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[G.R. No. 122191. October 8, 1998.

]
1. 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.
DECISION
QUISUMBING, J p:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the Resolution 1 dated 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: dctai
"On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi
Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a disco dance with fellow crew members
Thamer Al-Gazzawi and Allah Al-Gazzawi, both Saudi nationals. Because it was almost morning when they returned to
their hotels, they agreed to have breakfast together at the room of Thamer. When they were in te (sic) room, Allah left
on some pretext. Shortly after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and several security
personnel heard her cries for help and rescued her. Later, the Indonesian police came and arrested Thamer and Allah AlGazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials interrogated her about the Jakarta incident.
They then requested her to go back to Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA
Legal Officer Sirah Akkad and base manager Baharini negotiated with the police for the immediate release of the
detained crew members but did not succeed because plaintiff refused to cooperate. She was afraid that she might be
tricked into something she did not want because of her inability to understand the local dialect. She also declined to sign
a blank paper and a document written in the local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but
barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to
deport Thamer and Allah after two weeks of detention. Eventually, they were again put in service by defendant SAUDI
(sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was already behind her, her superiors
requested her to see Mr. Ali Miniewy, 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 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.
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. LLpr
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.

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, she was terminated from the service by SAUDIA, without her being informed of the cause. LLpr
On November 23, 1993, Morada filed a Complaint for damages against SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the following grounds, to wit: (1) that the Complaint
states no cause of action against Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or demand set forth
in the Complaint has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15 . Saudia filed a reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as party defendant. On August 11, 1994, Saudia
filed its Manifestation and Motion to Dismiss Amended Complaint 18 .
The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge denying the Motion to Dismiss, SAUDIA filed on September 20, 1994, its Motion for Reconsideration 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 (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 plaintiff's
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 promulgated on September 27, 1995, now assailed, the appellate court denied SAUDIA's Petition for the Issuance of a
Writ of Preliminary Injunction dated February 18, 1995, to wit:
"The Petition for the Issuance of a Writ of Preliminary Injunction is hereby DENIED, after considering the Answer, with
Prayer to Deny Writ of Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein petitioner
is not clearly entitled thereto (Unciano Paramedical College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993,
Second Division).
SO ORDERED."
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for Review with Prayer for Temporary Restraining Order
dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals rendered the Decision dated April 10, 1996, now also
assailed. It ruled that the Philippines is an appropriate forum considering that the Amended Complaint's basis for recovery of damages is
Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held that certiorari is not the proper
remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and in case of an adverse ruling, find
recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary Restraining Order 31 dated April 30, 1996,
given due course by this Court. After both parties submitted their Memoranda, 32 the instant case is now deemed submitted for decision.
Petitioner SAUDIA raised the following issues:
"I

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". cdrep
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 and 21 of the Civil Code, then
the instant case is properly a matter of domestic law.
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
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. Cdpr
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 manager, Aslam
Saleemi, that the investigation was routinary and that it posed no danger to her. Cdpr
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. prLL
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 Philippine 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. llcd
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, 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 in the Amended Complaint, read in the light of the Rules of Court on jurisdiction we find that the Regional Trial
Court (RTC) of Quezon City possesses jurisdiction over the subject matter of the suit. Its authority to try and hear the case is provided for
under Section 1 of Republic Act No. 7691, to wit:
"Section 1.Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is
hereby amended to read as follows: cda
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 cost 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). . .
(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." llcd
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
plaintiff's 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. Cdpr
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. LLpr

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. LibLex
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-oflaw 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." The purpose of "characterization" is to enable the forum to select the proper law.
Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative fact. 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.
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." (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 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. LibLex
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commisi, modem 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.
EN BANC
[G.R. No. L-16749. January 31, 1963.]
2. 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.
DECISION
LABRADOR, J p:
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 other 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 descendents 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 Maris 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 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 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 INTERNATIONAL 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 OR 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.
"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-1',
'MM-2-Daney', and p. 473, t.s.n., July 21, 1953.
"In April, 1951, Edward E. Christensen returned once more to California shortly after the making of his last will and
testament (now in question herein) which he executed at his lawyers' offices in Manila on March 5, 1951. He died at the
St. Luke's Hospital in the City of Manila on April 30, 1953." (Pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded by the fact that he was born in New
York, migrated to California and resided there for nine years, and since he came to the Philippines in 1913 he returned to California very
rarely and only for short visits (perhaps to relatives), and considering that he appears never to have owned or acquired a home or
properties in that state, which would indicate that he would ultimately abandon the Philippines and make home in the State of California.
"Sec. 16.Residence is a term used with many shades of meaning from mere temporary presence to the most permanent
abode. Generally, however, it is used to denote something more than mere physical presence." (Goodrich on Conflict of
Laws, p. 29)
As to his citizenship, however, we find that the citizenship that he acquired in California when he resided in Sacramento, California from
1904 to 1913, was never lost by his stay in the Philippines, for the latter was a territory of the United States (not a state) until 1946 and the
deceased appears to have considered himself as a citizen of California by the fact that when he executed his will in 1951 he declared that he
was a citizen of that State; so that he appears never to have intended to abandon his California citizenship by acquiring another. This
conclusion is in accordance with the following principle expounded by Goodrich in his Conflict of Laws.
"The terms 'residence' and 'domicile' might well be taken to mean the same thing, a place of permanent abode. But
domicile, as has been shown, has acquired a technical meaning. Thus one may be domiciled in a place where he has
never been. And he may reside in a place where he has no domicile. The man with two homes, between which he
divides his time, certainly resides in each one, while living in it. But if he went on business which would require his
presence for several weeks or months, he might properly be said to have sufficient connection with the place to be
called a resident. It is clear, however, that, if he treated his settlement as continuing only for the particular business in
hand, not giving up his former "home," he could not be a domiciled New Yorker. Acquisition of a domicile of choice
requires the exercise of intention as well as physical presence. Residence simply requires bodily presence as an
inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's
domicile.' 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 is 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 wherein 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" as 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 which the decedent is a citizen, in the case at bar, 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 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 above-cited 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 renvoi, the question of the
validity of the testamentary provision in question should be referred back to the law of the decedent's domicile, which is the Philippines.

The theory or 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 corresponding rule of the Conflict of Law of that foreign law, or 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 that 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 by legal
writers. The opponents of the renvoi would have looked merely to the internal law of Illinois, thus rejecting therenvoi or
the reference back. Yet there seems no compelling logical reason why the original reference should be to the internal
law rather than to the Conflict of Laws rule. It is true that such a solution avoids going on a merry-go-round, but those
who have accepted the renvoi theory avoid this inextricabilis circulas by getting off at the second reference and at that
point applying internal law. Perhaps the opponents of the renvoi are a bit more consistent for they look always to
internal law as the rule of reference.
"Strangely enough, both the advocates for and the objectors to the renvoi plead that greater uniformity will result from
adoption of their respective views. And still more strange is the fact that the only way to achieve uniformity in this
choice-of-law problem is if in the dispute the two states whose laws form the legal basis of the litigation disagree as to
whether the renvoi should be accepted. If both reject, or both accept the doctrine, the result of the litigation will vary
with the choice of the forum. In the case stated above, had the Michigan court rejected the renvoi, judgment would
have been against the woman; if the suit had been brought in the Illinois courts, and they too rejected the renvoi,
judgment would be for the woman. The same result would happen, though the courts would switch with respect to
which would hold liability, if both courts accepted the renvoi.
"The Restatement accepts the renvoi theory in two instances: where the title to land is in question, and where the
validity of a decree of divorce is challenged. In these cases, the Conflict of Laws rule of the situs of the land, or the
domicile of the parties in the divorce case, is applied by the forum, but any further reference goes only to the internal
law. Thus, a person's title to land, recognized by the situs, will be recognized by every court; and every divorce, valid by
the domicile of the parties, will be valid everywhere." (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
"X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in Massachusetts, England,
and France. The question arises as to how this property is to be distributed among X's next of kin.
"Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of laws as to intestate
succession to movables calls for an application of the law of the deceased's last domicile. Since by hypothesis X's last
domicile was France, the natural thing for the Massachusetts court to do would be to turn to French statute of
distributions, or whatever corresponds thereto in French law, and decree a distribution accordingly. An examination of
French law, however, would show that if a French court were called upon to determine how this property should be
distributed, it would refer the distribution to the national law of the deceased, thus applying the Massachusetts state 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 laws as 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 socalled renvoi doctrine, it will follow the latter course, thus applying its own law.
"This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum refers to a foreign
law, the conflict-of-laws rule of which, in turn refers the matter back again to the law of the forum. This is renvoi in the
narrower sense. The German term for this judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523571.)
"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 . . . (15 C.J.S. 872.)
"Another theory, known as the 'doctrine of renvoi', has been advanced. The theory of the doctrine of renvoi is that the
court of the forum, in determining the question before it, must take into account the whole law of the other jurisdiction,
but also its rules as to conflict of laws, and then apply the law to the actual question which the rules of the other
jurisdiction prescribe. This may be the law of the forum. The doctrine of 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. 509-531. 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.

10

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 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 as 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 law 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 estates, 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 the 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 disposition 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 of the 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 disposition of personal property valid at the domicile of the owner, is valid
everywhere, is one of universal application. It had its origin in that international comity which was one of the first fruits
of civilization, and in 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 law rules law for the citizens domiciled abroad. If we must enforce the law of California as in comity we
are bound to do, 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 thatthe national 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 law 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 law 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.

11

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, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Bengzon, C.J., took no part.
EN BANC
[G.R. No. 35694. December 23, 1933.]
3. ALLISON D. GIBBS, petitioner-appellee, vs. THE GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositorappellant. THE REGISTER OF DEEDS OF THE CITY OF MANILA, respondent-appellant.

Solicitor-General Hilado for appellants.


Allison D. Gibbs in his own behalf.
DECISION
BUTTE, J p:
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 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 estate 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 tracts here involved; and further alleging that his said wife, Eva Johnson Gibbs", describing in detail the three tracts 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 adjudicating 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 adjudicating 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 nonpayment 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.

12

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:
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 the 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 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, leaving surviving her husband, the appellee, and two sons, Allison D. Gibbs, now aged 25, and Finley
J. Gibbs, now aged 22, as her sole heirs at 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 extend 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 sit. 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 (conflict 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 expectancy 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

13

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 acquired 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
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 in accordance with 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 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 a 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 sit, 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 of the place where the marriage was celebrated."
(See also Saul vs. His Creditors, 5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.]; Heidenheimer vs. Loring, 26 S. W., 99
[Texas].)
Under this broad principle, the nature and extent of the title which vested in Mrs. Gibbs at the time of the acquisition of the
community lands here in question must be determined in accordance with the lex rei sit.
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 is 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 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.

14

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.
FIRST DIVISION
[G.R. No. 104776. December 5, 1994.]
4. 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, AL
DECISION
QUIASON, J p:
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. L86-05-460; and
(3)to reverse the Resolution dated March 24, 1992 of the NLRC, denying the motion for reconsideration of its Resolution dated
September 2, 1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National Labor Relations Commission, et.
al.," was filed under Rule 65 of the Revised Rules of Court:
(1)to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799
and L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the Labor Code of the Philippines instead of the tenyear prescriptive period under the Civil Code of the Philippines; and (ii) denied the "three-hour daily average" formula in the
computation of petitioners' overtime pay; and
(2)to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration of its Resolution dated
September 2, 1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al., v. National Labor Relations
Commission, et. al." was filed under Rule 65 of the Revised Rules of Court:
(1)to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779
and L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2)to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied the motions for reconsideration of AIBC and
BRII (Rollo, pp. 2-59; 61-230).

15

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.
No. 104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the motion filed in G.R. Nos. 104911-14 for the
consolidation of said cases with G.R. Nos. 104776 and 105029-32, which were assigned to the First Division (G.R. Nos. 104911-14,
Rollo, pp. 986-1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the First Division
granted the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. No. 10502932, Rollo, p. 1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their own behalf and on behalf of 728
other overseas contract workers (OCWs) instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from their recruitment by AIBC and employment by BRII (POEA Case NO.
L-84-06-555). The claimants were represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction; while AIBC is a domestic
corporation licensed as a service contractor to recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its
foreign principals.
The amended complaint principally sought the payment of the unexpired portion of the employment contracts, which was
terminated prematurely, and secondarily, the payment of the interest of the earnings of the Travel and Reserved Fund, interest on all
the unpaid benefits; area wage and salary differential pay; fringe benefits; refund of SSS and premium not remitted to the SSS; refund
of withholding tax not remitted to the BIR; penalties for committing prohibited practices; as well as the suspension of the license of
AIBC and the accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was given, together with BRII, up to July 5,
1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the claimants to file a bill of particulars within
ten days from receipt of the order and the movants to file their answers within ten days from receipt of the bill of particulars. The POEA
Administrator also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23, 1984, AIBC filed a "Motion to
Strike Out of the Records", the "Complaint" and the "Compliance and Manifestation." On July 25, 1984, the claimants filed their
"Rejoinder and Comments," averring, among other matters, the failure of AIBC and BRII to file their answers and to attend the pre-trial
conference on July 25, 1984. The claimants alleged that AIBC and BRII had waived their right to present evidence and had defaulted by
failing to file their answers and 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.

16

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 complainants' evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and Motion for Bill of Particulars Re:
Amended Complaint dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to file their answers in POEA Case No.
L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for the issuance of a writ of
injunction. On September 19, 1985, NLRC enjoined the POEA Administrator from hearing the labor cases and suspended the period for
the filing of the answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional claimants in the case and to investigate
alleged wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-85-10-777) against AIBC and
BRII with the POEA, demanding monetary claims similar to those subject of POEA Case No. L-84-06-555. In the same month, Solomon
Reyes also filed his own complaint (POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the substitution of the original counsel of
record and the cancellation of the special powers of attorney given the original counsel.

