraud purportedly committed by appellees, in overpricing the Texas land, constitute the action before the Philippine court, which likewise stems from the same Warranty Deed. The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S. court: The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A. In their present appeal, petitioners contend that:

1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE. 2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE. 3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NONRESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES. We will deal with these contentions in the order in which they are made. First. It is important to note in connection with the first point that while the present case was pending in the Court of Appeals, the United States District Court for the Southern District of Texas rendered judgment[5] in the case before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals. [6] Thus, the principal issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the U.S. court. Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign judgment cannot be given the effect of res judicata without giving them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules of Court, to wit: want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Petitioners contention is meritorious. While this Court has given the effect of res judicata to foreign judgments in several cases,[7] it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law.[8] It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a party and, as such, is subject to proof to the contrary.[9] Rule 39, 50 provides: SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as follows: (a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing; (b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd.,[10] which private respondents invoke for claiming conclusive effect for the foreign judgment in their favor, the foreign judgment was considered res judicata because this Court found from the evidence as well as from appellants own pleadings[11] that the foreign court did not make a clear mistake of law or fact or that its judgment was void for want of jurisdiction or because of fra ud or collusion by the defendants. Trial had been previously held in the lower court and only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of Washington to have the effect of res judicata in the case before the lower court. In the same vein, in Philippine International Shipping Corp. v. Court of Appeals,[12] this Court held that the foreign judgment was valid and enforceable in the Philippines there being no showing that it was vitiated by want of notice to the party, collusion, fraud or clear mistake of law or fact. The prima facie presumption under the Rule had not been rebutted. In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata. As the trial court stated in its disputed order dated March 9, 1988: On the plaintiffs claim in its Opposition that the causes of action of this case and the pending case in the United States are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the case pending before the USA Court, were identical. (emphasis added) It was error therefore for the Court of Appeals to summarily rule that petitioners action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals.[13] Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the appellate courts ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff against whom

it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a separate proceeding. This is plainly untenable. It has been held therefore that: [A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative relief is being sought. Hence, in the interest of justice, the complaint should be considered as a petition for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if applicable. [14] Accordingly, to insure the orderly administration of justice, this case and Civil Case No. consolidated.[15] After all, the two have been filed in the Regional Trial Court of Makati, albeit in different assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign judgment and succeed in doing so may they proceed with their action against private respondents. 92-1070 should be salas, this case being 134 of Judge Ignacio only in the event they

Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non conveniens.[16] The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance.[17] In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case. Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among others, the property of the defendant has been attached within the Philippines. [18] It is not disputed that the properties, real and personal, of the private respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.[19] Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main judgment under consideration in Civil Case No. 16563. The separability of Guevarras claim is not only admitted by petitioners,[20] it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563.[21] Hence, the TRO should be lifted and Civil Case No. 921445 allowed to proceed. WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in accordance with this decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED . SO ORDERED. Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

Republic of the Philippines 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 respondents money claims.5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and dismissed respondents complaint on the ground of lack of jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a Resolution dated 26 November 1997. The Resolution became final and executory on 09 November 1998. On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7 docketed as Civil 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 respondents claim, it was a foreign corporation duly licensed to do business in the Philippines and denied entering into any arrangement with respondent or paying the latter any sum of money. Petitioner also denied combining with BMSI and RUST for the purpose of assuming the alleged obligation of the said companies. 9 Petitioner also referred to the NLRC decision which disclosed that per the written agreement between respondent and BMSI and RUST, denominated as "Special Sales Representative Agreement," the rights and obligations of the parties shall be governed by the laws of the State of Connecticut.10Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way of compulsory counterclaim.11 On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the complaint on grounds of forum non conveniens and failure to state a cause of action. Respondent opposed the same. Pending the resolution of the omnibus motion, the deposition of Walter Browning was taken before the Philippine Consulate General in Chicago.13 In an Order14 dated 13 September 2000, the RTC denied petitioners omnibus motion. The trial court held that the factual allegations in the complaint, assuming the same to be admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled that the principle of forum non conveniens was inapplicable because the trial 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 petitioners motion. Thus, it filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from conducting further proceedings.20 On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the petition for certiorari for lack of merit. It also denied petitioners motion for reconsideration in the assailed Resolution issued on 10 March 2004. 22 The appellate court held that although the trial court should not have confined itself to the allegations in the complaint and should have also considered evidence aliunde in resolving petitioners omnibus motion, it found the evidence presented by petitioner, that is, the deposition of Walter Browning, insufficient for purposes of determining whether the complaint failed to state a cause of action. The appellate court also stated that it could not rule one way or the other on the issue of whether the corporations, including petitioner, named as defendants in the case had indeed merged together based solely on the evidence presented by respondent. Thus, it held that the issue should be threshed out during trial.23 Moreover, the appellate court deferred to the discretion of the trial court when the latter decided not to desist from assuming jurisdiction on the ground of the inapplicability of the principle of forum non conveniens. Hence, this petition raising the following issues: WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION AGAINST RAYTHEON INTERNATIONAL, INC. WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON CONVENIENS.24 Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino Padua Law Office, counsel on record for respondent, manifested that the lawyer handling the case, Atty. Rogelio Karagdag, had severed relations with the law firm even

before the filing of the instant petition and that it could no longer find the whereabouts of Atty. Karagdag or of respondent despite diligent efforts. In a Resolution25 dated 20 November 2006, the Court resolved to dispense with the filing of a comment. The instant petition lacks merit. Petitioner mainly asserts that the written contract between respondent and BMSI included a valid choice of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also mentions the presence of foreign elements in the dispute namely, the parties and witnesses involved are American corporations and citizens and the evidence to be presented is located outside the Philippines that renders our local courts inconvenient forums. Petitioner theorizes that the foreign elements of the dispute necessitate the immediate application of the doctrine of forum non conveniens. Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice of law, and recognition and enforcement of judgments. Thus, in the instances27 where the Court held that the local judicial machinery was adequate to resolve controversies with a foreign element, the following requisites had to be proved: (1) that the Philippine Court is one to which the parties may conveniently resort; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine Court has or is likely to have the power to enforce its decision.28 On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine court and where the court has jurisdiction over the subject matter, the parties and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or the convenience of the parties point to a foreign forum. This is an exercise of sovereign prerogative of the country where the case is filed.29 Jurisdiction over the nature and subject matter of an action is conferred by the Constitution and the law30 and by the material allegations in the complaint, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.31 Civil Case No. 1192-BG is an action for damages arising from an alleged breach of contract. Undoubtedly, the nature of the action and the amount of damages prayed are within the jurisdiction of the RTC. As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as party plaintiff) upon the filing of the complaint. On the other hand, jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary appearance in court.32 That the subject contract included a stipulation that the same shall be governed by the laws of the State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to both parties.33The 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 Petitioners averments of the foreign elements in the instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved. Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a factual determination; hence, it is more properly considered as a matter of defense. While it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance.35 Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign elements. In the same manner, the Court defers to the sound discretion of the lower courts because their findings are binding on this Court. Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action against petitioner. Failure to state a cause of action refers to the insufficiency of allegation in the pleading.36 As a general rule, the elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded.37 The complaint alleged that petitioner had combined with BMSI and RUST to function as one company. Petitioner contends that the deposition of Walter Browning rebutted this allegation. On this score, the resolution of the Court of Appeals is instructive, thus: x x x Our examination of the deposition of Mr. Walter Browning as well as other documents produced in the hearing shows that these evidence aliunde are not quite sufficient for us to mete a ruling that the complaint fails to state a cause of action. Annexes "A" to "E" by themselves are not substantial, convincing and conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC) assumed the warranty obligations of defendant Rust International in the Makar Port Project in General Santos City, after Rust International ceased to exist after being absorbed by REC. Other documents already submitted in evidence are likewise meager to preponderantly conclude that Raytheon International, Inc., Rust

International[,] Inc. and Brand Marine Service, Inc. have combined into one company, so much so that Raytheon International, Inc., the surviving company (if at all) may be held liable for the obligation of BMSI to respondent Rouzie for unpaid commissions. Neither these documents clearly speak otherwise.38 As correctly pointed out by the Court of Appeals, the question of whether petitioner, BMSI and RUST merged together requires the presentation of further evidence, which only a full-blown trial on the merits can afford. WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 67001 are hereby AFFIRMED. Costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT FIRST DIVISION G.R. No. 120077 October 13, 2000

THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G. SANTOS,respondents. PARDO, J.: The case before the Court is a petition for certiorari1 to annul the following orders of the National Labor Relations Commission (hereinafter referred to as "NLRC") for having been issued without or with excess jurisdiction and with grave abuse of discretion: 2 (1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution of August 28, 1992.4 The questioned order declared that the NLRC, not the Philippine Overseas Employment Administration (hereinafter referred to as "POEA"), had jurisdiction over private respondent's complaint; (2) Decision of December 15, 1994.5 Directing petitioners to jointly and severally pay private respondent twelve thousand and six hundred dollars (US$ 12,600.00) representing salaries for the unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00) as extra four months salary for the two (2) year period of his contract, three thousand six hundred dollars (US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight hundred dollars (US$19,800.00) or its peso equivalent and attorney's fees amounting to ten percent (10%) of the total award; and (3) Order of March 30, 1995.6 Denying the motion for reconsideration of the petitioners. In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People's Republic of China and later terminated due to retrenchment. Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila Hotel International Company, Limited (hereinafter referred to as "MHICL"). When the case was filed in 1990, MHC was still a government-owned and controlled corporation duly organized and existing under the laws of the Philippines. MHICL is a corporation duly organized and existing under the laws of Hong Kong.7 MHC is an "incorporator" of MHICL, owning 50% of its capital stock.8 By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company Limited), MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China. Now the facts. During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor Buenio, a friend of his.

Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary and increased benefits. The position was slated to open on October 1, 1988.11 On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer. On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was acceptable, to return the same to Mr. Henk in Manila, together with his passport and two additional pictures for his visa to China. On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30, 1988, under the pretext that he was needed at home to help with the family's piggery and poultry business. On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter. Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4, 1988) and notified them that he was going to arrive in Manila during the first week of July 1988. The employment contract of June 4, 1988 stated that his employment would commence September 1, 1988 for a period of two years.12 It provided for a monthly salary of nine hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year. 13 On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press. On July 1, 1988, respondent Santos arrived in Manila. On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace Hotel. 14 Subsequently, respondent Santos signed an amended "employment agreement" with the Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The Vice President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the employment agreement under the word "noted". From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned to China and reassumed his post on July 17, 1989. On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten note that respondent Santos be given one (1) month notice of his release from employment. On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that his employment at the Palace Hotel print shop would be terminated due to business reverses brought about by the political upheaval in China. 15 We quote the letter:16 "After the unfortunate happenings in China and especially Beijing (referring to Tiannamen Square incidents), our business has been severely affected. To reduce expenses, we will not open/operate printshop for the time being. "We sincerely regret that a decision like this has to be made, but rest assured this does in no way reflect your past performance which we found up to our expectations." "Should a turnaround in the business happen, we will contact you directly and give you priority on future assignment." On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and paid all benefits due him, including his plane fare back to the Philippines. On October 3, 1989, respondent Santos was repatriated to the Philippines. On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt, demanding full compensation pursuant to the employment agreement. On November 11, 1989, Mr. Shmidt replied, to wit:17 His service with the Palace Hotel, Beijing was not abruptly terminated but we followed the one-month notice clause and Mr. Santos received all benefits due him. "For your information the Print Shop at the Palace Hotel is still not operational and with a low business outlook, retrenchment in various departments of the hotel is going on which is a normal management practice to control costs.

"When going through the latest performance ratings, please also be advised that his performance was below average and a Chinese National who is doing his job now shows a better approach. "In closing, when Mr. Santos received the letter of notice, he hardly showed up for work but still enjoyed free accommodation/laundry/meals up to the day of his departure." On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC). He prayed for an award of nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents. The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before the Labor Arbiter.18 On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus: 19 "WHEREFORE, judgment is hereby rendered: "1. directing all the respondents to pay complainant jointly and severally; "a) $20,820 US dollars or its equivalent in Philippine currency as unearned salaries; "b) P50,000.00 as moral damages; "c) P40,000.00 as exemplary damages; and "d) Ten (10) percent of the total award as attorney's fees. "SO ORDERED." On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over the case. On August 28, 1992, the NLRC promulgated a resolution, stating:20 "WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for want of jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA. "SO ORDERED." On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted resolution. He argued that the case was not cognizable by the POEA as he was not an "overseas contract worker."21 On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was retrenched or dismissed.22 On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the testimonial and documentary evidence presented to and heard by him.23 Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera.24 On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that respondent Santos was illegally dismissed from employment and recommended that he be paid actual damages equivalent to his salaries for the unexpired portion of his contract.26 On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:27 "WHEREFORE, finding that the report and recommendations of Arbiter de Vera are supported by substantial evidence, judgment is hereby rendered, directing the respondents to jointly and severally pay complainant the following computed contractual benefits: (1) US$12,600.00 as salaries for the unexpired portion of the parties' contract; (2) US$3,600.00 as extra four (4) months salary for the two (2) years period (sic) of the parties' contract; (3) US$3,600.00 as "14th month pay" for the aforesaid two (2) years contract stipulated by the parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorney's fees of 10% of complainant's total award.

"SO ORDERED." On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de Vera's recommendation had no basis in law and in fact.28 On March 30, 1995, the NLRC denied the motion for reconsideration.29 Hence, this petition.30 On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a temporary restraining order and/or writ of preliminary injunction and a motion for the annulment of the entry of judgment of the NLRC dated July 31, 1995.31 On November 20, 1995, the Court denied petitioner's urgent motion. The Court required respondents to file their respective comments, without giving due course to the petition.32 On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the petition and its annexes, they can not defend and sustain the position taken by the NLRC in its assailed decision and orders. The Solicitor General prayed that he be excused from filing a comment on behalf of the NLRC33 On April 30,1996, private respondent Santos filed his comment.34 On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the NLRC to file its own comment to the petition.35 On January 7, 1997, the NLRC filed its comment. The petition is meritorious. I. Forum Non-Conveniens The NLRC was a seriously inconvenient forum. We note that the main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the Philippines has with the case is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases involving our citizens can be tried here. The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then employed. He was hired without the intervention of the POEA or any authorized recruitment agency of the government.36 Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision.37 The conditions are unavailing in the case at bar. Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents of the case from the time of recruitment, to employment to dismissal occurred outside the Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither .are they "doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines. No power to determine applicable law. Neither can an intelligent decision be made as to the law governing the employment contract as such was perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of the place where the contract was made).38 The employment contract was not perfected in the Philippines. Respondent Santos signified his acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the People's Republic of China. No power to determine the facts. Neither can the NLRC determine the facts surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People's Republic of China. The NLRC was not in a position to determine whether the Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to justify respondent Santos' retrenchment. Principle of effectiveness, no power to execute decision. Even assuming that a proper decision could be reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not even served with summons. Jurisdiction over its person was not acquired.

This is not to say that Philippine courts and agencies have no power to solve controversies involving foreign employers. Neither are we saying that we do not have power over an employment contract executed in a foreign country . If Santos were an "overseas contract worker", a Philippine forum, specifically the POEA, not the NLRC, would protect him.39 He is not an "overseas contract worker" a fact which he admits with conviction.40 Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's decision cannot be sustained. II. MHC Not Liable Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot be held liable. True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is not enough to pierce the veil of corporate fiction between MHICL and MHC. Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is done only when a corporation is a mere alter ego or business conduit of a person or another corporation. In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities." The tests in determining whether the corporate veil may be pierced are: First, the defendant must have control or complete domination of the other corporation's finances, policy and business practices with regard to the transaction attacked. There must be proof that the other corporation had no separate mind, will or existence with respect the act complained of. Second, control must be used by the defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty must be the proximate cause of the injury or loss complained of. The absence of any of the elements prevents the piercing of the corporate veil. 43 It is basic that a corporation has a personality separate and distinct from those composing it as well as from that of any other legal entity to which it may be related.44 Clear and convincing evidence is needed to pierce the veil of corporate fiction. 45 In this case, we find no evidence to show that MHICL and MHC are one and the same entity. III. MHICL not Liable Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract with the Palace Hotel. This fact fails to persuade us. First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed the employment contract as a mere witness. He merely signed under the word "noted". When one "notes" a contract, one is not expressing his agreement or approval, as a party would. 46 In Sichangco v. Board of Commissioners of Immigration,47 the Court recognized that the term "noted" means that the person so noting has merely taken cognizance of the existence of an act or declaration, without exercising a judicious deliberation or rendering a decision on the matter. Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the document is that which, "in a deed or other formal instrument is that part which comes after the recitals, or where there are no recitals, after the parties (emphasis ours)."48 As opposed to a party to a contract, a witness is simply one who, "being present, personally sees or perceives a thing; a beholder, a spectator, or eyewitness."49 One who "notes" something just makes a "brief written statement"50 a memorandum or observation. Second, and more importantly, there was no existing employer-employee relationship between Santos and MHICL. In determining the existence of an employer-employee relationship, the following elements are considered:51 "(1) the selection and engagement of the employee; "(2) the payment of wages; "(3) the power to dismiss; and "(4) the power to control employee's conduct." MHICL did not have and did not exercise any of the aforementioned powers. It did not select respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of employment were negotiated and finalized through correspondence between respondent Santos, Mr. Schmidt and Mr.

Henk, who were officers and representatives of the Palace Hotel and not MHICL. Neither did respondent Santos adduce any proof that MHICL had the power to control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos' services. Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is no proof that MHICL "supplied" respondent Santos or even referred him for employment to the Palace Hotel. Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to pierce the corporate veil between MHICL and the Palace Hotel. IV. Grave Abuse of Discretion Considering that the NLRC was forum non-conveniens and considering further that no employer-employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No. 00-02-01058-90. Labor Arbiters have exclusive and original jurisdiction only over the following:53 "1. Unfair labor practice cases; "2. Termination disputes; "3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; "4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations; "5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and "6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement." In all these cases, an employer-employee relationship is an indispensable jurisdictional requirement. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employeremployee relationship which can be resolved by reference to the Labor Code, or other labor statutes, or their collective bargaining agreements.54 "To determine which body has jurisdiction over the present controversy, we rely on the sound judicial principle that jurisdiction over the subject matter is conferred by law and is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein."55 The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His failure to dismiss the case amounts to grave abuse of discretion.56 V. The Fallo WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90). No costs. SO ORDERED. Davide, Jr., C .J ., Puno, Kapunan, Pardo and Ynares-Santiago, JJ ., concur.

EN BANC [G.R. No. L-6897. November 29, 1956.]

In the Matter of the Claim for Attorneys Fees. CLARO M. RECTO, claimant-Appellee, vs. ESPERANZA P. DE HARDEN and FRED M. HARDEN, Defendants-Appellants.