On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-460) in behalf of 11 claimants
including Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and September 18, 1985 by AIBC and
BRII.
In narrating the proceedings of the labor cases before the POEA Administrator, it is not amiss to mention that two cases were
filed in the Supreme Court by the claimants, namely G.R. No. 72132 on September 26, 1985 and Administrative Case No. 2858 on
March 18, 1986. On May 13, 1987, the Supreme Court issued a resolution in Administrative Case No. 2858 directing the POEA
Administrator to resolve the issues raised in the motions and oppositions filed in POEA Cases Nos. L-84-06-555 and L-86-05-460 and to
decide the labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order dated September 4, 1985 of the POEA
Administrator. Said order required BRII and AIBC to answer the amended complaint in POEA Case No. L-84-06-555. In a resolution
dated November 9, 1987, we dismissed the petition by informing AIBC that all its technical objections may properly be resolved in the
hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on September 22, 1988 by claimant Hermie Arguelles
and 18 co-claimants against the POEA Administrator and several NLRC Commissioners. The Ombudsman merely referred the complaint
to the Secretary of Labor and Employment with a request for the early disposition of POEA Case No. L-84-06-555. The second was filed
on April 28, 1989 by claimants Emigdio P. Bautista and Rolando R. Lobeta charging AIBC and BRII for violation of labor and social
legislations. The third was filed by Jose R. Santos, Maximino N. Talibsao and Amado B. Bruce denouncing AIBC and BRII of violations of
labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for suspension of the period for filing an
answer or motion for extension of time to file the same until the resolution of its motion for reconsideration of the order of the NLRC
dismissing the two appeals. On April 28, 1987, NLRC en banc denied the motion for reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the same hearing, the parties were given a
period of 15 days from said date within which to submit their respective position papers. On June 24, 1987 claimants filed their "Urgent
Motion to Strike Out Answer," alleging that the answer was filed out of time. On June 29, 1987, claimants filed their "Supplement to
Urgent Manifestational Motion" to comply with the POEA Order of June 19, 1987. On February 24, 1988, AIBC and BRII submitted their

17

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 reglementary 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 complaints 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 forcertiorari with the Supreme Court (G.R. Nos. 120741-44). The petition was dismissed in a resolution dated January 27,
1992.
Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were filed. The first, by the claimants
represented by Atty. Del Mundo; the second, by the claimants represented by Atty. De Castro; and the third, by AIBC and BRII.

18

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 claimantsparties 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.
No. 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.
105029-3,Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13)Joint Manifestation and Motion involving claimant Dante C. Aceres and 37 co-claimants dated September 8, 1993 (G.R. No.
104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14)Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-claimants dated January 10, 1994 (G.R. Nos. 10502932, 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. No. 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

19

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 may be 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

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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 (emphasis supplied):
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 above-mentioned benefits.
(b)Whether or not Art. 44 of the same Decree (allegedly prescribing a more favorable treatment of alien
employees) bars complainants from enjoying its benefits.
Second: Assuming that Amiri Decree No. 23 of Bahrain is applicable in these cases, whether or not
complainants' claim for the benefits provided therein have prescribed.
Third: Whether or not the instant cases qualify as a class suit.
Fourth: Whether or not the proceedings conducted by the POEA, as well as the decision that is the subject of
these appeals, conformed with the requirements of due process;
(a)Whether or not the respondent-appellant was denied its right to due process;

21

(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.
Eight: 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.

22

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 threeyear 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

23

(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. No. 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 AIBI 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

24

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion when it: (1) enforced the provisions of
the Amiri Decree No. 23 of 1976 and not the terms of the employment contracts; (2) granted claims for holiday, overtime and leave
indemnity pay and other benefits, on evidence admitted in contravention of petitioner's constitutional right to due process; and (3)
ordered the POEA Administrator to hold new hearings for the 683 claimants whose claims had been dismissed for lack of proof by the
POEA Administrator or NLRC itself. Lastly, they allege that assuming that the Amiri Decree No. 23 of 1976 was applicable, NLRC erred
when it did not apply the one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776
G.R. Nos. 104911-14
G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed as to the time that should be embraced within
the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article 1144 of the Civil Code of the Philippines.
NLRC believed otherwise, fixing the prescriptive period at three years as provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds, insisted that NLRC erred in ruling that
the prescriptive period applicable to the claims was three years, instead of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period was one year as prescribed by the Amiri Decree
No. 23 of 1976 but he deferred to the ruling of NLRC that Article 291 of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
"These money claims (under Article 291 of the Labor Code) refer to those arising from the employer's violation
of the employee's right as provided by the Labor Code.
In the instant case, what the respondents violated are not the rights of the workers as provided by the Labor
Code, but the provisions of the Amiri Decree No. 23 issued in Bahrain, which ipso facto amended the worker's contracts
of employment. Respondents consciously failed to conform to these provisions which specifically provide for the increase
of the worker's rate. It was only after June 30, 1983, four months after the brown builders brought a suit against B & R
in Bahrain for this same claim, when respondent AIBC's contracts have undergone amendments in Bahrain for the new
hires/renewals (Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to this instant case is Article 1144 of the Civil
Code of the Philippines, which provides:
'Art. 1144.The following actions may be brought within ten years from the time the cause of action
accrues:
(1)Upon a written contract;
(2)Upon an obligation created by law;'
Thus, herein money claims of the complainants against the respondents shall prescribe in ten years from August 16,
1976. Inasmuch as all claims were filed within the ten-year prescriptive period, no claim suffered the infirmity of being
prescribed" (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period is three years as provided in Article 291 of the
Labor Code of the Philippines, the NLRC argued as follows:
"The Labor Code provides that 'all money claims arising from employer-employee relations . . . shall be filed
within three years from the time the cause of action accrued; otherwise they shall be forever barred' (Art. 291, Labor
Code, as amended). This three-year prescriptive period shall be the one applied here and which should be reckoned
from the date of repatriation of each individual complainant, considering the fact that the case is having (sic) filed in this
country. We do not agree with the POEA Administrator that this three-year prescriptive period applies only to money
claims specifically recoverable under the Philippine Labor Code. Article 291 gives no such indication. Likewise, We can
not consider complainants' cause/s of action to have accrued from a violation of their employment contracts. There was
no violation; the claims arise from the benefits of the law of the country where they worked. (G.R. No. 104776, Rollo,
pp. 90-91).
Anent the applicability of the one-year prescriptive period as provided by the Amiri Decree No. 23 of 1976, NLRC opined that
the applicability of said law was one of characterization, i.e., whether to characterize the foreign law on prescription or statute of
limitation as "substantive" or "procedural." NLRC cited the decision in Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir.
[1955], where the issue was the applicability of the Panama Labor Code in a case filed in the State of New York for claims arising from
said Code. In said case, the claims would have prescribed under the Panamanian Law but not under the Statute of Limitations of New
York. The U.S. Circuit Court of Appeals held that the Panamanian Law was procedural as it was not "specifically intended to be
substantive," hence, the prescriptive period provided in the law of the forum should apply. The Court observed:

25

". . . 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 'specificity' we might have a different case; but here on the surface of things we appear
to be dealing with a 'broad,' and not a 'specific,' statute of limitations" (G.R. No. 104776, Rollo, pp. 92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the Philippines, which was applied by
NLRC, refers only to claims "arising from the employer's violation of the employee's right as provided by the Labor Code." They assert
that their claims are based on the violation of their employment contracts, as amended by the Amiri Decree No. 23 of 1976 and
therefore the claims may be brought within ten years as provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos.
104911-14, pp. 18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No. 23 of 1976, argue that
there is in force in the Philippines a "borrowing law," which is Section 48 of the Code of Civil Procedure and that where such kind of law
exists, it takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a
Philippine law on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the
date of the expiry of the contract" (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process,
joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action
is based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or
substantive, depending on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of limitations of New York,
instead of the Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be
substantive. Being considered merely a procedural law even in Panama, it has to give way to the law of the forum on prescription of
actions.
However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the
forum has a "borrowing statute." Said statute has the practical effect of treating the foreign statute of limitation as one of substance
(Goodrich, Conflict of Laws 152-153 [1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of
limitations to the pending claims based on a foreign law (Siegel, Conflicts 183 [1975]). While there are several kinds of "borrowing
statutes," one from 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.]).

26

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 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 (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
under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead
bargaining agreements between the parties be observed. Since the claim
contracts between the litigants, the ten-year prescriptive period provided

make any reference as to the computation for overtime work


insisted that work computation provided in the collective
for pay differentials is primarily anchored on the written
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. 1993) 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 claim is 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.

27

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. No. 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 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;

28

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 No. 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 name 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).

29

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. 838-810; 1525).
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:

30

"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
e.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 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 those 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).

31

The overseas-employment contracts could have been drafted more felicitously. While a part thereof provides that the
compensation to the employee may be "adjusted downward so that the total computation (thereunder) plus the non-waivable benefits
shall be equivalent to the compensation" therein agreed, another part of the same provision categorically states "that total
remuneration and benefits do not fall below that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII, the parties that drafted it
(Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
"The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity."
Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing the
stipulations of the employment contract and the employees merely "take it or leave it." The presumption is that there was an imposition
by one party against the other and that the employees signed the contracts out of necessity that reduced their bargaining power
(Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment contracts in question as adopting the provisions of the
Amiri Decree No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be governed (Cheshire, Private International Law, 187 [7th ed]).
In such a case, the foreign law is adopted as a "system" to regulate the relations of the parties, including questions of their capacity to
enter into the contract, the formalities to be observed by them, matters of performance, and so forth (16 Am Jur 2d, 150-161).
Instead of adopting the entire mass of the foreign law, the parties may just agree that specific provisions of a foreign statute
shall be deemed incorporated into their contract "as a set of terms." By such reference to the provisions of the foreign law, the contract
does not become a foreign contract to be governed by the foreign law. The said law does not operate as a statute but as a set of
contractual terms deemed written in the contract (Anton, Private International Law 197 [1967]; Dicey and Morris, The Conflict of Laws
702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law in Torts and Contracts, 16 Columbia
Journal of Transnational Law 1, 21 [1977]). Such party expectation is protected by giving effect to the parties' own choice of the
applicable law (Fricke v. Isbrandtsen Co. Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must, however, bear some relationship
to the parties or their transaction (Scoles and Hayes, conflict of Law 644-647 [1982]). there is no question that the contracts sought to
be enforced by claimants have a direct connection with the Bahrain law because the services were rendered in that country.

In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the "Employment Agreement," between
Norse Management co. and the late husband of the private respondent, expressly provided that in the event of illness or injury to the
employee arising out of and in the course of his employment and not due to his own misconduct, "compensation shall be paid to
employee in accordance with and subject to the limitation of the Workmen's Compensation Act of the Republic of the Philippines or the
Worker's Insurance Act of registry of the vessel, whichever is greater." Since the laws of Singapore, the place of registry of the vessel in
which the late husband of private respondent served at the time of his death, granted a better compensation package, we applied said
foreign law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor Relations Commission, 135 SCRA 278 (1985), relied upon
by AIBC and BRII is inapposite to the facts of the cases at bench. The issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the shipboard employment contract executed in the Philippines or the
Hongkong law. Holding that the shipboard employment contract was controlling, the court differentiated said case from Norse
Management Co. in that in the latter case there was an express stipulation in the employment contract that the foreign law would be
applicable if it afforded greater compensation.
B.AIBC and BRII claim that they were denied by NLRC of their right to due process when said administrative agency granted
Friday-pay differential, holiday-pay differential, annual-leave differential and leave indemnity pay to the claimants listed in Annex B of
the Resolution. At first, NLRC reversed the resolution of the POEA Administrator granting these benefits on a finding that the POEA
Administrator failed to consider the evidence presented by AIBC and BRII, that some findings of fact of the POEA Administrator were
not supported by the evidence, and that some of the evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But
instead of remanding the case to the POEA Administrator for a new hearing, which means further delay in the termination of the case,
NLRC decided to pass upon the validity of the claims itself. It is this procedure that AIBC and BRII complain of as being irregular and a
"reversible error."
They pointed out that NLRC took into consideration evidence submitted on appeal, the same evidence which NLRC found to
have been "unilaterally submitted by the claimants and not disclosed to the adverse parties" (Rollo, pp. 37-39).
NLRC noted that so many pieces of evidentiary matters were submitted to the POEA administrator by the claimants after the
cases were deemed submitted for resolution and which were taken cognizance of by the POEA Administrator in resolving the cases.
While AIBC and BRII had no opportunity to refute said evidence of the claimants before the POEA Administrator, they had all the
opportunity to rebut said evidence and to present their counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves
were able to present before NLRC additional evidence which they failed to present before the POEA Administrator.

32

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). Cdpr
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 inAng Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
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.
FIRST DIVISION
[G.R. No. L-68470. October 8, 1985.]
5. 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.

DECISION
MELENCIO-HERRERA, J p:
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

33

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. We consider 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 all 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.That 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 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. 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.

34

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.
SECOND DIVISION
[G.R. No. 80116. June 30, 1989.]
6. 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.

DECISION
REGALADO, J p:
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.
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

35

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. LexLib
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 partriae,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

36

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
Dorn, a 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, herein before 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 entered DISMISSING the complaint
in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby
made permanent.
SO ORDERED.
Melencio-Herrera, Padilla and Sarmiento, JJ ., concur.
FIRST DIVISION
[G.R. No. 124371. November 23, 2000.]
7. PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F. LLORENTE, respondents.
E.A. Dacanay for petitioner.

37

Pardalis, Navarro & Sales for private respondents.