DECISION CONCEPCION, J.: This is an appeal taken by Esperanza P. de Harden and Fred M. Harden from a decision of the Court of First Instance of Manila, the pertinent part of which is of the following tenor:chanroblesvirtuallawlibrary. The contingent fee to which the claimant is entitled under paragraph 3 of the contract, Exhibit JJJ or 20, is 20% of P1,920, 554.85 or the sum of P384,110.97. WHEREFORE, this Court hereby approves the recommendation of the Commissioner with the above -stated modification, and finds that Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS AND NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of Esperanza P. de Hardens share in the conjugal properties owned by her and her husband, Fred M. Harden, as contingent fee stipulated in paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20, and the said Esperanza P. de Harden is hereby ordered to pay the said amount above-stated. It appears that sometime in July, 1941, Appellant, Mrs. Harden, and Appellee, Claro M. Recto, executed the following:chanroblesvirtuallawlibrary CONTRACT OF PROFESSIONAL SERVICES KNOW ALL MEN BY THESE PRESENTS:chanroblesvirtuallawlibrary That I, ESPERANZA PEREZ DE HARDEN, of age, married to Fred M. Harden, and temporarily residing in the Philippines, with addr ess at 534 Sales Street, Manila, have engaged the services of Attorney Claro M. Recto to appear and act as my counsel in the action which I will file against my husband, Fred M. Harden, for the purpose of securing an increase in the amount of support being received by me from the conjugal partnership of myself and said Fred M. Harden, and for the purpose likewise of protecting and preserving my rights in the properties of the said conjugal partnership, in contemplation of the divorce suit which I intent to file against him in the competent Court of California and of the liquidation of the conjugal partnership between us, this contract of services to be under the following conditions:chanroblesvirtuallawlibrary 1. That in lieu of retainer fee, which under the circumstances I am not in a position to pay, I hereby agree to pay Attorney Claro M. Recto, such payment to be made monthly, during the pendency of the litigation and until the termination of the same, twenty-five (25%) per cent of the total increase in allowance or pension which may be awarded to me by the court over and above the amount of P1,500.00 which I now receive monthly from Defendant Fred M. Harden out of the funds of the conjugal partnership; chan roblesvirtualawlibraryProvided, that should the case be terminated or an amicable settlement thereof be arrived at by the parties before the expiration of two years from the date of the filing of the complaint, I shall continue to pay the said twenty-five (25%) per cent up to the end of said period. 2. That the aforesaid monthly payments shall be in addition to whatever amount may be adjudged by the court against the Defendant Fred M. Harden or against the conjugal partnership by way of litis expense, that is, attorneys fees chargeable as expenses of litigation. 3. That as full and complete satisfaction of the fees of Attorney Claro M. Recto in connection with the case above referred to, and said case being for the purposes aforestated, that is, to secure an increase in the amount of support I now receive as well as to protect and preserve my rights and interest in the properties of the conjugal partnership, in contemplation of divorce and of the liquidation of said partnership, I hereby agree to pay said Attorney Claro M. Recto twenty (20%) per cent of the value of the share and participation which I may receive in the funds and properties of the said conjugal partnership of myself and DefendantFred M. Harden, as a result of the liquidation thereof either by death, divorce, judicial separation, compromise or by any means or method by virtue of which said partnership is or may be liquidated. 4. All expenses in connection with the litigation are to be for my account, but the same may be advanced by Attorney Claro M. Recto, to be reimbursed to him either from the money which I receive by way of support or from the funds of the conjugal partnership. 5. It is hereby understood that this contract includes the services of Attorney Claro M. Recto in connection with the securing of the liquidation of the properties and assets of the conjugal partnership of myself and Fred M. Harden, upon dissolution of said partnership or for any other cause mentioned in Paragraph (3) hereof. IN WITNESS WHEREOF, I have signed these presents in the City _____ of Manila, Philippines this _______ day of July, 1941. s/ Esperanza P. de Harden t/ ESPERANZA P. DE HARDEN ACCEPTED:chanroblesvirtuallawlibrary s/ Claro M. Recto t/ CLARO M. RECTO In compliance therewith, on July 12, 1941, the Appellee, as counsel for Mrs. Harden, commenced Civil Case No. 59634 of the Court of First Instance of Manila, entitled Esperanza P. de Harden vs. Fred M. Harden and Jose Salumbides. In the complaint there in filed, it was prayed, among other things:chanroblesvirtuallawlibrary (a) that Mrs. Harden be given the exclusive administration of the business and all properties of the conjugal partnership of Mr. and Mrs. Harden; chan roblesvirtualawlibrary(b) that, in the event of denial of this prayer, the Defendants be ordered to inform her of everything pertaining to the administration of said business and properties, as well as to render accounts thereof and to permit her to examine the books and records pertinent thereto; chan roblesvirtualawlibrary(c) that Mr. Harden be ordered to account to Mrs. Harden, and to return to this jurisdiction, the sum of P449,015.44 allegedly withdrawn by him from the Philippines or sent by him to Hongkong on April 1, 1941; chan

roblesvirtualawlibrary(d) that Defendant Salumbides be ordered to account for all moneys, amounting to P285,000.00, belonging to the business and assets of said conjugal partnership and deposited by him in a safety box, either in his name, or in that of Antonio Wilson, from January 23 to December 23, 1940; chan roblesvirtualawlibrary(e) that the transfer, in the name of Salumbides, of certain shares of stock, allegedly belonging to the conjugal partnership, be rescinded and said Defendant ordered to transfer said shares of stock in the name of Mrs. Harden or in that of Mr. and Mrs. Harden, should Mr. Harden be allowed to continue as administrator of said partnership; chan roblesvirtualawlibrary( f ) that the transfer, made by Mr. Harden and/or byDefendant Salumbides, as his attorney-in-fact, of 36,000 shares of stock of the Angelo Mining Company, to some residents of Hongkong, be rescinded and said shares returned to the assets of the conjugal partnership and placed in the name of Mr. and Mrs. Harden; chan roblesvirtualawlibrary(g) that the monthly allowance of Mrs. Harden be increased from P1,500 to P15,000; chan roblesvirtualawlibrary(h) that, pending final decision, Mr. Harden be ordered to increase the allowance or pension of Mrs. Harden and their daughter Sarah Elizabeth to P10,000 a month; chan roblesvirtualawlibraryand (i) that a writ of preliminary injunction be issued restraining the Defendants from disposing of the assets of the conjugal partnership in fraud of Mrs. Harden. By an order dated July 12, 1941, the court authorized the issuance of said writ, upon the filing of the corresponding bond. It appears that, pursuant to an agreement submitted by both parties, and with a view to avoiding unnecessary embarrassment, restraint or inconvenience in the financial operations of the business enterprises affected by said writ of preliminary injunction, the same was amended by an order dated July 19, 1941, in the sense that. cralaw without prejudicing in any way the rights of the parties in this case, a separate bank account be established in the Chartered Bank of India, Australia and China, of Manila, and all transactions in connection with the aforesaid businesses passed through that account by Mr. Harden or his duly authorized representative, who at present is Mr. Salumbides, without the necessity of securing a particular order from this Court on each occasion; chan roblesvirtualawlibrarythat the present funds in the Philippine National Bank in the name of Plaza Lunch and Fred M. Harden be utilized for the purpose of starting said special bank account in the Chartered Bank of India, Australia and China; chan roblesvirtualawlibrarythat all income from the aforesaid businesses be deposited in this special bank account and no checks be drawn upon the same, except to pay the necessary overhead and running expenses including purchases of tobacco, merchandise, etc., required for the proper operation of said businesses; chan roblesvirtualawlibrarythat a new set of books be opened by Mr. Harden or his duly authorized representative covering all business transactions passed through said special bank account and the same be opened for inspection by the Plaintiffs duly authorized representative. The order of injunction of July 12, 1941, is modified only to the above extent, and in all other respects is maintained. Subsequently, the Philippines was invaded by the Japanese and placed under military occupation. Then came the liberation, in the course of which the records of this case were destroyed. On October 23, 1946, said records were reconstituted at the instance of Appelleeherein. Thereafter, the proceedings were resumed and, in due course, the Court of First Instance of Manila rendered, on or about October 31, 1949, a decision the dispositive part of which we quote:chanroblesvirtuallawlibrary In view of the foregoing considerations, this court finds and so holds that (a) Fred M. Harden abandoned his domicile of origin in New Jersey and established a domicile of choice in Manila, Philippines, since 1901; (b) The matrimonial domicile of Fred M. Harden and Esperanza P. de Harden was established in Manila, Philippines, from the date of their marriage on December 14, 1917; (c) Since they did not execute any antenuptial contract before their marriage, all the properties, real or personal, acquired by either or both of them on and after December 14, 1917, up to the present, over and above the sum of P20,000.00 representing Fred M. Hardens capital, are hereby declared conjugal properties; (d) The total amount of P1,944,794.37 representing deposits in safety deposit boxes in the name of Jose Salumbides, the selling price of the house in Los Angeles, California, and the pre-war and post-war remittances abroad of Fred M. Harden, from which has already been deducted the sum of P160,000.00 covering payments for deficiency Federal income taxes and attorneys fees, both in the tax case and the present one, is hereby declared chargeable to the share of Defendant Harden and deductible from whatever participation he may still have in the said conjugal partnership upon the liquidation thereof, upon his failure to return and deposit them in the name of the Plaza Lunch with the Manila branch of the Chartered Bank of India, Australia and China up to the time this decision shall become final; (e) A conjugal lien be annotated in the original and owners duplicate of Transfer Certificates of Title Nos. 2439 3, 52436 and 54911 of the Register of Deeds of Manila and in Original Certificate of Title No. 2292 of Quezon Province, and on all the certificates of shares belonging to said conjugal partnership, as well as in the corresponding books of the companies or corporations issuing them, whereby it will be made to appear that any subsequent alienation or encumbrance of said properties by Fred M. Harden alone or his representative without the consent of his wife will be deemed fraudulent and subject to revocation or cancellation for being in fraud and prejudicial to the right of Esperanza P. de Harden; ( f ) Within a period of fifteen (15) days after this decision shall have become final, Fred M. Harden and Esperanza P. de Harden are hereby ordered to execute a document to be approved by this court creating and express active trust upon the remaining cash assets and income of the conjugal partnership in the Philippines, whereby the Philippine Trust Company, with offices in Manila, will act as trustee, subject to the right of Fred M. Harden to receive therefrom the sum of P2,500,00 a month by way of allowance and an equal amount for the Plaintiff as separate support and maintenance; (g) Within thirty (30) days after this decision shall have become final, Fred M. Harden shall inform the Plaintiff of all the properties and businesses of the conjugal partnership, be they in the Philippines or abroad, and render a true and complete accounting of the earnings and profits thereof; (h) The Plaintiff is entitled to litis expensae in the amount of P175,000.00 for services rendered by her counsel up to the rendition of this judgment, which Fred M. Harden or the herein receiver is ordered to pay within a period of fifteen (15) days after this decision has become final; chan roblesvirtualawlibraryand

(i) The writ of preliminary injunction of July 12, 1941, is hereby declared permanent and the order of receivership of November 20, 1946, is hereby maintained, but said auxiliary remedies will be automatically lifted upon the conclusion of the annotation of the conjugal lien and the execution of the deed of trust above mentioned. Without costs. IT IS SO ORDERED. The Defendants appealed from said decision to this Court, where the case was docketed as case No. L-3687. While the appeal was thus pending before us, herein Appellee filed a manifestation and a motion, both dated February 20, 1952. In said manifestation, Appelleestated that Mrs. Harden had instructed him, by letter, to discontinue all proceedings relative to said ca se, vacate all orders and judgments rendered therein, and abandon and nullify all her claims to the conjugal partnership existin g between her and Mr. Harden, in accordance with several instruments dated January 29, 1952, and executed without the knowledg e, advise and consent of said Appellee, as counsel for Mrs. Harden, whereby:chanroblesvirtuallawlibrary (1) Mr. and Mrs. Harden had purportedly agreed to settle their differences in consideration of the sum of $5,000 paid by Mr. Harden to Mrs. Harden, and a monthly pension of P500 to be paid by him to her; chan roblesvirtualawlibrary(2) Mr. Harden had created a trust fund of $20,000 from which said monthly pension of $500 would be taken; chan roblesvirtualawlibraryand (3) Mr. and Mrs. Harden had mutually released and forever discharged each other from all actions, debts, duties, accounts, demands and claims to the conjugal partnership, in consideration of the sum of $1. It was further asserted, in Appellees manifestation, that the purpose of the said instruments, executed by Mr. and Mrs. Harden, was to defeat the claim of the former for attorneys fees, for which reason, he prayed, in his aforementioned motion, that a) Pending the resolution of this motion, the receiver appointed herein be authorized to continue holding the properties above mentioned in his custody in order not to defeat the undersigneds inchoate lien on them; b) A day set aside to receive the evidence of the undersigned and those of the Plaintiff and the Defendant Fred M. Harden, in order to determine the amount of fees due to the undersigned, by the appointment of a referee or commissioner for the reception of such c) After due hearing, the undersigned be declared entitled to the sum of P400,000.00 as his fees for services rendered in behalf of the Plaintiff in this case, under paragraph 3 of the contract, Annex A, and to that end a charging lien therefore be established upon the properties above-mentioned; d) And the receiver be ordered to pay to the undersigned the full amount of the fees to which the latter is found to be entitled. Counsel for the Defendants-Appellants, in turn, moved for the dismissal of the case, to whichAppellee objected. Acting upon the issues raised in such motion for dismissal and in Appellees motion to establish and enforce his charging lien, as counsel for Mrs. Harden, this Court issued on July 22, 1952, a resolution the pertinent part of which reads:chanroblesvirtuallawlibrary It will be seen from the above that the Defendants-Appellants pray for the complete dismissal of the above entitled case without prejudice to the annotation of the contingent claim of Attorney Claro M. Recto on the property under receivership, other than the 368,553 shares of the Balatoc Mining Company which belong to Fred M. Harden. On the other hand, Attorney Claro M. Recto agrees to the lifting of the writ of preliminary injunction, the orders of contempt and commitment, and all other interlocutory orders which were issued in the course of this case, with the exception of the receivership, but objects to the dismissal of the case on the ground that, since receivership is merely an auxiliary remedy, the present case should be allowed to remain pending for the purpose of maintaining the receivership to safeguard his right to collect the fees that may be due him. Attorney Claro M. Recto prays that a commissioner or referee be immediately appointed by this Court to receive evidence in s upport of his allegations as to his attorneys lien and its enforcement. Counsel for the Defendants-Appellants does not object to this proceeding provided that the restrictions set forth by him be observed. However, this Court does not have the proper facilities for receiving evidence in order to determine the amount of the fees claimed by Attorney Claro M. Recto, and it is deemed advisable that this matter be determined by the Court of First Instance. This is specially so considering the opposition to the claim of Attorney Claro M. Recto filed by Attorney J. W. Ferrier, Sr. in behalf of Esperanza P. de Harden. In view of the foregoing, the above entitled case is hereby remanded to the court of origin in order to determine the amount of fees claimed by Attorney Claro M. Recto in his motion dated February 20, 1952. It is understood that, after said fees had been finally determined and paid, this case will be completely dismissed as prayed for by the Defendants-Appellants, without prejudice to considering the claim of the receiver for compensation as stated in his urgent motion dated July 2, 1952. Pending the determination of the amount of fees claimed by Attorney Claro M. Recto, the writ of preliminary injunction, the orders of contempt and commitment, and all interlocutory orders which were issued in the course of this case, are hereby lifted and vacated, and with regard to the receivership, the same is hereby dissolved, only with respect to the 368,553 shares of the Balatoc Mining Company. As to the rest of the properties, the receivership shall be maintained. In compliance with said resolution, the records of this case were remanded to the lower court, which, on September 2, 1952, designated a commissioner to receive evidence on the amount of the fees collectible by herein Appellee and to report thereon. After due hearing, said commissioner submitted, on February 6, 1953, a report of about one hundred (100) pages of the printed record on appeal, setting forth, in detail, the evidence introduced by both parties, and his findings of fact, with the following conclusion and recommendation:chanroblesvirtuallawlibrary Taking into consideration the value of the properties involved in this litigation, the length of time in which claimant had handled the same for Esperanza Harden, the volume and quality of the work performed, the complicated legal questions involved, the responsibility assumed by the claimant as counsel, his reputation in the bar, the difficulties encountered by him while handling the same in which he had to work hard every inch of the way because of the stiff oppositions filed by adverse counsel, the diligence he employed not only in the preservation of the records in his possession during the days of enemy occupation but also in the protection of the interests of Esperanza Harden, his successful handling of said case and those cases growing out of it which reached the Supreme Court, and the extra services he rendered in her behalf in the tax and other court cases, the undersigned Commissioner concludes that claimant is entitled to the full amount of 20% of Esperanza Hardens share of the conjuga l properties, as provided in paragraph 3 of the Contract of Professional Services, Exhibit JJJ.

WHEREFORE, the undersigned Commissioner respectfully recommends that Atty. Claro M. Recto be paid the equivalent amount of 20% of Esperanza P. de Hardens share of the conjugal properties or the sum of P369,410.04 as his contingent fee for services rendered in her behalf. After appropriate proceedings, the lower court rendered a decision dated April 30, 1953, adopting substantially said report of the commissioner, but increasing the contingent fee ofAppellee herein from P369,410.04, the sum recommended in the report, to P384,110.97. Hence, this appeal taken by Mr. and Mrs. Harden. The first question for determination therein is the validity of the above-quoted contract of services, which the Appellants assail as void, mainly, upon the ground:chanroblesvirtuallawlibrary (1) that Mrs. Harden cannot bind the conjugal partnership without her husbands consent; chan roblesvirtualawlibrary(2) that Article 1491 of the Civil Code of the Philippines in effect prohibits contingent fees; chan roblesvirtualawlibrary(3) that the contract in question has for its purpose to secure a decree of divorce, allegedly in violation of Articles 1305, 1352 and 1409 of the Civil Code of the Philippines; chan roblesvirtualawlibraryand (4) that the terms of said contract are harsh, inequitable and oppressive. The first objection has no foundation in fact, for the contract in dispute does not seek to bind the conjugal partnership. By virtue of said contract, Mrs. Harden merely bound herself or assumed the personal obligation to pay, by way of contingent fees, 20% of her share in said partnership. The contract neither gives, nor purports to give, to the Appellee any right whatsoever, personal or real, in and to her aforesaid share. The amount thereof is simply a basis for the computation of said fees. For the same reason, the second objection is, likewise, untenable. Moreover, it has already been held that contingent fees are not prohibited in the Philippines and are impliedly sanctioned by our Cannons (No. 13) of Professional Ethics. (see, also, Ulanday vs. Manila Railroad Co., 45 Phil., 540, 554.) Such is, likewise, the rule in the United States (Legal Ethics by Henry S. Drinker, p. 176). cralaw in the United States, the great weight of authority recognizes the validity of contracts for contingent fees, provided such contracts are not in contravention of public policy, and it is only when the attorney has taken an unfair or unreasonable advantage of his client that such a claim is condemned. (See 5 Am. Jur. 359 et seq.; chan roblesvirtualawlibraryBallentine, Law Dictionary, 2nd ed., p. 276.) Needless to say, there is absolutely nothing in the records before us to show that Appelleeherein had, in any manner, taken an unfair or unreasonable advantage of his client Mrs. Harden. The third objection is not borne out, either by the language of the contract between them, or by the intent of the parties thereto. Its purpose was not to secure a divorce, or to facilitate or promote the procurement of a divorce. It merely sought to protect the interest of Mrs. Harden in the conjugal partnership, during the pendency of a divorce suit she intended to file in the United States. What is more, inasmuch as Mr. and Mrs. Harden are admittedly citizens of the United States, their status and the dissolution thereof are governed pursuant to Article 9 of the Civil Code of Spain (which was in force in the Philippines at the time of the execution of the contract in question) and Article 15 of the Civil Code of the Philippines by the laws of the United States, which sanction divorce. In short, the contract of services, between Mrs. Harden and herein Appellee, is not contrary to law, morals, good customs, public order or public policy. The last objection is based upon principles of equity, but, pursuant thereto, one who seeks equity must come with clean hands (Bastida, et al., vs. Dy Buncio & Co., 93 Phil., 195; chan roblesvirtualawlibrary30C.J. S. 475), and Appellants have not done so, for the circumstances surrounding the case show, to our satisfaction, that their aforementioned agreements, ostensibly for the settlement of the differences between husband and wife, were made for the purpose of circumventing or defeating the rights of herein Appellee, under his above-quoted contract of services with Mrs. Harden. Indeed, having secured a judgment in her favor, acknowledging her rights to the assets of the conjugal partnership, which turned out to be worth almost P4,000,000 in addition to litis expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would have waived such rights, as well as the benefits of all orders and judgments in her favor, in consideration of the paltry sum of $5,000 allegedly paid to her by Mr. Harden and the additional sum of $20,000 to be paid by him in installments, at the rate of $500 a month. In fact, no explanation has been given for this most unusual avowed settlement between Mr. and Mrs. Harden. One cannot even consider the possibility of a reconciliation between the spouses, the same being inconsistent with the monetary consideration for said alleged settlement. What is more, the records show that the relations between said spouses which were bad indeed, not only in July, 1941, when Mrs. Harden engaged the services of theAppellee, but, even, before, for Mr. and Mrs. Harden were separated since 1938 had worsened considerably thereafter, as evidence by an action for divorce filed by Mr. Harden in New Jersey, in July 1948, upon the ground of repeated acts of infidelity allegedly committed by Mrs. Harden in 1940 and 1941. Again, it appears that Appellee had rendered, under the contract in question, the following services, for the benefit of Mrs. Harden:chanroblesvirtuallawlibrary 1. He succeeded in defeating Defendants motion for the dissolution of the writ of preliminary injunction, issued by the Court on July 12, 1941, and amended on July 19, 1941. 2. On November 12, 1946, Appellee moved for the appointment of a receiver, upon the ground that, despite said writ of preliminary injunction, the Defendants had been disposing of the properties of the conjugal partnership for the purpose of defrauding Mrs. Harden. After due hearing, the court, by an order dated November 20, 1946, directed the appointment of Abelardo Perez as receiver of said properties, upon the filing of a P10,000 bond. Defendantsasked, on February 13, 1947, that the receivership be suspended, or else, that they be allowed to file a bond for the discharge of the receivership. Appellee replied objecting thereto, unless the Defendants posted a P4,000,000 bond. Subsequently or on March 5, 1947, the Defendants sought a reconsideration of the order of November 20, 1946, and the discharge of the receiver. By an order dated March 21, 1947, the Court authorized said discharged upon the filing, by the Defendants, of a bond in the sum of P500,000, provided that Mr. Harden should bring back all the 368,553 shares of the Balatoc Mining Co., in his name to the Philippines for deposit with the Clerk of Court, or with the Chartered Bank of India, Australia and China, at Manila cralaw 3. On motion of the Appellee dated March 4, 1947, the Court, by an order dated April 5, 1947, directed Mr. Harden to remit to Mrs. Harden the sum of $2,500, to be charged against her litis expensae. Upon similar motion, filed by Appellee on or about April 26, 1947, the Court ordered Mr. Harden, on May 13, 1947, to furnish Mrs. Harden the sum of $5,000, under the same conditions.