SYNOPSIS
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from 1927 to 1957 and a naturalized American
citizen. On February 22, 1937, Lorenzo married petitioner Paula Llorente. 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. When Lorenzo returned to the Philippines to
visit his wife in 1945, he discovered that his wife Paula was pregnant and was "living in" and having an adulterous relationship with his
brother, Ceferino Llorente. Lorenzo refused to forgive Paula and live with her. Lorenzo returned to the United States and 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. 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. The divorce decree became final in 1952. On January 16, 1958,
Lorenzo married Alicia F. Llorente in Manila. 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. From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife and
produced three children, Raul, Luz and Beverly, all surnamed Llorente. On March 13, 1981, Lorenzo executed a Last Will and Testament. In
the will, Lorenzo bequeathed all his property to Alicia and their three children. 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. The trial court admitted the will to probate. On June 11, 1985, before the proceedings could
be terminated, Lorenzo died. Paula filed with the same court a petition for letters of administration over Lorenzo's estate in her favor. Alicia
also filed in the testate proceeding a petition for the issuance of letters testamentary. The trial court denied Alicia's petition and ruled that
the divorce decree granted to the late Lorenzo Llorente was void and inapplicable in the Philippines, therefore, her marriage to Lorenzo was
likewise void. The trial court appointed Paula Llorente as legal administrator of the estate of the deceased, Lorenzo Llorente. Respondent
Alicia filed with the trial court a motion for reconsideration, but was denied. Alicia appealed to the Court of Appeals. The appellate court
promulgated its decision, affirming with modification the decision of the trial court. The trial court declared Alicia as co-owner of whatever
properties she and the deceased Lorenzo may have acquired during the twenty-five (25) years of cohabitation. Petitioner Paula moved for
reconsideration, but was denied for lack of merit. Hence, the present petition.
The Supreme Court reversed and set aside the ruling of the trial court and recognized as valid and as a matter of comity 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. According to the Court, the "national law" indicated in Article 16 of the Civil Code cannot possibly
apply to the 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 and there was also no showing that the application of the renvoi doctrine was called for or
required by New York State law. The Court also said that the clear intent of Lorenzo to bequeath his property to his second wife and children
by her was glaringly shown in the will he executed and the Court did not wish to frustrate Lorenzo's wishes, since he was a foreigner, not
covered by Philippine laws on family rights and duties, status, condition and legal capacity. The Court remanded the cases to the court of
origin for determination of the intrinsic validity of Lorenzo N. Llorente's will and determination of the parties' successional rights allowing
proof of foreign law.
DECISION
PARDO, J p:
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 City2 declaring respondent Alicia F. Llorente (hereinafter 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 Registrar of Nabua as "Crisologo Llorente," with the
certificate stating that the child was not legitimate and the line for the father's name was left blank. 9

38

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 Lorenzo's salary and all other obligations for Paula's daily
maintenance and support would be suspended; (2) they would dissolve their marital union in accordance with judicial proceedings; (3) they
would make a separate agreement regarding their conjugal property acquired during their marital life; and (4) Lorenzo would not prosecute
Paula for her adulterous act since she voluntarily admitted her fault and agreed to separate from Lorenzo peacefully. The agreement was
signed by both Lorenzo and Paula and was witnessed by Paula's 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. CADHcI
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, Nabua, Camarines Sur, Philippines, including ALL the personal properties and other movables or belongings
that may be found or existing therein;
"(2)I give and bequeath exclusively to my wife Alicia R. Fortuno and to my children, Raul F. Llorente, Luz F. Llorente and
Beverly F. Llorente, in equal shares, all my real properties whatsoever and wheresoever located, specifically my real
properties located at Barangay Aro-Aldao, Nabua, Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay
Baras, Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong, Nabua, Camarines Sur;
"(3)I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno and unto my children, Raul F. Llorente, Luz F.
Llorente and Beverly F. Llorente, in equal shares, my real properties located in Quezon City Philippines, and covered by
Transfer Certificate of Title No. 188652; and my lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of
Title Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal, Philippines;
"(4)That their respective shares in the above-mentioned properties, whether real or personal properties, shall not be
disposed of, ceded, sold and conveyed to any other persons, but could only be sold, ceded, conveyed and disposed of by
and among themselves;
"(5)I designate my wife ALICIA R. FORTUNO to be the sole executor of this my Last Will and Testament, and in her
default or incapacity of the latter to act, any of my children in the order of age, if of age;
"(6)I hereby direct that the executor named herein or her lawful substitute should served (sic) without bond;
"(7)I hereby revoke any and all my other wills, codicils, or testamentary dispositions heretofore executed, signed, or
published, by me;
"(8)It is my final wish and desire that if I die, no relatives of mine in any degree in the Llorente's Side should ever
bother and disturb in any manner whatsoever my wife Alicia R. Fortunato and my children with respect to any real or
personal properties I gave and bequeathed respectively to each one of them by virtue of this Last Will and
Testament." 17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a petition for the probate and allowance of his last
will and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate. 18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was still alive. 19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to probate. 20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died. 21
On September 4, 1985, Paula filed with the same court a petition 22 for letters of administration over Lorenzo's estate in her favor. Paula
contended (1) that she was Lorenzo's surviving spouse, (2) that the various property were acquired during their marriage, (3) that
Lorenzo's will disposed of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal
property. 23

39

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 Paula's petition in Sp. Proc. No. IR888. 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: ISaCTE
"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 Alicia's motion for reconsideration but modified its earlier decision, stating that Raul and Luz
Llorente are not children "legitimate or otherwise" of Lorenzo since they were not legally adopted by him. 29 Amending its decision of May
18, 1987, the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and
one-third (1/3) of the free portion of the estate. 30
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 coowner 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.

40

Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
The Civil Code clearly provides:
"ARTICLE 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. SCcHIE
"ARTICLE 16.Real property as well as personal property is subject to the law of the country where it is situated.
"However, intestate and testamentary succession, both with respect to the order of succession and to the amount of
successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the
person whose succession is under consideration,whatever may be the nature of the property and regardless of the
country wherein said property may be found." (italics 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 decedent's domicile, in this case, Philippine
law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in the same breath it made the categorical,
albeit equally unproven statement that "American law" follows the 'domiciliary theory' hence, Philippine law applies when determining the
validity of Lorenzo's 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. 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 trial court's opinion was a
mereparamour. 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. 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, we recognized the divorce obtained by the respondent in his country, the Federal Republic of Germany. There, we
stated that divorce and its legal effects may be recognized in the Philippines insofar as respondent is concerned in view of the nationality
principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity. 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:
"ARTICLE 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
foreign country, the solemnities established by Philippine laws shall be observed in their execution." (italics 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

41

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.HAICcD
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. Llorente's will and
determination of the parties' successional rights allowing proof of foreign law with instructions that the trial court shall proceed with all
deliberate dispatch to settle the estate of the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
FIRST DIVISION
[G.R. No. 154380. October 5, 2005.]
8. REPUBLIC OF THE PHILIPPINES, petitioner, vs. CIPRIANO ORBECIDO III, respondent.
DECISION
QUISUMBING, J p:
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 court a quo had
declared that herein respondent Cipriano Orbecido III is capacitated to remarry. The fallo of the impugned Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art. 26 of the Family Code and by reason of the
divorce decree obtained against him by his American wife, the petitioner is given the capacity to remarry under the
Philippine Law.
IT IS SO ORDERED. 3
The factual antecedents, as narrated by the trial court, are as follows.
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, Cipriano's 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.

42

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 respondent's 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 petition Any 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.
xxx xxx xxx
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.
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.

43

2.This is the beginning of the recognition of the validity of divorce even for Filipino citizens. For those whose foreign
spouses validly divorce them abroad will also be considered to be validly divorced here and can re-marry. We
propose that this be deleted and made into law only after more widespread consultation. (Emphasis supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article 26, according to Judge Alicia
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. AETcSa
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 ofobiter 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. AHDTIE
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of Article 26 as follows:
1.There is a valid marriage that has been celebrated between a Filipino citizen and a foreigner; and
2.A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but their citizenship at the time a
valid divorce is obtained abroad by the alien spouse capacitating the latter to remarry.
In this case, when Cipriano's 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 OSG's 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 respondent's 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 respondent's bare allegations that his wife, who was naturalized as an American citizen, had obtained a divorce

44

decree and had remarried an American, that respondent is now capacitated to remarry. Such declaration could only be made properly upon
respondent's submission of the aforecited evidence in his favor. CcAHEI
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.
Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.
EN BANC
[G.R. No. 46631. November 16, 1939.]
9. IDONAH SLADE PERKINS, petitioner, vs. ARSENIO P. DIZON, Judge of First Instance of Manila, EUCENE
ARTHUR PERKINS, and BENGUET CONSOLIDATED MINING COMPANY, respondents.
DECISION
MORAN, J p:
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 H. 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 may be 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 voluntarily, 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 decision, and of other 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

45

service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the
non-resident defendant has expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292;
see also 5 L. R. A. 585; 35 L. R. A. L. R. 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 nonessential, 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 "many reported cases can be cited in which it is
assumed that the question of the sufficiency of publication or notice in a 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 mounded 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 language in which the courts have expounded their ideas."
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 own 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 Ferkins 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 stock 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 certificates
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 judgment 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 larger and more
general senses 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 quasi in rem, the Court of First Instance of Manila has jurisdiction to try the same even if it can acquire no
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 the 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 been 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 he made upon a person for or relating

46

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, and thereupon
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 from 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 remis 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
simply disclaims any personal interest in the controversy. What would be the situation if, after the claimants 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 now. 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 res adjudicata, lis pendens and lack of jurisdiction
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 her 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 pendenshas 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 superfluous reasoning but
from the nature of the relief prayed for.

For all of the foregoing, petition is hereby denied, with costs against petitioner.
SECOND DIVISION
[G.R. No. 103493. June 19, 1997.]
10. 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.
Padilla Law Office for petitioners.
Salonga Hernandez & Mendoza for Guevarra.
Oreta, Suarez & Narvasa Law Firm for private respondents.
DECISION
MENDOZA, J p:
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 Ducat's obligation under an Agreement, dated
January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendor's Lien by which it sold to petitioner Athona Holdings, N.V.
(hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A. for US$2,807,209.02, while PHILSEC and AYALA extended a loan
to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by

47

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, PHILSEC's own former president, for the rescission of the sale on the
ground that the property had been over-valued. 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-86440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a
cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not
PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to
ATHONA under a separate loan agreement. On the other hand, private respondents 1488, Inc. and its president Daic filed a joint "Special
Appearance and Qualified Motion to Dismiss," contending that the action being in personam, extraterritorial service of summons by
publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic,
who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the evidentiary requirements of the
controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international
law of forum non conveniens," even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9, 1988, the trial court 3 granted the motion
to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is the validity of the sale of real property in the
United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United
States District Court which, under the doctrine offorum 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-IFL's former name) and the Athona Holdings, NV. The case at bar involves the same
parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between Athona
Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory notes are sued upon by 1488 Inc.,
which likewise alleges fraud employed by herein appellants, on the marketability of Ducat's securities given in exchange
for the Texas property. The recovery of a sum of money and damages, for fraud purportedly committed by appellees, in

48

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 COURT'S DISMISSAL OF THE CIVIL
ACTION IS NOT APPLICABLE.
2.THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE
DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3.AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE
PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL
JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS'
RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY 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 appellant's own pleadings" 11 that the foreign court did not make a "clear mistake of law or fact"
or that its judgment was void for want of jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held in
the lower court and only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of Washington to
have the effect of res judicata in the case before the lower court. In the same vein, in 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.

49

On the plaintiff's claim in its Opposition that the causes of action of this case and the pending case in the United States
are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the
case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners' action is barred by the principle of res judicata. Petitioners
in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the
Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment in the Regional Trial
Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended
because of the pendency of this case. To sustain the appellate court's ruling that the foreign judgment constitutes res judicata and is a bar
to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could
then arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in
this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a separate proceeding.
This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative relief is being
sought. Hence, in the interest of justice, the complaint should be considered as a petition 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. 92-1070 should be consolidated. 15 After all, the
two have been filed in the Regional Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V.
Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should have
the burden of impeaching the foreign judgment and only in the event they succeed in doing so may they proceed with their action against
private respondents.

Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion
to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non conveniens. 16 The propriety of dismissing a case
based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after "vital facts are established, to
determine whether special circumstances" require the court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection
with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants
(Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter's debt which was the object of the transaction under litigation.
The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be
obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, 17 on extraterritorial service
provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among
others, "the property of the defendant has been attached within the Philippines." 1 8 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
Guevarra's claim is not only admitted by petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded Guevarra as
defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed. cdasia
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.
SECOND DIVISION
[G.R. No. 162894. February 26, 2008.]
11. RAYTHEON INTERNATIONAL, INC., petitioner, vs. STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J p:

50

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure which seeks the reversal of the
Decision 1 and Resolution 2 of the Court of Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent against
petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing under the laws of the State of
Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI
hired respondent as its representative to negotiate the sale of services in several government projects in the Philippines for
an agreed remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a service contract with the Republic of
the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo eruption and mudflows. 3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations Commission (NLRC) a suit against BMSI
and Rust International, Inc. (RUST), Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal
termination and breach of employment contract. 4 On 28 September 1995, Labor Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering
BMSI and RUST to pay respondent's money claims. 5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter and
dismissed respondent's complaint on the ground of lack of jurisdiction. 6 Respondent elevated the case to this Court but was dismissed in
a Resolution dated 26 November 1997. The Resolution became final and executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the Regional Trial Court (RTC) of
Bauang, La Union. The Complaint, 7 docketed as Civil Case No. 1192-BG, named as defendants herein petitioner Raytheon International,
Inc. as well as BMSI and RUST, the two corporations impleaded in the earlier labor case. The complaint essentially reiterated the
allegations in the labor case that BMSI verbally employed respondent to negotiate the sale of services in government projects and that
respondent was not paid the commissions due him from the Pinatubo dredging project which he secured on behalf of BMSI. The complaint
also averred that BMSI and RUST as well as petitioner itself had combined and functioned as one company.
In its Answer, 8 petitioner alleged that contrary to respondent's claim, it was a foreign corporation duly licensed to do business in the
Philippines and denied entering into any arrangement with respondent or paying the latter any sum of money. Petitioner also denied
combining with BMSI and RUST for the purpose of assuming the alleged obligation of the said companies. 9 Petitioner also referred to the
NLRC decision which disclosed that per the written agreement between respondent and BMSI and RUST, denominated as "Special Sales
Representative Agreement," the rights and obligations of the parties shall be governed by the laws of the State of
Connecticut. 10 Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non
conveniens and prayed for damages by way of compulsory counterclaim. 11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on Affirmative Defenses and for Summary
Judgment 12 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 Order 14 dated 13 September 2000, the RTC denied petitioner's omnibus motion. The trial court held that the factual allegations in
the complaint, assuming the same to be admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled that
the principle of forum non conveniens was inapplicable because the trial court could enforce judgment on petitioner, it being a foreign
corporation licensed to do business in the Philippines. 15
Petitioner filed a Motion for Reconsideration 16 of the order, which motion was opposed by respondent. 17 In an Order dated 31 July
2001, 18 the trial court denied petitioner's motion. Thus, it filed a Rule 65 Petition 19 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 Decision 21 denying the petition for certiorari for lack of merit. It also
denied petitioner's motion for reconsideration in the assailed Resolution issued on 10 March 2004. 22
The appellate court held that although the trial court should not have confined itself to the allegations in the complaint and should have also
considered evidence aliunde in resolving petitioner's omnibus motion, it found the evidence presented by petitioner, that is, the deposition of
Walter Browning, insufficient for purposes of determining whether the complaint failed to state a cause of action. The appellate court also
stated that it could not rule one way or the other on the issue of whether the corporations, including petitioner, named as defendants in the
case had indeed merged together based solely on the evidence presented by respondent. Thus, it held that the issue should be threshed out
during trial. 23 Moreover, the appellate court deferred to the discretion of the trial court when the latter decided not to desist from
assuming jurisdiction on the ground of the inapplicability of the principle offorum 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
Resolution 25 dated 20 November 2006, the Court resolved to dispense with the filing of a comment.