4. On June 21, 1947, the Defendants instituted Civil Case No. G. R. No. L-1499 of this Court, entitled Fred M. Harden and Jose Salumbides vs. Emilio Pea, Abelardo Perez and Esperanza P. Harden for the purpose of annulling and setting aside, by writ o f certiorari, the aforementioned orders of the lower court dated July 12, 1941, November 20, 1946, and April 5 and May 13, 1947, and to restrain, in the meantime, the enforcement thereof. After appropriate proceedings, in the course of which Appellee appeared as counsel for Mrs. Harden, and like counsel for the Petitioners therein, filed several lengthy, detailed pleadings and memoranda, decision was rendered on November 21, 1950, denying the writ of certiorari prayed for. 5. On or about September 9, 1947, Appellee filed a motion alleging that despite the writ of preliminary injunction above mentioned, the Defendants had, fraudulently and without judicial consent, remitted abroad several sums of money aggregating P1,000,608.66, and praying that Mr. Harden be ordered to return this sum to the Philippines, within a stated period, said sum to be deposited with the account of the Plaza Lunch at the Manila Branch of the Chartered Bank of India, Australia and China. Mr. Harden objected to said motion.Appellee filed a rejoinder, to which Mr. Harden replied. Appellee filed a rejoinder to the rejoinder. On October 7, 1947, the Court granted Appellees motion. Mr. Harden sought a reconsideration, which was opposed by the Appellee on October 27, 1947, and denied by an order dated November 13, 1947. Mr. Harden moved, on November 18, 1947, for the suspension of this order, which was immediately objected to by the Appellee and then denied by the Court. 6. Inasmuch as said order of November 13, 1947 had not been complied with, Appellee filed on November 27, 1947, a motion praying that Mr. Harden be declared in contempt of court and punished accordingly. Meanwhile, or on November 24, 1947, Mr. Harden had instituted case G. R. No. L-1816 of this Court against Hon. Emilio Pea, as Judge of the Court of First Instance of Manila, and Mrs. Harden. In the petition therein filed, Mr. Harden applied for a writ of certiorari annulling said orders of Judge Pea of October 7 and November 13, 1947, and prayed that, pending disposition of the case, a writ of preliminary injunction be issued restraining the Respondents therein from enforcing said orders, particularly through contempt proceedings. Hence, the lower court deferred action on the aforementioned motion of November 27, 1947. After due hearing, this Court, in a resolution dated February 12, 1948, refused to issue the writ of preliminary injunction prayed for. Subsequently, or on November 21, 1950, decision was rendered denying the petition for a writ of certiorari. 7. Soon after the issuance of our resolution in said case G. R. No. 1816, dated February 12, 1948, or to be exact on March 27, 1948, the lower court issued an order directing Mr. Harden to comply, within five (5) days from notice, with the order of October 7, 1947. On April 6, 1948,Appellee filed with the lower court the corresponding formal charges against Mr. Harden for contempt of court. After due hearing, Mr. Harden was, by an order of April 28, 1948, found guilty as charged and ordered confined until he complies with the aforementioned orders of October 7, 1947 and March 27, 1948. On motion of Mr. Harden, said order of April 28, 1948 was suspended until May 4, 1948, on which date he was arrested and placed in confinement at the New Bilibid Prison, in Muntinglupa, Rizal. On July 10, 1948, he filed with this Court a petition for a writ of habeas corpus against the Director of Prisons, (G. R. No. L-2349, entitled Fred M. Harden vs. The Director of Prisons), which, in due course was denied in a decision promulgated on October 22, 1948. 8. During the military occupation of the Philippines by the Japanese, the Appellee made representations with the Japanese Government to prevent the commandeering of a business establishment belonging to Mr. and Mrs. Harden. Moreover, he succeeded in persuading the Japanese to refrain from interning Mrs. Harden and her daughter and to allow her to withdraw, from the formers deposit in a local bank, from P200 to P250 a month, for their subsistence. He, likewise, lent her money to meet her needs and spent the sum of P55,000 in the preservation of the records and papers pertaining to the business and other properties of the conjugal partnership of Mr. and Mrs. Harden. 9. Appellee assisted, also, the receiver, as his counsel and, in such capacity, took all steps essential for the proper discharge of the duties of the former. Among other things, Appelleesought and obtained judicial authority for some important acts of administration of, and disposition by, the receiver. He (Appellee) secured judicial intervention for the protection and preservation of the assets of the conjugal partnership, including orders for the delivery of certificates of stock, the return thereof and/or its deposit with the clerk of court. He, likewise, represented the receiver in seeking war damage payments. 10. In civil case No. 6222 of the Court of First Instance of Manila, entitled Francisco Dalupan vs. Fred M. Harden for the reco very of P113,837.17, it was decided, through Appellees intervention, that the conjugal assets would bear the payment of P22,767.43 only, the balance to be chargeable exclusively against Mr. Hardens share of the conjugal partnership. 11. Appellee instituted civil case No. 6940 of the Court of First Instance of Manila, entitled Abelardo Perez vs. Chartered Bank of India, Australia and China and Fred M. Harden, for the recovery of P1,000,608.66 and the return of stock certificates of the Balatoc Mining Co., which had been sent abroad. 12. He (Appellee) represented Mrs. Harden in connection with a million-peso federal tax case against Mr. and Mrs. Harden. 13. Appellee successfully blocked Mr. Hardens attempts to withdraw:chanroblesvirtuallawlibrary (1) $53,000 and forward the same to the Collector of Internal Revenue of Los Angeles, California; chan roblesvirtualawlibrary(2) $50,000.00, allegedly to defray expenses in resisting a new tax assessment against him in the United States; chan roblesvirtualawlibraryand (3) P65,000 for his expenses. Then too, the conjugal partnership had varried and extensive business interests and its assets were worth almost P4,000,000. The pleadings, motions, oppositions, rejoinders, and memoranda filed, and the evidence introduced, in the aforementioned cases in whichAppellee was pitted against one of the most experienced and able members of the Philippine Bar were numerous, extensive and exhaustive. For instance, the record on appeal in one of those cases, namely, G. R. No. L-3687, consisted of 966 pages. In short, considering the character of the services rendered by the Appellee, the nature and importance of the issues in said litigations, the amount of labor, time (1941 to 1952) and trouble involved therein, the skill displayed in connection with said cases, the value of the property affected by the controversy, the professional character and standing of the Appellee, the risks assumed and the results obtained, we are of the opinion, and so hold, that the contract of services in question is neither harsh nor oppressive or inequitable. Under their second assignment of error, Appellants maintain that:chanroblesvirtuallawlibrary The lower court erred in failing to find as a fact borne out by the evidence that the legal services of Attorney Claro M. Re cto to Mrs. Esperanza P. de Harden, payment, for which is sought by him in this case, have already been paid by his immediate execution

pending appeal of the decision in Civil Case No. CFI-R-59634 (SC-G.R. No. L- 3687), wherein he collected the sum of P176,000.00 for all such legal services. Said decision, however, states clearly that the aforementioned sum of P175,000 represents litis expensae, and the contract between the Appellee and Mrs. Harden explicitly declares that said litis expensae shall be in addition to Appellees share of 25% of the increase in the allowance of Mrs. Harden and his attorneys fees of 20% of her share in the conjugal partnership. The second assignment of error is, therefore, devoid of merit. Appellants, further contend, that:chanroblesvirtuallawlibrary 3. The lower court erred in holding that the inchoate share of the wife, Esperanza P. de Harden, in the undissolved and unliquidated conjugal partnership properties of the Harden spouses, is capable of certain valuation before such dissolution and liquidation, and summarily assessing the value of Mrs. Hardens share in such conjugal properties without proper evidence. 4. The lower court erred in awarding 20% of such inchoate share to Attorney Claro M. Recto from Mrs. Hardens interests in the Harden conjugal properties, summarily assessing such 20% inchoate share as of a value of P384,110.97, and ordering the payment of said sum to Attorney Recto in pursuance of the provisions of paragraph 3 of the Contract of Professional Services. Appellants arguments in support thereof may be summarized as follows:chanroblesvirtuallawlibrary The contract of services in question provides that Appellees contingent fees shall be 20% of the share of Mrs. Harden in the conjugal partnership. Pursuant to law, the share of Mrs. Harden shall be determined upon the liquidation of said partnership, which has not taken place, as yet. What is more, it cannot be effected until the dissolution of the marriage relation between Mr. and Mrs. Harden. Inasmuch as this relation subsists, it follows that the amount of attorneys fees due to Appellee herein should not have been determined in the decision appealed from. This line of argument overlooks the fact that said contract of services was made, principally, in contemplation of a suit for divorce that, according to Mrs. Harden, she intended to file before a competent court in California, and of the liquidation of the conjugal partnership between her and Mr. Harden. Had she filed said action for divorce and secured a decree of divorce, said conjugal partnership would have been dissolved and then liquidated, and the share of Mrs. Harden therein would have been fixed. However, this cannot take place, either now, or in the foreseeable future, owing to the aforementioned agreements between Mr. and Mrs. Harden, which were made for the evident purpose of defeating Appellees claim for attorneys fees. In other words, the occurrence, within the time contemplated by the parties bearing in mind the nature of, and the circumstances under which they entered into, said contract of services of the event upon which the amount of said fees depended, was rendered impossible by Mrs. Harden. Hence, whether such event be regarded as a condition or as a period, she may not insist upon its occurrence, prior to the enforcement of the rights of the herein Appellee, for the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment (Art. 1186, Civil Code) and the debtor shall lose every right to make use of the period when he violates any undertaking, in consideration of which the creditor agreed to the period. (Art. 1198, Civil Code.) It should be noted, also, that the compensation agreed upon for Appellees services, consists of three (3) parts, namely:chanroblesvirtuallawlibrary (a) 25% of the increase in the allowance of Mrs. Harden; chan roblesvirtualawlibrary(b) litis expensae; chan roblesvirtualawlibraryand (c) 20% of her share in the conjugal partnership. The first part was dealt with in the first paragraph of their contract of services. The second and third parts were the object of the second and third paragraphs, respectively. The first paragraph limited the rights of Appellee thereunder to two (2) years, in the event of termination of the case or amicable settlement thereof within two (2) years from the filing of the complaint. No such limitation appears in the second and third paragraphs of said contract. Hence, the same were intended by the parties to be fully operative under any and all conditions. It may not be amiss to add that the value of the properties involved has been assessed, not summarily, but after due notice and full dress hearing, in the course of which both parties introduced testimonial and documentary evidence. Appellants presented Exhibits 1 to 58, whereas those of the Appellee were so numerous that, having begun with Exhibit A, his last piece of documentary evidence was marked Exhibit 26 Ys. The transcript of the hearing, which lasted ten (10) days, covers over 220 pages. The other assignments of error made by Appellants herein are mere corollaries of those already disposed of, and, hence, no further discussion thereof is necessary. In conclusion, it appears that the assets of the conjugal partnership between Mr. and Mrs. Harden are reasonably valued at P3,841,109.70. One-half (1/2) thereof, representing the share of Mrs. Harden, is therefore, worth P1,920,554.85. Twenty percentum (20%) of this sum is P384,110.97, which is the contingent fee due to the Appellee, apart from the litis expensae already paid to him. Inasmuch as the Appellee has collected, also, the sum of P80,000.00, on account of said contingent fees, there results in his favor a balance of P304,110.97. Subject to this qualification, the decision appealed from is hereby affirmed, therefore, with costs against the Appellants. SO ORDERED. Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Reyes, J. B. L., Endencia and Felix, JJ., concur.