51

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 instances 27 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 law 30 and by the material allegations
in the complaint, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein. 31 Civil
Case No. 1192-BG is an action for damages arising from an alleged breach of contract. Undoubtedly, the nature of the action and the
amount of damages prayed are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as party plaintiff) upon the filing of the
complaint. On the other hand, jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary appearance in
court. 32
That the subject contract included a stipulation that the same shall be governed by the laws of the State of Connecticut does not suggest
that the Philippine courts, or any other foreign tribunal for that matter, are precluded from hearing the civil action. JURISDICTION AND
CHOICE OF LAW ARE TWO DISTINCT CONCEPTS. Jurisdiction considers whether it is fair to cause a defendant to travel to this state;
choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to
both parties. 33 The choice of law stipulation will become relevant only when the substantive issues of the instant case develop, that is,
AFTER HEARING on the merits proceeds before the trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded from seeking remedies
elsewhere. 34 Petitioner's averments of the foreign elements in the instant case are not sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a factual determination; hence, it is
more properly considered as a matter of defense. While it is within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine whether special circumstances require the court's
desistance. 35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its conclusion that it can assume jurisdiction over the
dispute notwithstanding its foreign elements. In the same manner, the Court defers to the sound discretion of the lower courts because their
findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a cause of action against petitioner. Failure to state a
cause of action refers to the insufficiency of allegation in the pleading. 36 As a general rule, the elementary test for failure to state a cause
of action is whether the complaint alleges facts which if true would justify the relief demanded. 37
The complaint alleged that petitioner had combined with BMSI and RUST to function as one company. Petitioner contends that the
deposition of Walter Browning rebutted this allegation. On this score, the resolution of the Court of Appeals is instructive, thus:
. . . Our examination of the deposition of Mr. Walter Browning as well as other documents produced in the hearing
shows that these evidencealiunde 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.

52

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
67001 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Carpio, Sandoval-Gutierrez, * Carpio-Morales and Velasco, Jr., JJ., concur.
FIRST DIVISION
[G.R. No. 120077. October 13, 2000.]
12. THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G. SANTOS, respondents.
SYNOPSIS
Private respondent Marcelo Santos was an overseas worker employed as printer at the Mazoon Printing Press, Sultanate of Oman. While in
Oman, on May 2, 1998, he received a letter from Mr. Gerald R. Shmidt, General Manager of Palace Hotel, Beijing, China, offering him the
same position as printer with a higher monthly salary and increased benefits as he was recommended by his friend Nestor Buenio. Palace
Hotel is a member of the Manila Hotel Group. Santos signified his acceptance. Subsequently, an employment contract for a period of two
years beginning September 1, 1998 was perfected. However, since it was only on November 5, 1988 that Santos left for Beijing, China, the
employment contract was amended. The amended employment contract was signed by Mr. Shmidt as the representative of Palace Hotel,
and was noted by the Vice President for Operations and Development of MHICL, Miguel O. Cergueda. 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 will be terminated due to
business reverses brought about by the political upheaval in China. On February 20, 1990, respondent Santos filed a complaint for illegal
dismissal against MHC, MHICL, the Palace Hotel and Mr. Shmidt before the Arbitration Branch, National Capital Region, National Labor
Relations Commission. The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before
the Labor Arbiter. Subsequently, the Labor Arbiter decided against MHC and MHICL. MHC and MHICL appealed to the NLRC which decided in
favor of Santos. Hence, this appeal.
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 Filipino citizens can be tried here. This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. If Santos were an "overseas contract worker," a Philippine forum, specifically the POEA, not the NLRC, would
protect him. However, he is not an "overseas contract worker," a fact which he admits with conviction. He was hired directly by the Palace
Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman where he was then employed. He was hired without the
intervention of the POEA or any authorized recruitment agency of the government.
Further, 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. Clear and convincing evidence is needed to pierce the veil of corporate fiction. The Court found no
evidence to show that MHICL and MHC are one and the same entity. Moreover, when one "notes" a contract, one is not expressing his
agreement or approval, as a party would. InSichangco v. Board of Commissioners of Immigration, 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. Considering that no employer-employee relationship existed between MHICL,
MHC and respondent Santos, the Labor Arbiter had no jurisdiction over respondent's claim.
The Court ANNULLED the orders and resolutions of the National Labor Relations Commission.
DECISION
PARDO, J p:
The case before the Court is a petition for certiorari 1 to annul the following orders of the National Labor Relations Commission (hereinafter
referred to as "NLRC") for having been issued without or with excess jurisdiction and with grave abuse of discretion: 2
(1)Order of May 31, 1993. 3 Reversing and setting aside its earlier resolution of August 28, 1992. 4 The questioned order declared that the
NLRC, not the Philippine Overseas Employment Administration (hereinafter referred to as "POEA"), had jurisdiction over private respondent's
complaint;
(2)Decision of December 15, 1994. 5 Directing petitioners to jointly and severally pay private respondent twelve thousand and six hundred
dollars (US$12,600.00) representing salaries for the unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00) as
extra four months salary for the two (2) year period of his contract, three thousand six hundred dollars (US$3,600.00) as "14th month pay"
or a total of nineteen thousand and eight hundred dollars (US$19,800.00) or its peso equivalent and attorney's fees amounting to ten
percent (10%) of the total award; and
(3)Order of March 30, 1995. 6 Denying the motion for reconsideration of the petitioners. EHSITc
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.

53

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), MHICL 10 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. TAIEcS
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. AaEcDS
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. We quote the letter:
"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.

54

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. DCSETa
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

55

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 NLRC. 33
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. ICTaEH
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.

56

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. DSHTaC
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 (italics 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.

57

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. AaCcST
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 employer-employee
relationship which can be resolved by reference to the Labor Code, or other labor statutes, or their collective bargaining agreements. 54
"To determine which body has jurisdiction over the present controversy, we rely on the sound judicial principle that jurisdiction over the
subject matter is conferred by law and is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all
or some of the claims asserted therein." 55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His failure to dismiss the case amounts to
grave abuse of discretion. 56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and resolutions of the National Labor Relations
Commission dated May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-0201058-90).
No costs.
SO ORDERED.
SECOND DIVISION
[G.R. No. 133876. December 29, 1999.]
13. BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN REALTY CORPORATION and COURT OF
APPEALS, respondents.
Agcaoili & Associates for petitioner.
William R. Veto for private respondent.
SYNOPSIS
As security for restructured loans, American Realty Corporation, a third party mortgagor, executed two (2) real estate mortgages in favor
of Bank of America. Eventually, the corporate borrowers defaulted in the payment of the restructured loans. Consequently, Bank of
America filed collection suits before foreign courts. Later Bank of America likewise filed an application for extra-judicial foreclosure of
real estate mortgage. This prompted American Realty Corporation to file an action for damages against Bank of America. The trial
court rendered judgment in favor of American Realty Corporation. According to the trial court, the filing by Bank of America of
collections suits operated as a waiver of the security of the mortgages. The Court of Appeals affirmed the assailed decision of the lower
court. Its motion for reconsideration having been denied, petitioner resorted to this action. aSDCIE

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A mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage.
The remedies available to the mortgage creditor are deemed alternative and not cumulative. An election of one remedy operates as
a waiver of the other.
A suit brought before a foreign court having competence and jurisdiction to entertain the action is deemed to be within the contemplation of
the remedy available to the mortgagee-creditor. This would best serve the interest of justice and fair play and further discourage the
noxious practice of splitting up a lone cause of action.
Despite the fact that the award of actual and compensatory damages by the lower court exceeded that prayed for in the complaint, the
same was nonetheless valid. Inasmuch as the petitioner was afforded the opportunity to refute the evidence formally offered by private
respondent, the rudiments of fair play were deemed satisfied.
DECISION
BUENA, J p:
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? cdrep
Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the Rules of Court are the decision 1 of public
respondent Court of Appeals in CA G.R. CV No. 51094, promulgated on 30 September 1997 and its resolution, 2 dated 22 May 1998,
denying petitioner's motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing institution duly licensed to do business in the
Philippines, organized and existing under and by virtue of the laws of the State of California, United States of America while private
respondent American Realty Corporation (ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited liability company organized and existing under the laws of
England.
As borne by the records, BANTSA and BAIL on several occasions granted three major multi-million United States (US) Dollar loans to the
following corporate borrowers: (1) Liberian Transport Navigation, S.A.; (2) El Challenger S.A. and (3) Eshley Compania Naviera S.A.
(hereinafter collectively referred to as "borrowers"), all of which are existing under and by virtue of the laws of the Republic of Panama and
are foreign affiliates of private respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and the corporate borrowers signed and entered into restructuring
agreements. As additional security for the restructured loans, private respondent ARC as third party mortgagor executed two real estate
mortgages, 4 dated 17 February 1983 and 20 July 1984, over its parcels of land including improvements thereon, located at Barrio Sto.
Cristo, San Jose Del Monte, Bulacan, and which are covered by Transfer Certificate of Title Nos. T-78759, T-78760, T-78761, T-78762 and T78763. Cdpr
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; cdrep
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 not impleaded as partydefendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial Sheriff of Bulacan, Philippines, an application for
extrajudicial foreclosure 6 of real estate mortgage. cdasia

59

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. prLL
"c)Under English Law, which is the governing law under the principal agreements, the mortgagee does not lose its
security interest by filing civil actions for sums of money."
On 14 December 1993, private respondent filed a motion for suspension 10 of the redemption period on the ground that "it cannot exercise
said right of redemption without at the same time waiving or contradicting its contentions in the case that the foreclosure of the mortgage
on its properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private respondent's motion for suspension after which a copy of said
order was duly received by the Register of Deeds of Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale, consolidated its ownership over the real
properties, resulting to the issuance of Transfer Certificate of Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real properties to Stateland Investment Corporation for
the amount of Thirty Nine Million Pesos (P39,000,000.00). 12 Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-187782(m), T187783(m), T-16653P(m) and T-16652P(m) were issued in the latter's name. prLL
After trial, the lower court rendered a decision 13 in favor of private respondent ARC dated 12 May 1993, the decretal portion of which
reads:
"WHEREFORE, judgment is hereby rendered declaring that the filing in foreign courts by the defendant of collection suits
against the principal debtors operated as a waiver of the security of the mortgages. Consequently, the plaintiff's rights
as owner and possessor of the properties then covered by Transfer Certificates of Title Nos. T-78759, T-78762, T-78763,
T-78760 and T-78761, all of the Register of Deeds of Meycauayan, Bulacan, Philippines, were violated when the
defendant caused the extrajudicial foreclosure of the mortgages constituted thereon.
"Accordingly, the defendant is hereby ordered to pay the plaintiff the following sums, all with legal interest thereon from
the date of the filing of the complaint up to the date of actual payment:
"1)Actual or compensatory damages in the amount of Ninety Nine Million Pesos (P99,000,000.00);
"2)Exemplary damages in the amount of Five Million Pesos (P5,000,000.00); and
"3)Costs of suit.
"SO ORDERED."
On appeal, the Court of Appeals affirmed the assailed decision of the lower court prompting petitioner to file a motion for reconsideration
which the appellate court denied.
Hence, the instant petition for review 14 on certiorari where herein petitioner BANTSA ascribes to the Court of Appeals the following
assignment of errors:
1.The Honorable Court of Appeals disregarded the doctrines laid down by this Hon. Supreme Court in the cases
of Caltex Philippines, Inc. vs.Intermediate Appellate Court docketed as G.R. No. 74730 promulgated on August
25, 1989 and Philippine Commercial International Bank vs. IAC, 196 SCRA 29 (1991 case), although said cases
were duly cited, extensively discussed and specifically mentioned, as one of the issues in the assignment of
errors found on page 5 of the decision dated September 30, 1997. Cdpr
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

60

nor prayed for in private respondent's complaint, is contrary to law and is totally unsupported by evidence
(sic).

In fine, this Court is called upon to resolve two main issues:


1.Whether or not the petitioner's act of filing a collection suit against the principal debtors for the recovery of the loan
before foreign courts constituted a waiver of the remedy of foreclosure.
2.Whether or not the award by the lower court of actual and exemplary damages in favor of private respondent ARC, as
third-party mortgagor, is proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that a waiver of the remedy of foreclosure requires the concurrence of
two requisites: an ordinary civil action for collection should be filed and subsequently a final judgment be correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect the principal loan does not suffice; a final judgment must be secured
and obtained in the personal action so that waiver of the remedy of foreclosure may be appreciated. To put it differently, absent any of the
two requisites, the mortgagee-creditor is deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the jurisprudence laid down in Bachrach 15 and similar cases
adjudicated thereafter, thus:
"In the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a
personal action for debt or a real action to foreclose the mortgage. In other words, 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." LexLib
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence enunciated in Manila Trading and Supply Co. vs. Co
Kim 17 and Movido vs. RFC, 18invariably held:
". . . The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead, an ordinary
action to recover the indebtedness with the right to execute a judgment thereon on all the properties of the debtor,
including the subject matter of the mortgage . . .,subject to the qualification that if he fails in the remedy by him
elected, he cannot pursue further the remedy he has waived. (Underscoring 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 1997 Rules of Civil Procedure. As
to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice
but with the Office of the Sheriff of the province where the sale is to be made, in accordance with the provisions of Act No. 3135, as
amended by Act No. 4118.
In the case at bench, private respondent ARC constituted real estate mortgages over its properties as security for the debt of the principal
debtors. By doing so, private respondent subjected itself to the liabilities of a third party mortgagor. Under the law, third persons who are
not parties to a loan may secure the latter by pledging or mortgaging their own property. 20
Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the fulfillment of
another's obligation by mortgaging his own property, to be solidarily bound with the principal obligor. The signatory to the principal contract
loan remains to be primarily bound. It is only upon default of the latter that the creditor may have recourse on the mortgagors by
foreclosing the mortgaged properties in lieu of an action for the recovery of the amount of the loan. 21
In the instant case, petitioner's contention that the requisites of filing the action for collection and rendition of final judgment therein should
concur, is untenable.

61

Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in said case, that the filing of a collection suit barred the foreclosure
of the mortgage:
"A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage constituted over
the personal property as security for the debt or value of the promissory note when he seeks to recover in the said
collection suit."
". . . When the mortgagee elects to file a suit for collection, not foreclosure, thereby abandoning the chattel mortgage
as basis for relief, he clearly manifests his lack of desire and interest to go after the mortgaged property as security for
the promissory note . . . ."
Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity and emphasis, that the mere act of filing of an ordinary action
for collection operates as a waiver of the mortgage-creditor's remedy to foreclose the mortgage. By the mere filing of the ordinary action for
collection against the principal debtors, the petitioner in the present case is deemed to have elected a remedy, as a result of which a waiver
of the other necessarily must arise. Corollarily, no final judgment in the collection suit is required for the rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court, 23 a case relied upon by petitioner, supposedly to buttress its
contention, this Court had occasion to rule that the mere act of filing a collection suit for the recovery of a debt secured by a mortgage
constitutes waiver of the other remedy of foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is non-payment of the debt. Nevertheless, alternative remedies are
available for its enjoyment and exercise. Petitioner then may opt to exercise only one of two remedies so as not to violate the rule against
splitting a cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc. vs. Icarangal. 24
"For non-payment of a note secured by mortgage, the creditor has a single cause of action against the debtor. This
single cause of action consists in the recovery of the credit with execution of the security. In other words, the creditor in
his action may make two demands, the payment of the debt and the foreclosure of his mortgage. But both demands
arise from the same cause, the non-payment of the debt, and for that reason, they constitute a single cause of action.
Though the debt and the mortgage constitute separate agreements, the latter is subsidiary to the former, and both refer
to one and the same obligation. Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rules above stated, cannot split up his single cause of action by filing a
complaint for payment of the debt, and thereafter another complaint for foreclosure of the mortgage. If he does so, the
filing of the first complaint will bar the subsequent complaint. By allowing the creditor to file two separate complaints
simultaneously or successively, one to recover his credit and another to foreclose his mortgage, we will, in effect, be
authorizing him plural redress for a single breach of contract at so much cost to the courts and with so much vexation
and oppression to the debtor."
Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine enunciated in Caltex, wherein this High Court relaxed
the application of the general rules to wit:
"In the present case, however, we shall not follow this rule to the letter but declare that it is the collection suit which
was waived and/or abandoned. This ruling is more in harmony with the principles underlying our judicial system. It is of
no moment that the collection suit was filed ahead, what is determinative is the fact that the foreclosure
proceedings ended even before the decision in the collection suit was rendered. . . ."
Notably, though, petitioner took the Caltex ruling out of context. We must stress that the Caltex case was never intended to overrule the
well-entrenched doctrine enunciated in Bachrach, which to our mind still finds applicability in cases of this sort. To reiterate, Bachrach is still
good law.
We then quote the decision 25 of the trial court, in the present case, thus:

"The aforequoted ruling in Caltex is the exception rather than the rule, dictated by the peculiar circumstances obtaining
therein. In the said case, the Supreme Court chastised Caltex for making ". . . a mockery of our judicial system when it
initially filed a collection suit then, during the pendency thereof, foreclosed extrajudicially the mortgaged property which
secured the indebtedness, and still pursued the collection suit to the end." Thus, to prevent a mockery of our judicial
system", the collection suit had to be nullified because the foreclosure proceedings have already been pursued to their
end and can no longer be undone.
xxx xxx xxx
"In the case at bar, it has not been shown whether the defendant pursued to the end or are still pursuing the collection
suits filed in foreign courts. There is no occasion, therefore, for this court to apply the exception laid down by the
Supreme Court in Caltex, by nullifying the collection suits. Quite obviously, too, the aforesaid collection suits are beyond
the reach of this Court. Thus the only way the court may prevent the specter of a creditor having "plural redress for a
single breach of contract" is by holding, as the Court hereby holds, that the defendant has waived the right to foreclose
the mortgages constituted by the plaintiff on its properties originally covered by Transfer Certificates of Title Nos. T78759, T-78762, T-78760 and T-78761." (RTC Decision pp., 10-11)

62

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." LibLex
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. LibLex
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. LLphil
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. LibLex
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. Cdpr
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.

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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 courts 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 individual titles, and the Court itself has seen the character and nature of said properties during the ocular
inspection it conducted. Based principally on the foregoing, the Court makes the following observations:
"1.The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del Monte, Bulacan, which is (sic) not distant
from Metro Manila the biggest urban center in the Philippines and are easily accessible through well-paved roads;
"2.The properties are suitable for development into a subdivision for low cost housing, as admitted by defendant's own
appraiser (TSN, May 30, 1994, p. 31);
"3.The pigpens which used to exist in the property have already been demolished. Houses of strong materials are found
in the vicinity of the property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing community. It has even been shown
that the house of the Barangay Chairman is located adjacent to the property in question (Exh. 27), and the only
remaining piggery (named Cherry Farm) in the vicinity is about 2 kilometers away from the western boundary of the
property in question (TSN, November 19, p. 3);
"4.It will not be hard to find interested buyers of the property, as indubitably shown by the fact that on March 18, 1994,
ICCS (the buyer during the foreclosure sale) sold the consolidated real estate properties to Stateland Investment
Corporation, in whose favor new titles were issued, i.e., TCT Nos. T-187781(m); T-187782(m), T-187783(m); T16653P(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. 46 Applying the foregoing principle, we therefore
hold that the trial court committed no palpable error in giving credence to the testimony of Reynaldo Flores, who according to the records, is
a licensed real estate broker, appraiser and director of Philippine Appraisal Company, Inc. since 1990. 47 As the records show, Flores had
been with the company for 26 years at the time of his testimony.
Of equal importance is the fact that the trial court did not confine itself to the appraisal report dated 29 March 1993, and the testimony
given by Mr. Reynaldo Flores, in determining the fair market value of the real property. Above all these, the record would likewise show that
the trial judge in order to appraise himself of the characteristics and condition of the property, conducted an ocular inspection where the
opposing parties appeared and were duly represented.

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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 for 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. cda
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
"SECTION 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 judgment; 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. prLL
"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 on the basis of issues discussed and the assertions of fact proved in the course of trial. The court may treat the
pleading as if it had been amended to conform to the evidence, although it had not been actually so amended. Former
Chief Justice Moran put the matter in this way:
'When evidence is presented by one party, with the expressed or implied consent of the adverse party, as to
issues not alleged in the pleadings, judgment may be rendered validly as regards those issues, which shall be
considered as if they have been raised in the pleadings. There is implied consent to the evidence thus
presented when the adverse party fails to object thereto.'
"Clearly, a court may rule and render judgment on the basis of the evidence before it even though the relevant pleading
had not been previously amended, so long as no surprise or prejudice is thereby caused to the adverse party. Put a little
differently, so long as the basis requirements of fair play had been met, as where litigants were given full opportunity to
support their respective contentions and to object to or refute each other's evidence, the court may validly treat the
pleadings as if they had been amended to conform to the evidence and proceed to adjudicate on the basis of all the
evidence before it."
In the instant case, in as much 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

65

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. Accordingly, 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. LexLib
SO ORDERED.

THIRD DIVISION
[G.R. No. 55960. November 24, 1988.]
14. 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 petitioner.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.
DECISION
CORTES, J p:
Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City where he was then residing, leaving behind real and personal
properties here in the Philippines worth P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for the grant of letters of administration
docketed as Special Proceedings Case No. C-699 of the then Court of First Instance of Rizal Branch XXXIII, Caloocan City. In said petition
they alleged among others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Kiat died
intestate; (c) they do not recognize Sy Kiat's marriage to Yao Kee nor the filiation of her children to him; and, (d) they nominate Aida SyGonzales for appointment as administratrix of the intestate estate of the deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged that: (a) Yao Kee is the lawful wife of Sy
Kiat whom he married on January 19, 1931 in China; (b) the other oppositors are the legitimate children of the deceased with Yao Kee; and,
(c) Sze Sook Wah is the eldest among them and is competent, willing and desirous to become the administratrix of the estate of Sy Kiat
[Record on Appeal, pp. 12-13; Rollo, p. 107.]
After hearing, the probate court, finding among others that:
(1)Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp. 49-64;]
(2)Sze Sook Wah, Sze Lai Cho and Sze Chum Yen are the legitimate children of Yao Kee with Sy Kiat [CFI decision, pp.
28-31; Rollo. pp. 65-68;] and,
(3)Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the acknowledged illegitimate offsprings of Sy
Kiat with Asuncion Gillego [CFI decision, pp. 27-28; Rollo, pp. 64-65.]
held in favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the administratrix of the intestate estate of the
deceased [CFI decision, pp. 68-69; Rollo, pp. 106.]
On appeal the Court of Appeals rendered a decision modifying that of the probate court, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby MODIFIED and SET ASIDE and a new judgment
rendered as follows:
(1)Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita 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
Kiat to Yao Kee in China had not been proven to be valid to the laws of the Chinese People's Republic of China (sic);
(3)Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor of Tomas Sy (Exhibit "G-1", English
translation of Exhibit "G") of the Avenue Tractor and Diesel Parts Supply to be valid and accordingly, said property
should be excluded from the estate of the deceased Sy Kiat; and

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(4)Affirming the appointment by the lower court of Sze Sook Wah as judicial administratrix of the estate of the
deceased. [CA decision, pp. 11-12; Rollo, pp. 36-37.]
From said decision both parties moved for partial reconsideration, which was however denied by respondent court. They thus interposed
their respective appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe
and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and (4) of the
dispositive portion of the Court of Appeals' decision. The Supreme Court however resolved to deny the petition and the motion for
reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No. 56045. *

The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion of the decision of the Court of Appeals.
This petition was initially denied by the Supreme Court on June 22, 1981. Upon motion of the petitioners the Court in a resolution dated
September 16, 1981 reconsidered the denial and decided to give due course to this petition.
Herein petitioners assign the following as errors:
I.RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT
HAVE (sic) BEEN PROVEN VALID IN ACCORDANCE WITH LAWS OF THE PEOPLE'S REPUBLIC OF CHINA.
II.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING AIDA SY-GONZALES, MANUEL SY, TERESITA SYBERNABE AND RODOLFO SY AS NATURAL CHILDREN OF SY KIAT WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p. 6.]
I.Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and custom was conclusively proven. To buttress
this argument they rely on the following testimonial and documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as follows:
Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in Fookien, China; that she does not have a
marriage certificate because the practice during that time was for elders to agree upon the betrothal of their children,
and in her case, her elder brother was the one who contracted or entered into [an] agreement with the parents of her
husband; that the agreement was that she and Sy Kiat would be married, the wedding date was set, and invitations
were sent out; that the said agreement was complied with; that she has five children with Sy Kiat, but two of them
died; that those who are alive are Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah who is
already 38 years old; that Sze Sook Wah was born on November 7, 1939; that she and her husband, Sy Kiat, have been
living in Fookien, China before he went to the Philippines on several occasions; that the practice during the time of her
marriage was a written document [is exchanged] just between the parents of the bride and the parents of the groom, or
any elder for that matter; that in China, the custom is that there is a go-between, a sort of marriage broker who is
known to both parties who would talk to the parents of the bride-to-be; that if the parents of the bride-to-be agree to
have the groom-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 Kiat; that during her wedding, Sy Chiok, the eldest brother of Sy Kiat,
signed the document with her mother; that as to the whereabouts of that document, she and Sy Kiat were married
for 46 years already and the document was left in China and she doubt if that document can still be found now; that it
was left in the possession of Sy Kiat's family; that right now, she does not know the whereabouts of that document
because of the lapse of many years and because they left it in a certain place and it was already eaten by the termites;
that after her wedding with Sy Kiat, they lived immediately together as husband and wife, and from then on, they lived
together; that Sy Kiat went to the Philippines sometime in March or April in the same year they were married; that she
went to the Philippines in 1970, and then came back to China; that again she went back to the Philippines and lived with
Sy Kiat as husband and wife; that she begot her children with Sy Kiat during the several trips by Sy Kiat made back to
China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]
Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among the many people who attended the
wedding of his sister with Sy Kiat and that no marriage certificate is issued by the Chinese government, a document signed by the parents
or elders of the parties being sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.]
Third, the statements made by Asuncion Gillego when she testified before the trial court to the effect that (a) Sy Kiat was married to Yao
Kee according to Chinese custom; and, (b) Sy Kiat's admission to her that he has a Chinese wife whom he married according to Chinese
custom [CFI decision, p. 17; Rollo, p. 54.]