Republic of the Philippines 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. T78759, 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. T187781(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 which reads:
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in favor of private respondent ARC dated 12 May 1993, the decretal portion of

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. T78759, 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 assignment of errors:
14

on certiorari where herein petitioner BANTSA ascribes to the Court of Appeals the following

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 Bachrach15 and similar cases adjudicated thereafter, thus: In the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action or debt or a real action to foreclose the mortgage. In other words, he may he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election 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, Kim 17 and Movido vs. RFC, 18 invariably held:
16

this Court, reiterating jurisprudence enunciated in Manila Trading and Supply Co vs. Co

. . . 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 contractloanremains to be primarily bound. It is only upon default of the latter that the creditor may have recourse on the mortgagors by foreclosing the mortgaged properties in lieu of an action for the recovery of the amount of the loan. 21 In the instant case, petitioner's contention that the requisites of filing the action for collection and rendition of final judgment therein should concur, is untenable. Thus, in Cerna vs. Court of Appeals, foreclosure of the mortgage:
22

we agreed with the petitioner in said case, that the filing of a collection suit barred the

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.
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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

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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 wellpaved roads; 2. The properties are suitable for development into a subdivision for low cost housing, as admitted by defendant's own appraiser (TSN, May 30, 1994, p. 31); 3. The pigpens which used to exist in the property have already been demolished. Houses of strong materials are found in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing community. It has even been shown that the house of the Barangay Chairman is located adjacent to the property in question (Exh. 27), and the only remaining piggery (named Cherry Farm) in the vicinity is about 2 kilometers away from the western boundary of the property in question (TSN, November 19, p. 3); 4. It will not be hard to find interested buyers of the property, as indubitably shown by the fact that on March 18, 1994, ICCS (the buyer during the foreclosure sale) sold the consolidated real estate properties to Stateland Investment Corporation, in whose favor new titles were issued, i.e., TCT Nos. T-187781(m); T-187782(m), T187783(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.49 citing Northern Cement Corporation vs. Intermediate Appellate Court 50 is enlightening: There have been instances where the Court has held that even without the necessary amendment, the amount proved at the trial may be validly awarded, as in Tuazon v. Bolanos (95 Phil. 106), where we said that if the facts shown entitled plaintiff to relief other than that asked for, no amendment to the complaint was necessary, especially where defendant had himself raised the point on which recovery was based. The appellate court could treat the pleading as amended to conform to the evidence although the pleadings were actually not amended. Amendment is also unnecessary when only clerical error or non substantial matters are involved, as we held

in Bank of the Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed that the rule on amendment need not be applied rigidly, particularly where no surprise or prejudice is caused the objecting party. And in the recent case of National Power Corporation vs. Court of Appeals (113 SCRA 556), we held that where there is a variance in the defendant's pleadings and the evidence adduced by it at the trial, the Court may treat the pleading as amended to conform with the evidence. It is the view of the Court that pursuant to the above-mentioned rule and in light of the decisions cited, the trial court should not be precluded from awarding an amount higher than that claimed in the pleading notwithstanding the absence of the required amendment. But it is upon the condition that the evidence of such higher amount has been presented properly, with full opportunity on the part of the opposing parties to support their respective contentions and to refute each other's evidence. The failure of a party to amend a pleading to conform to the evidence adduced during trial does not preclude an adjudication by the court on the basis of such evidence which may embody new issues not raised in the pleadings, or serve as a basis for a higher award of damages. Although the pleading may not have been amended to conform to the evidence submitted during trial, judgment may nonetheless be rendered, not simply on the basis of the issues alleged but also the basis of issues discussed and the assertions of fact proved in the course of trial. The court may treat the pleading as if it had been amended to conform to the evidence, although it had not been actually so amended. Former Chief Justice Moran put the matter in this way: When evidence is presented by one party, with the expressed or implied consent of the adverseparty, 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.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-55960 November 24, 1988 YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN YEN, petitioners, vs.

AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE, RODOLFO SY, and HONORABLE COURT OF APPEALS, respondents. Montesa, Albon, & Associates for petitioners. De Lapa, Salonga, Fulgencio & De Lunas for respondents.

CORTES, J.: Sy Kiat, a Chinese national. died on January 17, 1977 in Caloocan City where he was then residing, leaving behind real and personal properties here in the Philippines worth P300,000.00 more or less. Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for the grant of letters of administration docketed as Special Proceedings Case No. C-699 of the then Court of First Instance of Rizal Branch XXXIII, Caloocan City. In said petition they alleged among others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Mat died intestate; (c) they do not recognize Sy Kiat's marriage to Yao Kee nor the filiation of her children to him; and, (d) they nominate Aida Sy-Gonzales for appointment as administratrix of the intestate estate of the deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.] The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged that: (a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19, 1931 in China; (b) the other oppositors are the legitimate children of the deceased with Yao Kee; and, (c) Sze Sook Wah is the eldest among them and is competent, willing and desirous to become the administratrix of the estate of Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.] After hearing, the probate court, finding among others that: (1) Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp. 49-64;] (2) Sze Sook Wah, Sze Lai Cho and Sze Chun Yen are the legitimate children of Yao Kee with Sy Mat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and, (3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the acknowledged illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI decision, pp. 27-28; Rollo, pp. 64- 65.] held if favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the administratrix of the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo, pp. 105-106.] On appeal the Court of Appeals rendered a decision modifying that of the probate court, the dispositive portion of which reads: IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby MODIFIED and SET ASIDE and a new judgment rendered as follows: (1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy- Bernabe and Rodolfo Sy acknowledged natural children of the deceased Sy Kiat with Asuncion Gillego, an unmarried woman with whom he lived as husband and wife without benefit of marriage for many years: (2) Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the acknowledged natural children of the deceased Sy Kiat with his Chinese wife Yao Kee, also known as Yui Yip, since the legality of the alleged marriage of Sy Mat to Yao Kee in China had not been proven to be valid to the laws of the Chinese People's Republic of China (sic); (3) Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor of Tomas Sy (Exhibit "G-1", English translation of Exhibit "G") of the Avenue Tractor and Diesel Parts Supply to be valid and accordingly, said property should be excluded from the estate of the deceased Sy Kiat; and (4) Affirming the appointment by the lower court of Sze Sook Wah as judicial administratrix of the estate of the deceased. [CA decision, pp. 11-12; Rollo, pp. 36- 37.] From said decision both parties moved for partial reconsideration, which was however denied by respondent court. They thus interposed their respective appeals to this Court. Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-Gonzales, Manuel Sy, Teresita SyBernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and (4) of the dispositive portion of the Court of Appeals' decision. The Supreme Court however resolved to deny the petition and the motion for reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No. 56045. **