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Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where the following entries are found: "Marital
status Married"; "If married give name of spouse Yao Kee"; "Address China"; "Date of marriage 1931"; and "Place of marriage
China" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968 where the following entries are likewise found: "Civil
status Married"; and, "If married, state name and address of spouse Yao Kee Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People's Republic of China to the effect that
"according to the information available at the Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were
married on January 19, 1931 in Fukien, the People's Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However, the same do not suffice to establish the
validity of said marriage in accordance with Chinese law or custom.
Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced) as a social rule, legally binding and
obligatory" [In the Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes",
July 30, 1979, SCRA 3, 12 citing JBL Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed. Vol. 1, p. 7.] The law requires that "a custom
must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.] On this score the Court had occasion to state that "a
local custom as a source of right can not be considered by a court of justice unless such custom is properly established by competent
evidence like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a higher degree, should be
required of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code which states that:
Art. 71.All marriages performed outside the Philippines in accordance with the laws in force in the country where they
were performed, and valid there as such, shall also be valid in this country, except bigamous, polygamous, or
incestuous marriages, as determined by Philippine law. (Emphasis supplied.) **
Construing this provision of law the Court has held that to establish a valid foreign marriage two things must be proven, namely: (1) the
existence of the foreign law as a question of fact; and (2) the alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee,
43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of Court. With respect to an unwritten foreign law, Rule 130 section 45 states
that:
SEC. 45.Unwritten law. The oral testimony of witnesses, skilled therein, is admissible as evidence of the unwritten law
of a foreign country, as are also printed and published books of reports of decisions of the courts of the foreign country,
if proved to be commonly admitted in such courts.
Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus:
SEC. 25.Proof of public or official record. An official record or an entry therein, when admissible for any purpose, may
be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the
record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer
has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a
secretary of embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in which the record is kept and authenticated by the seal of his
office.
The Court has interpreted section 25 to include competent evidence like the testimony of a witness to prove the existence of a written
foreign law [Collector of Internal Revenue v. Fisher, 110 Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61
Phil. 471 (1935).]
In the case at bar petitioners did not present any competent evidence relative to the law and custom of China on marriage. The testimonies
of Yao and Gan Ching cannot be considered as proof of China's law or custom on marriage not only because they are self-serving evidence,
but more importantly, there is no showing that they are competent to testify on the subject matter. For failure to prove the foreign law or
custom, and consequently, the validity of the marriage in accordance with said law or custom, the marriage between Yao Kee and Sy Kiat
cannot be recognized in this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to prove the Chinese law on marriage as judicial
notice thereof had been taken by this Court in the case of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine courts cannot take judicial notice of foreign
laws. They must be alleged and proved as any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54
Phil. 610 (1930).]
Moreover a reading of said case would show that the party alleging the foreign marriage presented a witness, one Li Ung Bieng, to prove
that matrimonial letters mutually exchanged by the contracting parties constitute the essential requisite for a marriage to be considered
duly solemnized in China. Based on his testimony, which as found by the Court is uniformly corroborated by authors on the subject of
Chinese marriage, what was left to be decided was the issue of whether or not the fact of marriage in accordance with Chinese law was duly
proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]

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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 Kiat was celebrated [CFI decision, p.
14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v.
Vivo, supra., pp. 555-556.]
II.The second issue raised by petitioners concerns the status of private respondents.
Respondent court found the following evidence of petitioners' filiation:
(1)Sy Kiat's Master Card of Registered Alien where the following are entered: "Children if any: give number of children
Four"; and, "Name All living in China" [Exhibit "SS-1";]
(2)the testimony of their mother Yao Kee who stated that she had five children with Sy Kiat, only three of whom are
alive namely, Sze Sook Wah Sze Lai Chu and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and,
(3)an affidavit executed on March 22, 1961 by Sy Kiat for presentation to the Local Civil Registrar of Manila to support
Sze Sook Wah's application for a marriage license, wherein Sy Kiat expressly stated that she is his daughter [Exhibit
"3".]
Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three daughters with his Chinese wife, two of whom
Sook Wah and Sze Kai Cho she knows, and one adopted son [TSN, December 6, 1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with Sy Kiat according to the laws of China, they cannot be accorded the
status of legitimate children but only that of acknowledged natural children. Petitioners are natural children, it appearing that at the time of
their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry one another [See Art. 269, Civil Code.] And they are
acknowledged children of the deceased because of Sy Kiat's recognition of Sze Sook Wah [Exhibit "3"] and its extension to Sze Lai Cho and
Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil Code.]
Private respondents on the other hand are also the deceased's acknowledged natural children with Asuncion Gillego, a Filipina with whom he
lived for twenty-five (25) years without the benefit of marriage. They have in their favor their father's acknowledgment, evidenced by a
compromise agreement entered into by and between their parents and approved by the Court of First Instance on February 12, 1974
wherein Sy Kiat not only acknowledged them as his children by Asuncion Gillego but likewise made provisions for their support and future
inheritance, thus:
xxx xxx xxx
2.The parties also acknowledge that they are common-law husband and wife and that out of such relationship, which
they have likewise decided to definitely and finally terminate effective immediately, they begot five children, namely:
Aida Sy, born on May 30, 1950; Manuel Sy, born on July 1, 1953; Teresita Sy, born on January 28, 1955; Ricardo Sy
now deceased, born on December 14, 1956; and Rodolfo Sy, born on May 7, 1958.
3.With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY . . ., the parties mutually agree and covenant that

(a)The stocks and merchandise and the furniture and equipments . . ., shall be divided into two equal
shares between, and distributed to, Sy Kiat who shall own one-half of the total and the other half to Asuncion
Gillego who shall transfer the same to their children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy.
(b)the business name and premises . . . shall be retained by Sy Kiat. However, it shall be his
obligation to give to the aforenamed children an amount of One Thousand Pesos (P1,000;00) monthly out of
the rental of the two doors of the same building now occupied by Everett Construction.
xxx xxx xxx
(5)With respect to the acquisition, during the existence of the 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

69

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

70

SO ORDERED.
Fernan, C .J ., Gutierrez, Jr., Feliciano and Bidin, JJ ., concur.
EN BANC
[G.R. No. L-6897. November 29, 1956.]
15. In the Matter of the Claim for Attorney's Fees. CLARO M. RECTO, claimant-appellee, vs. ESPERANZA P. DE
HARDEN and FRED M. HARDEN, defendants-appellants.
DECISION
CONCEPCION, J p:
This is an appeal taken by Esperanza P. de Harden and Fred M. Harden from a decision of the Court of First Instance of Manila,
the pertinent part of which is of the following tenor:.
"The contingent fee to which the claimant is entitled under paragraph 3 of the contract, Exhibit JJJ or 20, is
20% of P1,920,554.85 or the sum of P384,110.97.
"WHEREFORE, this Court hereby approves the recommendation of the Commissioner with the above-stated
modification, and finds that Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED EIGHTY-FOUR
THOUSAND ONE HUNDRED AND TEN PESOS AND NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of
Esperanza P. de Harden's share in the conjugal properties owned by her and her husband, Fred M. Harden, as
contingent fee stipulated in paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20, and the said
Esperanza P. de Harden is hereby ordered to pay the said amount above-stated." It appears that sometime in July,
1941, appellant, Mrs. Harden, and appellee, Claro M. Recto, executed the following:
"CONTRACT OF PROFESSIONAL SERVICES
KNOW ALL MEN BY THESE PRESENTS:
"That I, ESPERANZA PEREZ DE HARDEN, of age, married to Fred M. Harden, and temporarily residing in the
Philippines, with address at 534 Sales Street, Manila, have engaged the services of Attorney Claro M. Recto to appear
and act as my counsel in the action which I will file against my husband, Fred M. Harden, for the purpose of securing an
increase in the amount of support being received by me from the conjugal partnership of myself and said Fred M.
Harden, and for the purpose likewise of protecting and preserving my rights in the properties of the said conjugal
partnership, in contemplation of the divorce suit which I intent to file against him in the competent Court of California
and of the liquidation of the conjugal partnership between us, this contract of services to be under the following
conditions:
"1.That in lieu of retainer fee, which under the circumstances I am not in a position to pay, I hereby agree to
pay Attorney Claro M. Recto, such payment to be made monthly, during the pendency of the litigation and until the
termination of the same, twenty-five (25%) per cent of the total increase in allowance or pension which may be
awarded to me by the court over and above the amount of P1,500.00 which I now receive monthly from defendant Fred
M. Harden out of the funds of the conjugal partnership; Provided, that should the case be terminated or an amicable
settlement thereof be arrived at by the parties before the expiration of two years from the date of the filing of the
complaint, I shall continue to pay the said twenty-five (25%) per cent up to the end of said period.
"2.That the aforesaid monthly payments shall be in addition to whatever amount may be adjudged by the court
against the defendant Fred M. Harden or against the conjugal partnership by way of litis expense, that is, attorney's
fees chargeable as expenses of litigation.
"3.That as full and complete satisfaction of the fees of Attorney Claro M. Recto in connection with the case
above referred to, and said case being for the purposes aforestated, that is, to secure an increase in the amount of
support I now receive as well as to protect and preserve my rights and interest in the properties of the conjugal
partnership, in contemplation of divorce and of the liquidation of said partnership, I hereby agree to pay said Attorney
Claro M. Recto twenty (20%) per cent of the value of the share and participation which I may receive in the funds and
properties of the said conjugal partnership of myself and defendant Fred M. Harden, as a result of the liquidation thereof
either by death, divorce, judicial separation, compromise or by any means or method by virtue of which said partnership
is or may be liquidated.
"4.All expenses in connection with the litigation are to be for my account, but the same may be advanced by
Attorney Claro M. Recto, to be reimbursed to him either from the money which I receive by way of support or from the
funds of the conjugal partnership.
"5.It is hereby understood that this contract includes the services of Attorney Claro M. Recto in connection with
the securing of the liquidation of the properties and assets of the conjugal partnership of myself and Fred M. Harden,
upon dissolution of said partnership or for any other cause mentioned in Paragraph (3) hereof.

71

IN WITNESS WHEREOF, I have signed these presents in the City _____ of Manila, Philippines this _______ day
of July, 1941.
s/ Esperanza P. de Harden
t/ ESPERANZA P. DE HARDEN
ACCEPTED:
s/ Claro M. Recto
t/ CLARO M. RECTO"
In compliance therewith, on July 12, 1941, the appellee, as counsel for Mrs. Harden, commenced Civil Case No. 59634 of the
Court of First Instance of Manila, entitled "Esperanza P. de Harden vs. Fred M. Harden and Jose Salumbides." In the complaint therein
filed, it was prayed, among other things: (a) that Mrs. Harden be given the exclusive administration of the business and all properties of
the conjugal partnership of Mr. and Mrs. Harden; (b) that, in the event of denial of this prayer, the defendants be ordered to inform her
"of everything pertaining to the administration of said business and properties", as well as to render accounts thereof and to permit her
to examine the books and records pertinent thereto; (c) that Mr. Harden be ordered to account to Mrs. Harden, and to return to this
jurisdiction, the sum of P449,015.44 allegedly withdrawn by him from the Philippines or sent by him to Hongkong on April 1, 1941; (d)
that defendant Salumbides be ordered to account for all moneys, amounting to P285,000.00, belonging to the business and assets of
said conjugal partnership and deposited by him in a safety box, either in his name, or in that of Antonio Wilson, from January 23 to
December 23, 1940; (e) that the transfer, in the name of Salumbides, of certain shares of stock, allegedly belonging to the conjugal
partnership, be rescinded and said defendant ordered to transfer said shares of stock in the name of Mrs. Harden or in that of Mr. and
Mrs. Harden, should Mr. Harden be allowed to continue as administrator of said partnership; ( f ) that the transfer, made by Mr. Harden
and/or by defendant Salumbides, as his attorney-in-fact, of 36,000 shares of stock of the Angelo Mining Company, to some residents of
Hongkong, be rescinded and said shares returned to the assets of the conjugal partnership and placed in the name of Mr. and Mrs.
Harden; (g) that the monthly allowance of Mrs. Harden be increased from P1,500 to P15,000; (h) that, pending final decision, Mr.
Harden be ordered to increase the allowance or pension of Mrs. Harden and their daughter Sarah Elizabeth to P10,000 a month; and (i)
that a writ of preliminary injunction be issued restraining the defendants from disposing of the assets of the conjugal partnership in
fraud of Mrs. Harden.

By an order dated July 12, 1941, the court authorized the issuance of said writ, upon the filing of the corresponding bond. It
appears that, pursuant to an agreement submitted by both parties, and with a view to avoiding unnecessary embarrassment, restraint
or inconvenience in the financial operations of the business enterprises affected by said writ of preliminary injunction, the same was
amended by an order dated July 19, 1941, in the sense that.
". . . without prejudicing in any way the rights of the parties in this case, a separate bank account be
established in the Chartered Bank of India, Australia and China, of Manila, and all transactions in connection with the
aforesaid businesses passed through that account by Mr. Harden or his duly authorized representative, who at present is
Mr. Salumbides, without the necessity of securing a particular order from this Court on each occasion; that the present
funds in the Philippine National Bank in the name of Plaza Lunch and Fred M. Harden be utilized for the purpose of
starting said special bank account in the Chartered Bank of India, Australia and China; that all income from the
aforesaid businesses be deposited in this special bank account and no checks be drawn upon the same, except to pay
the necessary overhead and running expenses including purchases of tobacco, merchandise, etc., required for the
proper operation of said businesses; that a new set of books be opened by Mr. Harden or his duly authorized
representative covering all business transactions passed through said special bank account and the same be opened for
inspection by the plaintiff's duly authorized representative.
"The order of injunction of July 12, 1941, is modified only to the above extent, and in all other respects is
maintained."
Subsequently, the Philippines was invaded by the Japanese and placed under military occupation. Then came the liberation, in
the course of which the records of this case were destroyed. On October 23, 1946, said records were reconstituted at the instance of
appellee herein. Thereafter, the proceedings were resumed and, in due course, the Court of First Instance of Manila rendered, on or
about October 31, 1949, a decision the dispositive part of which we quote:
"In view of the foregoing considerations, this court finds and so holds that
"(a)Fred M. Harden abandoned his domicile of origin in New Jersey and established a domicile of choice in
Manila, Philippines, since 1901;
"(b)The matrimonial domicile of Fred M. Harden and Esperanza P. de Harden was established in Manila,
Philippines, from the date of their marriage on December 14, 1917;
"(c)Since they did not execute any antenuptial contract before their marriage, all the properties, real or
personal, acquired by either or both of them on and after December 14, 1917, up to the present, over and above the
sum of P20,000.00 representing Fred M. Harden's capital, are hereby declared conjugal properties;
"(d)The total amount of P1,944,794.37 representing deposits in safety deposit boxes in the name of Jose
Salumbides, the selling price of the house in Los Angeles, California, and the pre-war and post-war remittances abroad
of Fred M. Harden, from which has already been deducted the sum of P160,000.00 covering payments for deficiency

72

Federal income taxes and attorney's fees, both in the tax case and the present one, is hereby declared chargeable to
the share of defendant Harden and deductible from whatever participation he may still have in the said conjugal
partnership upon the liquidation thereof, upon his failure to return and deposit them in the name of the Plaza Lunch with
the Manila branch of the Chartered Bank of India, Australia and China up to the time this decision shall become final;
"(e)A conjugal lien be annotated in the original and owner's duplicate of Transfer Certificates of Title Nos.
24393, 52436 and 54911 of the Register of Deeds of Manila and in Original Certificate of Title No. 2292 of Quezon
Province, and on all the certificates of shares belonging to said conjugal partnership, as well as in the corresponding
books of the companies or corporations issuing them, whereby it will be made to appear that any subsequent alienation
or encumbrance of said properties by Fred M. Harden alone or his representative without the consent of his wife will be
deemed fraudulent and subject to revocation or cancellation for being in fraud and prejudicial to the right of Esperanza
P. de Harden;
"( f )Within a period of fifteen (15) days after this decision shall have become final, Fred M. Harden and
Esperanza P. de Harden are hereby ordered to execute a document to be approved by this court creating and express
active trust upon the remaining cash assets and income of the conjugal partnership in the Philippines, whereby the
Philippine Trust Company, with offices in Manila, will act as trustee, subject to the right of Fred M. Harden to receive
therefrom the sum of P2,500,00 a month by way of allowance and an equal amount for the plaintiff as separate support
and maintenance;
"(g)Within thirty (30) days after this decision shall have become final, Fred M. Harden shall inform the plaintiff
of all the properties and businesses of the conjugal partnership, be they in the Philippines or abroad, and render a true
and complete accounting of the earnings and profits thereof;
"(h)The plaintiff is entitled to litis expensae in the amount of P175,000.00 for services rendered by her counsel
up to the rendition of this judgment, which Fred M. Harden or the herein receiver is ordered to pay within a period of
fifteen (15) days after this decision has become final; and
"(i)The writ of preliminary injunction of July 12, 1941, is hereby declared permanent and the order of
receivership of November 20, 1946, is hereby maintained, but said auxiliary remedies will be automatically lifted upon
the conclusion of the annotation of the conjugal lien and the execution of the deed of trust above mentioned. Without
costs.
"IT IS SO ORDERED."
The defendants appealed from said decision to this Court, where the case was docketed as case No. L-3687. While the appeal
was thus pending before us, herein appellee filed a manifestation and a motion, both dated February 20, 1952. In said "manifestation",
appellee stated that Mrs. Harden had instructed him, by letter, to "discontinue all proceedings relative to" said case, "vacate all orders
and judgments rendered therein, and abandon and nullify all her claims to the conjugal partnership existing between her and Mr.
Harden", in accordance with several instruments dated January 29, 1952, and executed without the knowledge, advise and consent of
said appellee, as counsel for Mrs. Harden, whereby: (1) Mr. and Mrs. Harden had purportedly agreed to settle their differences in
consideration of the sum of $5,000 paid by Mr. Harden to Mrs. Harden, and a monthly pension of P500 to be paid by him to her; (2) Mr.
Harden had created a trust fund of $20,000 from which said monthly pension of $500 would be taken; and (3) Mr. and Mrs. Harden had
mutually released and forever discharged each other from all actions, debts, duties, accounts, demands and claims to the conjugal
partnership, in consideration of the sum of $1. It was further asserted, in appellee's "manifestation", that the purpose of the said
instruments, executed by Mr. and Mrs. Harden, was to defeat the claim of the former for attorney's fees, for which reason, he prayed, in
his aforementioned motion, that
"a)Pending the resolution of this motion, the receiver appointed herein be authorized to continue holding the
properties above mentioned in his custody in order not to defeat the undersigned's inchoate lien on them;
"b)A day set aside to receive the evidence of the undersigned and those of the plaintiff and the defendant Fred
M. Harden, in order to determine the amount of fees due to the undersigned, by the appointment of a referee or
commissioner for the reception of such
"c)After due hearing, the undersigned be declared entitled to the sum of P400,000.00 as his fees for services
rendered in behalf of the plaintiff in this case, under paragraph 3 of the contract, Annex 'A', and to that end a charging
lien therefore be established upon the properties above-mentioned;
"d)And the receiver be ordered to pay to the undersigned the full amount of the fees to which the latter is
found to be entitled."
Counsel for the defendants-appellants, in turn, moved for the dismissal of the case, to which appellee objected. Acting upon
the issues raised in such motion for dismissal and in appellee's motion to establish and enforce his charging lien, as counsel for Mrs.
Harden, this Court issued on July 22, 1952, a resolution the pertinent part of which reads:
"It will be seen from the above that the defendants-appellants pray for the complete dismissal of the above
entitled case without prejudice to the annotation of the contingent claim of Attorney Claro M. Recto on the property
under receivership, other than the 368,553 shares of the Balatoc Mining Company which belong to Fred M. Harden. On
the other hand, Attorney Claro M. Recto agrees to the lifting of the writ of preliminary injunction, the orders of contempt
and commitment, and all other interlocutory orders which were issued in the course of this case, with the exception of
the receivership, but objects to the dismissal of the case on the ground that, since receivership is merely an auxiliary

73

remedy, the present case should be allowed to remain pending for the purpose of maintaining the receivership to
safeguard his right to collect the fees that may be due him.
"Attorney Claro M. Recto prays that a commissioner or referee be immediately appointed by this Court to
receive evidence in support of his allegations as to his attorney's lien and its enforcement. Counsel for the defendantsappellants 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:
"Taking into consideration the value of the properties involved in this litigation, the length of time in which
claimant had handled the same for Esperanza Harden, the volume and quality of the work performed, the complicated
legal questions involved, the responsibility assumed by the claimant as counsel, his reputation in the bar, the difficulties
encountered by him while handling the same in which he had to work hard every inch of the way because of the stiff
oppositions filed by adverse counsel, the diligence he employed not only in the preservation of the records in his
possession during the days of enemy occupation but also in the protection of the interests of Esperanza Harden, his
successful handling of said case and those cases growing out of it which reached the Supreme Court, and the extra
services he rendered in her behalf in the tax and other court cases, the undersigned Commissioner concludes that
claimant is entitled to the full amount of 20% of Esperanza Harden's share of the conjugal properties, as provided in
paragraph 3 of the Contract of Professional Services, Exhibit JJJ.
"WHEREFORE, the undersigned Commissioner respectfully recommends that Atty. Claro M. Recto be paid the
equivalent amount of 20% of Esperanza P. de Harden's share of the conjugal properties or the sum of P369,410.04 as
his contingent fee for services rendered in her behalf."
After appropriate proceedings, the lower court rendered a decision dated April 30, 1953, adopting substantially said report of
the commissioner, but increasing the contingent fee of appellee herein from P369,410.04, the sum recommended in the report, to
P384,110.97. Hence, this appeal taken by Mr. and Mrs. Harden.
The first question for determination therein is the validity of the above-quoted contract of services, which the appellants assail
as void, mainly, upon the ground: (1) that Mrs. Harden cannot bind the conjugal partnership without her husband's consent; (2) that
Article 1491 of the Civil Code of the Philippines in effect prohibits contingent fees; (3) that the contract in question has for its purpose
to secure a decree of divorce, allegedly in violation of Articles 1305, 1352 and 1409 of the Civil Code of the Philippines; and (4) that the
terms of said contract are harsh, inequitable and oppressive.
The first objection has no foundation in fact, for the contract in dispute does not seek to bind the conjugal partnership. By
virtue of said contract, Mrs. Harden merely bound herself or assumed the personal obligation to pay, by way of contingent fees,
20% of her share in said partnership. The contract neither gives, nor purports to give, to the appellee any right whatsoever, personal or
real, in and to her aforesaid share. The amount thereof is simply a basis for the 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).
". . . in the United States, the great weight of authority recognizes the validity of contracts for contingent fees,
provided such contracts are not in contravention of public policy, and it is only when the attorney has taken an unfair or
unreasonable advantage of his client that such a claim is condemned." (See 5 Am. Jur. 359 et seq.; Ballentine, Law
Dictionary, 2nd ed., p. 276.)
Needless to say, there is absolutely nothing in the records before us to show that appellee herein had, in any manner, taken an
unfair or unreasonable advantage of his client Mrs. Harden.

74

The third objection is not borne out, either by the language of the contract between them, or by the intent of the parties
thereto. Its purpose was not to secure a divorce, or to facilitate or promote the procurement of a divorce. It merely sought to protect
the interest of Mrs. Harden in the conjugal partnership, during the pendency of a divorce suit she intended to file in the United States.
What is more, inasmuch as Mr. and Mrs. Harden are admittedly citizens of the United States, their status and the dissolution thereof are
governed pursuant to Article 9 of the Civil Code of Spain (which was in force in the Philippines at the time of the execution of the
contract in question) and Article 15 of the Civil Code of the Philippines by the laws of the United States, which sanction divorce. In
short, the contract of services, between Mrs. Harden and herein appellee, is not contrary to law, morals, good customs, public order or
public policy.
The last objection is based upon principles of equity, but, pursuant thereto, one who seeks equity must come with clean hands
(Bastida, et al.,vs. Dy Buncio & Co., 93 Phil., 195; 30 C. J. S. 475), and appellants have not done so, for the circumstances surrounding
the case show, to our satisfaction, that their aforementioned agreements, ostensibly for the settlement of the differences between
husband and wife, were made for the purpose of circumventing or defeating the rights of herein appellee, under his above-quoted
contract of services with Mrs. Harden. Indeed, having secured a judgment in her favor, acknowledging her rights to the assets of the
conjugal partnership, which turned out to be worth almost P4,000,000 in addition to litis expensae in the sum of P175,000, it is
inconceivable that Mrs. Harden would have waived such rights, as well as the benefits of all orders and judgments in her favor, in
consideration of the paltry sum of $5,000 allegedly paid to her by Mr. Harden and the additional sum of $20,000 to be paid by him in
installments, at the rate of $500 a month. In fact, no explanation has been given for this most unusual avowed settlement between Mr.
and Mrs. Harden. One can not even consider the possibility of a reconciliation between the spouses, the same being inconsistent with
the monetary consideration for said alleged settlement. What is more, the records show that the relations between said spouses
which were bad indeed, not only in July, 1941, when Mrs. Harden engaged the services of the appellee, but, even, before, for Mr. and
Mrs. Harden were separated since 1938 had worsened considerably thereafter, as evidence by an action for divorce filed by Mr.
Harden in New Jersey, in July 1948, upon the ground of repeated acts of infidelity allegedly committed by Mrs. Harden in 1940 and
1941.
Again, it appears that appellee had rendered, under the contract in question, the following services, for the benefit of Mrs.
Harden:
1.He succeeded in defeating defendants' motion for the dissolution of the writ of preliminary injunction, issued by the Court on
July 12, 1941, and amended on July 19, 1941.
2.On November 12, 1946, appellee moved for the appointment of a receiver, upon the ground that, despite said writ of
preliminary injunction, the defendants had been disposing of the properties of the conjugal partnership for the purpose of defrauding
Mrs. Harden. After due hearing, the court, by an order dated November 20, 1946, directed the appointment of Abelardo Perez as
receiver of said properties, upon the filing of a P10,000 bond. Defendants asked, on February 13, 1947, that the receivership be
suspended, or else, that they be allowed to file a bond for the discharge of the receivership. Appellee replied objecting thereto, unless
the defendants posted a P4,000,000 bond. Subsequently or on March 5, 1947, the defendants sought a reconsideration of the order of
November 20, 1946, and the discharge of the receiver. By an order dated March 21, 1947, the Court authorized said discharged upon
the filing, by the defendants, of a bond in the sum of P500,000, provided that Mr. Harden "should bring back all the 368,553 shares of
the Balatoc Mining Co., in his name to the Philippines for deposit with the Clerk of Court, or with the Chartered Bank of India, Australia
and China, at Manila . . .
"3.On motion of the appellee dated March 4, 1947, the Court, by an order dated April 5, 1947, directed Mr. Harden to remit to
Mrs. Harden the sum of $2,500, to be charged against her litis expensae. Upon similar motion, filed by appellee on or about April 26,
1947, the Court ordered Mr. Harden, on May 13, 1947, to furnish Mrs. Harden the sum of $5,000, under the same conditions.
4.On June 21, 1947, the defendants instituted Civil Case No. G. R. No. L-1499 of this Court, entitled "Fred M. Harden and Jose
Salumbidesvs. Emilio Pea, Abelardo Perez and Esperanza P. Harden" for the purpose of annulling and setting aside, by writ of
certiorari, the aforementioned orders of the lower court dated July 12, 1941, November 20, 1946, and April 5 and May 13, 1947, and to
restrain, in the meantime, the enforcement thereof. After appropriate proceedings, in the course of which appellee appeared as counsel
for Mrs. Harden, and like counsel for the petitioners therein, filed several lengthy, detailed pleadings and memoranda, decision was
rendered on November 21, 1950, denying the writ of certiorari prayed for.

5.On or about September 9, 1947, appellee filed a motion alleging that despite the writ of preliminary injunction above
mentioned, the defendants had, fraudulently and without judicial consent, remitted abroad several sums of money aggregating
P1,000,608.66, and praying that Mr. Harden be ordered to return this sum to the Philippines, within a stated period, said sum to be
deposited with the account of the Plaza Lunch at the Manila Branch of the Chartered Bank of India, Australia and China. Mr. Harden
objected to said motion. Appellee filed a rejoinder, to which Mr. Harden replied. Appellee filed a rejoinder to the rejoinder. On October 7,
1947, the Court granted appellee's motion. Mr. Harden sought a reconsideration, which was opposed by the appellee on October 27,
1947, and denied by an order dated November 13, 1947. Mr. Harden moved, on November 18, 1947, for the suspension of this order,
which was immediately objected to by the appellee and then denied by the Court.
6.Inasmuch as said order of November 13, 1947 had not been complied with, appellee filed on November 27, 1947, a motion
praying that Mr. Harden be declared in contempt of court and punished accordingly. Meanwhile, or on November 24, 1947, Mr. Harden
had instituted case G. R. No. L-1816 of this Court against Hon. Emilio Pea, as Judge of the Court of First Instance of Manila, and Mrs.
Harden. In the petition therein filed, Mr. Harden applied for a writ of certiorari annulling said orders of Judge Pea of October 7 and
November 13, 1947, and prayed that, pending disposition of the case, a writ of preliminary injunction be issued restraining the
respondents therein from enforcing said orders, particularly through contempt proceedings. Hence, the lower court deferred action on
the aforementioned motion of November 27, 1947. After due hearing, this Court, in a resolution dated February 12, 1948, refused to
issue the writ of preliminary injunction prayed for. Subsequently, or on November 21, 1950, decision was rendered denying the petition
for a writ of certiorari.