The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion of the decision of the Court of Appeals. This petition was initially denied by the Supreme Court on June 22, 1981. Upon motion of the petitioners the Court in a resolution dated September 16, 1981 reconsidered the denial and decided to give due course to this petition. Herein petitioners assign the following as errors: I. RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN VALID IN ACCORDANCE WITH LAWS OF THE PEOPLE'S REPUBLIC OF CHINA. II. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE AND RODOLFO SY AS NATURAL CHILDREN OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p. 6.] I. Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and custom was conclusively proven. To buttress this argument they rely on the following testimonial and documentary evidence. First, the testimony of Yao Kee summarized by the trial court as follows: Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in Fookien, China; that she does not have a marriage certificate because the practice during that time was for elders to agree upon the betrothal of their children, and in her case, her elder brother was the one who contracted or entered into [an] agreement with the parents of her husband; that the agreement was that she and Sy Mat would be married, the wedding date was set, and invitations were sent out; that the said agreement was complied with; that she has five children with Sy Kiat, but two of them died; that those who are alive are Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is already 38 years old; that Sze Sook Wah was born on November 7, 1939; that she and her husband, Sy Mat, have been living in FooKien, China before he went to the Philippines on several occasions; that the practice during the time of her marriage was a written document [is exchanged] just between the parents of the bride and the parents of the groom, or any elder for that matter; that in China, the custom is that there is a go- between, a sort of marriage broker who is known to both parties who would talk to the parents of the bride-tobe; that if the parents of the bride-to-be agree to have the groom-to-be their son in-law, then they agree on a date as an engagement day; that on engagement day, the parents of the groom would bring some pieces of jewelry to the parents of the bride-to-be, and then one month after that, a date would be set for the wedding, which in her case, the wedding date to Sy Kiat was set on January 19, 1931; that during the wedding the bridegroom brings with him a couch (sic) where the bride would ride and on that same day, the parents of the bride would give the dowry for her daughter and then the document would be signed by the parties but there is no solemnizing officer as is known in the Philippines; that during the wedding day, the document is signed only by the parents of the bridegroom as well as by the parents of the bride; that the parties themselves do not sign the document; that the bride would then be placed in a carriage where she would be brought to the town of the bridegroom and before departure the bride would be covered with a sort of a veil; that upon reaching the town of the bridegroom, the bridegroom takes away the veil; that during her wedding to Sy Kiat (according to said Chinese custom), there were many persons present; that after Sy Kiat opened the door of the carriage, two old ladies helped her go down the carriage and brought her inside the house of Sy Mat; that during her wedding, Sy Chick, the eldest brother of Sy Kiat, signed the document with her mother; that as to the whereabouts of that document, she and Sy Mat were married for 46 years already and the document was left in China and she doubt if that document can still be found now; that it was left in the possession of Sy Kiat's family; that right now, she does not know the whereabouts of that document because of the lapse of many years and because they left it in a certain place and it was already eaten by the termites; that after her wedding with Sy Kiat, they lived immediately together as husband and wife , and from then on, they lived together; that Sy Kiat went to the Philippines sometime in March or April in the same year they were married; that she went to the Philippines in 1970, and then came back to China; that again she went back to the Philippines and lived with Sy Mat as husband and wife; that she begot her children with Sy Kiat during the several trips by Sy Kiat made back to China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.] Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among the many people who attended the wedding of his sister with Sy Kiat and that no marriage certificate is issued by the Chinese government, a document signed by the parents or elders of the parties being sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.] Third, the statements made by Asuncion Gillego when she testified before the trial court to the effect that (a) Sy Mat was married to Yao Kee according to Chinese custom; and, (b) Sy Kiat's admission to her that he has a Chinese wife whom he married according to Chinese custom [CFI decision, p. 17; Rollo, p. 54.] Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where the following entries are found: "Marital statusMarried"; "If married give name of spousesYao Kee"; "Address-China; "Date of marriage1931"; and "Place of marriageChina" [Exhibit "SS-1".] Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968 where the following entries are likewise found: "Civil statusMarried"; and, 'If married, state name and address of spouseYao Kee Chingkang, China" [Exhibit "4".]

And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People's Republic of China to the effect that "according to the information available at the Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were married on January 19, 1931 in Fukien, the People's Republic of China" [Exhibit "5".] These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However, the same do not suffice to establish the validity of said marriage in accordance with Chinese law or custom. Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a social rule, legally binding and obligatory" [In the Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed., Vol. 1, p. 7. ] The law requires that "a custom must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the Court had occasion to state that "a local custom as a source of right can not be considered by a court of justice unless such custom is properly established by competent evidence like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a higher degree, should be required of a foreign custom. The law on foreign marriages is provided by Article 71 of the Civil Code which states that: Art. 71. All marriages performed outside the Philippines in accordance with the laws in force in the country where they were performed and valid there as such, shall also be valid in this country, except bigamous, Polygamous, or incestuous marriages, as determined by Philippine law. (Emphasis supplied.) *** Construing this provision of law the Court has held that to establish a valid foreign marriage two things must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922).] In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten foreign law, Rule 130 section 45 states that: SEC. 45. Unwritten law.The oral testimony of witnesses, skilled therein, is admissible as evidence of the unwritten law of a foreign country, as are also printed and published books of reports of decisions of the courts of the foreign country, if proved to be commonly admitted in such courts. Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus: SEC. 25. Proof of public or official record.An official record or an entry therein, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept and authenticated by the seal of his office. The Court has interpreted section 25 to include competent evidence like the testimony of a witness to prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher 110 Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).] In the case at bar petitioners did not present any competent evidence relative to the law and custom of China on marriage. The testimonies of Yao and Gan Ching cannot be considered as proof of China's law or custom on marriage not only because they are self-serving evidence, but more importantly, there is no showing that they are competent to testify on the subject matter. For failure to prove the foreign law or custom, and consequently, the validity of the marriage in accordance with said law or custom, the marriage between Yao Kee and Sy Kiat cannot be recognized in this jurisdiction. Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to prove the Chinese law on marriage as judicial notice thereof had been taken by this Court in the case of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).] This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610 (1930).] Moreover a reading of said case would show that the party alleging the foreign marriage presented a witness, one Li Ung Bieng, to prove that matrimonial letters mutually exchanged by the contracting parties constitute the essential requisite for a marriage to be considered duly solemnized in China. Based on his testimony, which as found by the Court is uniformly corroborated by authors on the subject of Chinese marriage, what was left to be decided was the issue of whether or not the fact of marriage in accordance with Chinese law was duly proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.] Further, even assuming for the sake of argument that the Court has indeed taken judicial notice of the law of China on marriage in the aforecited case, petitioners however have not shown any proof that the Chinese law or custom obtaining at the time the Sy Joc

Lieng marriage was celebrated in 1847 was still the law when the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or eighty-four (84) years later. Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being applicable to the instant case. They aver that the judicial pronouncement in the Memoracion case, that the testimony of one of the contracting parties is competent evidence to show the fact of marriage, holds true in this case. The Memoracion case however is not applicable to the case at bar as said case did not concern a foreign marriage and the issue posed was whether or not the oral testimony of a spouse is competent evidence to prove the fact of marriage in a complaint for adultery. Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it is the same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her testimony that there was no solemnizing officer as is known here in the Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Mat was celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.] II. The second issue raised by petitioners concerns the status of private respondents. Respondent court found the following evidence of petitioners' filiation: (1) Sy Kiat's Master Card of Registered Alien where the following are entered: "Children if any: give number of childrenFour"; and, "NameAll living in China" [Exhibit "SS-1";] (2) the testimony of their mother Yao Kee who stated that she had five children with Sy Kiat, only three of whom are alive namely, Sze Sook Wah, Sze Lai Chu and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and, (3) an affidavit executed on March 22,1961 by Sy Kiat for presentation to the Local Civil Registrar of Manila to support Sze Sook Wah's application for a marriage license, wherein Sy Kiat expressly stated that she is his daughter [Exhibit "3".] Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three daughters with his Chinese wife, two of whomSook Wah and Sze Kai Choshe knows, and one adopted son [TSN, December 6,1977, pp. 87-88.] However, as petitioners failed to establish the marriage of Yao Kee with Sy Mat according to the laws of China, they cannot be accorded the status of legitimate children but only that of acknowledged natural children. Petitioners are natural children, it appearing that at the time of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry one another [See Art. 269, Civil Code.] And they are acknowledged children of the deceased because of Sy Kiat's recognition of Sze Sook Wah [Exhibit "3"] and its extension to Sze Lai Cho and Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil Code.] Private respondents on the other hand are also the deceased's acknowledged natural children with Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years without the benefit of marriage. They have in their favor their father's acknowledgment, evidenced by a compromise agreement entered into by and between their parents and approved by the Court of First Instance on February 12, 1974 wherein Sy Kiat not only acknowleged them as his children by Asuncion Gillego but likewise made provisions for their support and future inheritance, thus: xxx xxx xxx 2. The parties also acknowledge that they are common-law husband and wife and that out of such relationship, which they have likewise decided to definitely and finally terminate effective immediately, they begot five children, namely: Aida Sy, born on May 30, 1950; Manuel Sy, born on July 1, 1953; Teresita Sy, born on January 28, 1955; Ricardo Sy now deceased, born on December 14, 1956; and Rodolfo Sy, born on May 7, 1958. 3. With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY ... , the parties mutually agree and covenant that (a) The stocks and merchandize and the furniture and equipments ..., shall be divided into two equal shares between, and distributed to, Sy Kiat who shall own one-half of the total and the other half to Asuncion Gillego who shall transfer the same to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy. (b) the business name and premises ... shall be retained by Sy Kiat. However, it shall be his obligation to give to the aforenamed children an amount of One Thousand Pesos ( Pl,000.00 ) monthly out of the rental of the two doors of the same building now occupied by Everett Construction.

xxx xxx xxx (5) With respect to the acquisition, during the existence of the common-law husband-and-wife relationship between the parties, of the real estates and properties registered and/or appearing in the name of Asuncion Gillego ... , the parties mutually agree and covenant that the said real estates and properties shall be transferred in equal shares to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy, but to be administered by Asuncion Gillego during her lifetime ... [Exhibit "D".] (Emphasis supplied.) xxx xxx xxx This compromise agreement constitutes a statement before a court of record by which a child may be voluntarily acknowledged [See Art. 278, Civil Code.] Petitioners further argue that the questions on the validity of Sy Mat's marriage to Yao Kee and the paternity and filiation of the parties should have been ventilated in the Juvenile and Domestic Relations Court. Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled "An Act Revising Rep. Act No. 3278, otherwise known as the Charter of the City of Caloocan', with regard to the Juvenile and Domestic Relations Court: SEC. 91-A. Creation and Jurisdiction of the Court. xxx xxx xxx The provisions of the Judiciary Act to the contrary notwithstanding, the court shall have exclusive original jurisdiction to hear and decide the following cases: xxx xxx xxx (2) Cases involving custody, guardianship, adoption, revocation of adoption, paternity and acknowledgment; (3) Annulment of marriages, relief from marital obligations, legal separation of spouses, and actions for support; (4) Proceedings brought under the provisions of title six and title seven, chapters one to three of the civil code; xxx xxx xxx and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21 SCRA 1324] reiterated in Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA 307.] With the enactment of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, the Juvenile and Domestic Relations Courts were abolished. Their functions and jurisdiction are now vested with the Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Belosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no longer necessary to pass upon the issue of jurisdiction raised by petitioners. Moreover, even without the exactment of Batas Pambansa Blg. 129 we find in Rep. Act No. 5502 sec. 91-A last paragraph that: xxx xxx xxx If any question involving any of the above matters should arise as an incident in any case pending in the ordinary court, said incident shall be determined in the main case. xxx xxx xxx As held in the case of Divinagracia v. Rovira [G.R. No. L42615. August 10, 1976, 72 SCRA 307]: xxx xxx xxx It is true that under the aforequoted section 1 of Republic Act No. 4834 **** a case involving paternity and acknowledgment may be ventilated as an incident in the intestate or testate proceeding (See Baluyot vs. Ines Luciano, L-42215, July 13, 1976). But that legal provision presupposes that such an administration proceeding is pending or existing and has not been terminated. [at pp. 313-314.] (Emphasis supplied.)

xxx xxx xxx The reason for ths rule is not only "to obviate the rendition of conflicting rulings on the same issue by the Court of First Instance and the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R. No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits. Accordingly, this Court finds no reversible error committed by respondent court. WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Footnotes * The petition for review in G.R. No. 56045 was denied for lack of merit on March 9, 1981, Counsel for the petitioners then filed a Motion for Consolidation and for Extension of Time to File Motion for Reconsideration which was granted on July 8, 1981. On February 17, 1982, however, petitioners' motion for reconsideration of the resolution of March 9, 1981 was denied. ** Other than the exceptions contained in this article, this provision of law is derived from Section 19, Act No. 3613 and Section IV, General Order No. 68. *** The presumption that, in the absence of proof, the foreign law is the same as the law of the forum, is known as processual presumption which has been applied by this Court in the cases of Lim v. The Insular Collector of Customs, 36 Phil, 472 (1917); International Harvester Co. in Russia v. Hamburg-American Line, 42 Phil. 845 (1918); Miciano v. Brimo, 60 Phil, 867 (1924); and Rayray v. Chae Kyung Lee, G.R. No. L-18176, October 26, 1966,18 SCRA 450. **** Rep. Act 4834 created the Juvenile and Domestic Relations Court of Iloilo. Section 1 of said Act is the exact copy of section 19-A of Rep. Act 5502.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 92013 July 25, 1990 SALVADOR H. LAUREL, petitioner, vs. RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents. G.R. No. 92047 July 25, 1990 DIONISIO S. OJEDA, petitioner, vs. EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN,respondents. Arturo M. Tolentino for petitioner in 92013.

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to the public the basis of their decision to push through with the sale of the Roppongi property inspire of strong public opposition and to explain the proceedings which effectively prevent the participation of Filipino citizens and entities in the bidding process. The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by the Court's resolution dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the parties in the Laurel case were deliberated upon. The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30) days which we granted on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion for extension of time which we granted on June 5, 1990 but calling the attention of the respondents to the length of time the petitions have been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases. I The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on May 9, 1956, the other lots being: (1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy Chancery; (2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and categorized as a commercial lot now being used as a warehouse and parking lot for the consulate staff; and (3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is now vacant. The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II. The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years in accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on procurement and utilization of reparations and development loans. The procurements are divided into those for use by the government sector and those for private parties in projects as the then National Economic Council shall determine. Those intended for the private sector shall be made available by sale to Filipino citizens or to one hundred (100%) percent Filipinoowned entities in national development projects. The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time. A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation which shall construct two (2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The consideration of the construction would be the lease to the foreign corporation of one (1) of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three leased buildings shall be occupied and used by the Philippine government. No change of ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title all throughout the lease period and thereafter. However, the government has not acted favorably on this proposal which is pending approval and ratification between the parties. Instead, on August 11, 1986, President Aquino created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through Administrative Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically mentioned in the first "Whereas" clause. Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225 million. The first bidding was a failure since only one bidder qualified. The second one, after postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was restrained by his Court. Later, the rules on bidding were changed such that the $225 million floor price became merely a suggested floor price. The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine government in favor of selling the property to non-Filipino citizens and entities. These petitions have been consolidated and are resolved at the same time for the objective is the same - to stop the sale of the Roppongi property. The petitioner in G.R. No. 92013 raises the following issues: (1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and (2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property? Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the Roppongi property assails the constitutionality of Executive Order No. 296 in making the property available for sale to non-Filipino citizens and entities. He also questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino citizens and Filipinoowned entities by denying them the right to be informed about the bidding requirements. II In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of the reparations from the Japanese government for diplomatic and consular use by the Philippine government. VicePresident Laurel states that the Roppongi property is classified as one of public dominion, and not of private ownership under Article 420 of the Civil Code (See infra). The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2 of the above provision. He states that being one of public dominion, no ownership by any one can attach to it, not even by the State. The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other improvements" (Second Year Reparations Schedule). The petitioner states that they continue to be intended for a necessary service. They are held by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same remains property of public dominion so long as the government has not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use. The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed by our Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex situs which is used in determining the applicable law regarding the acquisition, transfer and devolution of the title to a property. They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the lex situs in explaining the inapplicability of Philippine law regarding a property situated in Japan. The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi property has ceased to become property of public dominion. It has become patrimonial property because it has not been used for public service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and because the intention by the Executive Department and the Congress to convert it to private use has been manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the possibility of alienating the four government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the holding of the public bidding of the Roppongi property but which failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate of the government's intention to remove the Roppongi property from the public service purpose; and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.

III In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now avers that the executive order contravenes the constitutional mandate to conserve and develop the national patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates: (1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141). itc-asl (2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national economy and patrimony (Section 10, Article VI, Constitution); (3) The protection given to Filipino enterprises against unfair competition and trade practices; (4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III, Constitution); (5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of capital goods received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and (6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section 28, Article III, Constitution). Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a misapplication of public funds He states that since the details of the bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines are available only in Tokyo, and the accomplishment of requirements and the selection of qualified bidders should be done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance to comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225 million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price would still be deducted. IV The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related properties were through reparations agreements, that these were assigned to the government sector and that the Roppongi property itself was specifically designated under the Reparations Agreement to house the Philippine Embassy. The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the Japanese government. There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become patrimonial. This, the respondents have failed to do. As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26). The applicable provisions of the Civil Code are: ART. 419. Property is either of public dominion or of private ownership. ART. 420. The following things are property of public dominion (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks shores roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property. The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and intended for some public service. Has the intention of the government regarding the use of the property been changed because the lot has been Idle for some years? Has it become patrimonial? The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]). The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises. A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as earlier stated, there simply was a shortage of government funds. The recent Administrative Orders authorizing a study of the status and conditions of government properties in Japan were merely directives for investigation but did not in any way signify a clear intention to dispose of the properties. Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly authorizing the sale of the four properties procured from Japan for the government sector. The executive order does not declare that the properties lost their public character. It merely intends to make the properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides: Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary notwithstanding, the above-mentioned properties can be made available for sale, lease or any other manner of disposition to non-Filipino citizens or to entities owned by non-Filipino citizens. Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other properties were earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for the government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this nationality provision which was amended by Executive Order No. 296. Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its implementation, the proceeds of the disposition of the properties of the Government in foreign countries, did not withdraw the Roppongi property from being classified as one of public dominion when it mentions Philippine properties abroad. Section 63 (c) refers to properties which are alienable and not to those reserved for public use or service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund created under Executive Order No. 299. Obviously any property outside of the commerce of man cannot be tapped as a source of funds. The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese law and not our Civil Code should apply. It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale of extremely valuable government property, Japanese law and not Philippine law should prevail. The Japanese law - its coverage and effects, when enacted, and exceptions to its provision is not presented to the Court It is simply asserted that the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is a ed on faith that Japanese law would allow the sale. We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined (See Salonga, Private International Law, 1981 ed., pp.

377-383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply. In the instant case, none of the above elements exists. The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the State. And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply. The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situsrule is misplaced. The opinion does not tackle the alienability of the real properties procured through reparations nor the existence in what body of the authority to sell them. In discussing who are capableof acquiring the lots, the Secretary merely explains that it is the foreign law which should determinewho can acquire the properties so that the constitutional limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we discuss who can acquire the Roppongi lot when there is no showing that it can be sold? The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the public character of the Roppongi property. Moreover, the approval does not have the force and effect of law since the President already lost her legislative powers. The Congress had already convened for more than a year. Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is another obstacle to its sale by the respondents. There is no law authorizing its conveyance. Section 79 (f) of the Revised Administrative Code of 1917 provides Section 79 (f ) Conveyances and contracts to which the Government is a party. In cases in which the Government of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary papers which, together with the proper recommendations, shall be submitted to the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf of the Government of the Philippines unless the Government of the Philippines unless the authority therefor be expressly vested by law in another officer. (Emphasis supplied) The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No. 292). SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: (1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer. (2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied) It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence. Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public character of the Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy considerations and calls for a fact-finding investigation of the circumstances behind the decision to sell the Philippine government properties in Japan. The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President to sell the Roppongi property. The Court stated that the constitutionality of the executive order was not the real issue and that resolving the constitutional question was "neither necessary nor finally determinative of the case." The Court

noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the property became alienable nor did it indicate that the President was authorized to dispose of the Roppongi property. The resolution should be read to mean that in case the Roppongi property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a sale may be used for national economic development projects including the CARP. Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the Roppongi property. We are resolving the issues raised in these petitions, not the issues raised in 1989. Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and a need for legislative authority to allow the sale of the property, we see no compelling reason to tackle the constitutional issues raised by petitioner Ojeda. The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question although properly presented by the record if the case can be disposed of on some other ground such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]). The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold: The Roppongi property is not just like any piece of property. It was given to the Filipino people in reparation for the lives and blood of Filipinos who died and suffered during the Japanese military occupation, for the suffering of widows and orphans who lost their loved ones and kindred, for the homes and other properties lost by countless Filipinos during the war. The Tokyo properties are a monument to the bravery and sacrifice of the Filipino people in the face of an invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or financial benefits from them. But who would think of selling these monuments? Filipino honor and national dignity dictate that we keep our properties in Japan as memorials to the countless Filipinos who died and suffered. Even if we should become paupers we should not think of selling them. For it would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R. No. 92013, p.147) The petitioner in G.R. No. 92047 also states: Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its past belligerence for the valiant sacrifice of life and limb and for deaths, physical dislocation and economic devastation the whole Filipino people endured in World War II. It is for what it stands for, and for what it could never bring back to life, that its significance today remains undimmed, inspire of the lapse of 45 years since the war ended, inspire of the passage of 32 years since the property passed on to the Philippine government. Roppongi is a reminder that cannot should not be dissipated ... (Rollo-92047, p. 9) It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real property in Tokyo but more so because of its symbolic value to all Filipinos veterans and civilians alike. Whether or not the Roppongi and related properties will eventually be sold is a policy determination where both the President and Congress must concur. Considering the properties' importance and value, the laws on conversion and disposition of property of public dominion must be faithfully followed. WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued enjoining the respondents from proceeding with the sale of the Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is made PERMANENT. SO ORDERED. Melencio-Herrera, Paras, Bidin, Grio-Aquino and Regalado, JJ., concur.