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7.Soon after the issuance of our resolution in said case G. R. No. 1816, dated February 12, 1948, or to be exact on March 27,
1948, the lower court issued an order directing Mr. Harden to comply, within five (5) days from notice, with the order of October 7,
1947. On April 6, 1948, appellee filed with the lower court the corresponding formal charges against Mr. Harden for contempt of court.
After due hearing, Mr. Harden was, by an order of April 28, 1948, found guilty as charged and ordered confined "until he complies with
the aforementioned orders" of October 7, 1947 and March 27, 1948. On motion of Mr. Harden, said order of April 28, 1948 was
suspended until May 4, 1948, on which date he was arrested and placed in confinement at the New Bilibid Prison, in Muntinglupa, Rizal.
On July 10, 1948, he filed with this Court a petition for a writ of habeas corpus against the Director of Prisons, (G. R. No. L-2349,
entitled "Fred M. Harden vs. The Director of Prisons"), which, in due course was denied in a decision promulgated on October 22, 1948.
8.During the military occupation of the Philippines by the Japanese, the appellee made representations with the Japanese
Government to prevent the commandeering of a business establishment belonging to Mr. and Mrs. Harden. Moreover, he succeeded in
persuading the Japanese to refrain from interning Mrs. Harden and her daughter and to allow her to withdraw, from the former's
deposit in a local bank, from P200 to P250 a month, for their subsistence. He, likewise, lent her money to meet her needs and spent
the sum of P55,000 in the preservation of the records and papers pertaining to the business and other properties of the conjugal
partnership of Mr. and Mrs. Harden.
9.Appellee assisted, also, the receiver, as his counsel and, in such capacity, took all steps essential for the proper discharge of
the duties of the former. Among other things, appellee sought and obtained judicial authority for some important acts of administration
of, and disposition by, the receiver. He (appellee) secured judicial intervention for the protection and preservation of the assets of the
conjugal partnership, including orders for the delivery of certificates of stock, the return thereof and/or its deposit with the clerk of
court. He, likewise, represented the receiver in seeking war damage payments.
10.In civil case No. 6222 of the Court of First Instance of Manila, entitled "Francisco Dalupan vs. Fred M. Harden" for the
recovery of P113,837.17, it was decided, through appellee's intervention, that the conjugal assets would bear the payment of
P22,767.43 only, the balance to be chargeable exclusively against Mr. Harden's share of the conjugal partnership.
11.Appellee instituted civil case No. 6940 of the Court of First Instance of Manila, entitled "Abelardo Perez vs. Chartered Bank
of India, Australia and China and Fred M. Harden", for the recovery of P1,000,608.66 and the return of stock certificates of the Balatoc
Mining Co., which had been sent abroad.
12.He (appellee) represented Mrs. Harden in connection with a million-peso federal tax case against Mr. and Mrs. Harden.
13.Appellee successfully blocked Mr. Harden's attempts to withdraw: (1) $53,000 and forward the same to the Collector of
Internal Revenue of Los Angeles, California; (2) $50,000.00, allegedly to defray expenses in resisting a new tax assessment against
him in the United States; and (3) P65,000 for his expenses.
Then too, the conjugal partnership had varried and extensive business interests and its assets were worth almost P4,000,000.
The pleadings, motions, oppositions, rejoinders, and memoranda filed, and the evidence introduced, in the aforementioned cases in
which appellee was pitted against one of the most experienced and able members of the Philippine Bar were numerous, extensive
and exhaustive. For instance, the record on appeal in one of those cases, namely, G. R. No. L-3687, consisted of 966 pages.
In short, considering the character of the services rendered by the appellee, the nature and importance of the issues in said
litigations, the amount of labor, time (1941 to 1952) and trouble involved therein, the skill displayed in connection with said cases, the
value of the property affected by the controversy, the professional character and standing of the appellee, the risks assumed and the
results obtained, we are of the opinion, and so hold, that the contract of services in question is neither harsh nor oppressive or
inequitable.
Under their second assignment of error, appellants maintain that:
"The lower court erred in failing to find as a fact borne out by the evidence that the legal services of Attorney
Claro M. Recto to Mrs. Esperanza P. de Harden, payment, for which is sought by him in this case, have already been
paid by his immediate execution pending appeal of the decision in Civil Case No. CFI-R-59634 (SC-G.R. No. L- 3687),
wherein he collected the sum of P176,000.00 for all such legal services."
Said decision, however, states clearly that the aforementioned sum of P175,000 represents litis expensae, and the contract
between the appellee and Mrs. Harden explicitly declares that said litis expensae shall be "in addition to" appellee's share of 25% of the
increase in the allowance of Mrs. Harden and his attorney's fees of 20% of her share in the conjugal partnership. The second
assignment of error is, therefore, devoid of merit.
Appellants, further contend, that:
3.The lower court erred in holding that the inchoate share of the wife, Esperanza P. de Harden, in the
undissolved and unliquidated conjugal partnership properties of the Harden spouses, is capable of certain valuation
before such dissolution and liquidation, and summarily assessing the value of Mrs. Harden's share in such conjugal
properties without proper evidence.
4."The lower court erred in awarding 20% of such inchoate share to Attorney Claro M. Recto from Mrs.
Harden's interests in the Harden conjugal properties, summarily assessing such 20% inchoate share as of a value of
P384,110.97, and ordering the payment of said sum to Attorney Recto in pursuance of the provisions of paragraph 3 of
the Contract of Professional Services."

76

Appellants' arguments in support thereof may be summarized as follows: The contract of services in question provides that
appellee's contingent fees shall be 20% of the share of Mrs. Harden in the conjugal partnership. Pursuant to law, the share of Mrs.
Harden shall be determined upon the liquidation of said partnership, which has not taken place, as yet. What is more, it cannot be
effected until the dissolution of the marriage relation between Mr. and Mrs. Harden. Inasmuch as this relation subsists, it follows that
the amount of attorney's fees due to appellee herein should not have been determined in the decision appealed from.
This line of argument overlooks the fact that said contract of services was made, principally, in contemplation of a suit for
divorce that, according to Mrs. Harden, she intended to file before a competent court in California, "and of the liquidation of the
conjugal partnership between" her and Mr. Harden. Had she filed said action for divorce and secured a decree of divorce, said conjugal
partnership would have been dissolved and then liquidated, and the share of Mrs. Harden therein would have been fixed. However, this
cannot take place, either now, or in the foreseeable future, owing to the aforementioned agreements between Mr. and Mrs. Harden,
which were made for the evident purpose of defeating appellee's claim for attorney's fees. In other words, the occurrence, within the
time contemplated by the parties bearing in mind the nature of, and the circumstances under which they entered into, said contract
of services of the event upon which the amount of said fees depended, was rendered impossible by Mrs. Harden. Hence, whether
such event be regarded as a condition or as a period, she may not insist upon its occurrence, prior to the enforcement of the rights of
the herein appellee, for "the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment" (Art. 1186, Civil
Code) and "the debtor shall lose every right to make use of the period" when he "violates any undertaking, in consideration of which
the creditor agreed to the period." (Art. 1198, Civil Code.)

It should be noted, also, that the compensation agreed upon for appellee's services, consists of three (3) parts, namely: (a)
25% of the increase in the allowance of Mrs. Harden; (b) litis expensae; and (c) 20% of her share in the conjugal partnership. The first
part was dealt with in the first paragraph of their contract of services. The second and third parts were the object of the second and
third paragraphs, respectively. The firstparagraph limited the rights of appellee thereunder to two (2) years, in the event of termination
of the case or amicable settlement thereof within two (2) years from the filing of the complaint. No such limitation appears in the
second and third paragraphs of said contract. Hence, the same were intended by the parties to be fully operative under any and all
conditions.
It may not be amiss to add that the value of the properties involved has been assessed, not summarily, but after due notice
and full dress hearing, in the course of which both parties introduced testimonial and documentary evidence. Appellants presented
Exhibits 1 to 58, whereas those of the appellee were so numerous that, having begun with Exhibit A, his last piece of documentary
evidence was marked Exhibit 26 Y's. The transcript of the hearing, which lasted ten (10) days, covers over 220 pages.
The other assignments of error made by appellants herein are mere corollaries of those already disposed of, and, hence, no
further discussion thereof is necessary.
In conclusion, it appears that the assets of the conjugal partnership between Mr. and Mrs. Harden are reasonably valued at
P3,841,109.70. One-half (1/2) thereof, representing the share of Mrs. Harden, is therefore, worth P1,920,554.85. Twenty percentum
(20%) of this sum is P384,110.97, which is the contingent fee due to the appellee, apart from the litis expensae already paid to him.
Inasmuch as the appellee has collected, also, the sum of P80,000.00, on account of said contingent fees, there results in his favor a
balance of P304,110.97.
Subject to this qualification, the decision appealed from is hereby affirmed, therefore, with costs against the appellants. So
ordered.
THIRD DIVISION
[G.R. No. 154830. June 8, 2007.]
16. PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J.
KLEPZIG, petitioners, vs. ANTONIO D. TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J p:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision 1 of the Court of Appeals (CA) dated
October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution 2 of August 21, 2002 denying petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court (RTC) of Makati City, a complaint for
Sum of Money and Damages with Preliminary Attachment against Pioneer International Limited ( PIL), Pioneer Concrete Philippines, Inc.
(PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig). 3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of Australia and is principally engaged
in the ready-mix concrete and concrete aggregates business; PPHI is the company established by PIL to own and hold the stocks of its
operating company in the Philippines; PCPI is the company established by PIL to undertake its business of ready-mix concrete, concrete
aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the
President and Managing Director of PPHI and PCPI; Todaro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a
company engaged in pre-mixed concrete and concrete aggregate production; he resigned from Betonval in February 1996; in May 1996, PIL

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contacted Todaro and asked him if he was available to join them in connection with their intention to establish a ready-mix concrete plant
and other related operations in the Philippines; Todaro informed PIL of his availability and interest to join them; subsequently, PIL and
Todaro came to an agreement wherein the former consented to engage the services of the latter as a consultant for two to three months,
after which, he would be employed as the manager of PIL's ready-mix concrete operations should the company decide to invest in the
Philippines; subsequently, PIL started its operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro
on a permanent basis. 4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the complaint states no
cause of action, that the RTC has no jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of the NLRC,
and that the complaint should be dismissed on the basis of the doctrine of forum non conveniens. 5 TIDcEH
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective motions to dismiss. 6 Herein
petitioners, as defendants, filed an Urgent Omnibus Motion 7 for the reconsideration of the trial court's Order of January 4, 1999 but the
trial court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA. 9 On October 31, 2000, the CA rendered its presently
assailed Decision denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its
Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST PETITIONERS IS
WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF EXISTENCE OF
AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND WITH
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT DESPITE
THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN ALLEGED BREACH OF
EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXCLUSIVE JURISDICTION OF THE NATIONAL LABOR
RELATIONS COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM NON CONVENIENS" AS
A VALID GROUND FOR DISMISSING A COMPLAINT. 10
In their first assigned error, petitioners contend that there was no perfected employment contract between PIL and herein respondent.
Petitioners assert that the annexes to respondent's complaint show that PIL's offer was for respondent to be employed as the manager only
of its pre-mixed concrete operations and not as the company's managing director or CEO. Petitioners argue that when respondent reiterated
his intention to become the manager of PIL's overall business venture in the Philippines, he, in effect did not accept PIL's offer of
employment and instead made a counter-offer, which, however, was not accepted by PIL. Petitioners also contend that under Article 1318 of
the Civil Code, one of the requisites for a contract to be perfected is the consent of the contracting parties; that under Article 1319 of the
same Code, consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract; that the offer must be certain and the acceptance absolute; that a qualified acceptance constitutes a counter-offer. Petitioners
assert that since PIL did not accept respondent's counter-offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19 and 21 of the Civil Code is baseless
because it was shown that there was no perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract, petitioners contend that PCPI and PPHI,
may not also be held liable because they are juridical entities with personalities which are separate and distinct from PIL, even if they are
subsidiary corporations of the latter. Petitioners also aver that the annexes to respondent's complaint show that the negotiations on the
alleged employment contract took place between respondent and PIL through its office in Hongkong. In other words, PCPI and PPHI were
not privy to the negotiations between PIL and respondent for the possible employment of the latter; and under Article 1311 of the Civil
Code, a contract is not binding upon and cannot be enforced against one who was not a party to it even if he be aware of such contract and
has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting in his capacity as president of PCPI and
PPHI and settled is the rule that an officer of a corporation is not personally liable for acts done in the performance of his duties and within
the bounds of the authority conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held liable, respondent still has
no cause of action against Klepzig because PCPI and PPHI have personalities which are separate and distinct from those acting in their
behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims for actual, moral and exemplary damages are
solely premised on the alleged breach of employment contract, the present case should be considered as falling within the exclusive
jurisdiction of the NLRC.

78

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

As to the applicability of the doctrine of forum non conveniens, respondent avers that the question of whether a suit should be entertained
or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to
the sound discretion of the trial judge, who is in the best position to determine whether special circumstances require that the court desist
from assuming jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission by which a party violates a right of
another. A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and, (3) an
act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant
to the plaintiff for which the latter may maintain an action for recovery of damages. 11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan, 12 this Court held:
The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would
justify the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein?
The inquiry is into the sufficiency, not the veracity of the material allegations. If the allegations in the complaint furnish
sufficient basis on which it can be maintained, it should not be dismissed regardless of the defense that may be
presented by the defendants. 13
Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have
to be done at the trial on the merits of the case. 14 To sustain a motion to dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain. 15
Hence, in resolving whether or not the Complaint in the present case states a cause of action, the trial court correctly limited itself to
examining the sufficiency of the allegations in the Complaint as well as the annexes thereto. It is proscribed from inquiring into the truth of
the allegations in the Complaint or the authenticity of any of the documents referred or attached to the Complaint, since these are deemed
hypothetically admitted by the respondent.
This Court has reviewed respondent's allegations in its Complaint. In a nutshell, respondent alleged that herein petitioners reneged on their
contractual obligation to employ him on a permanent basis. This allegation is sufficient to constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between petitioners and respondent is a matter which is not ripe for
determination in the present case; rather, this issue must be taken up during trial, considering that its resolution would necessarily entail an
examination of the veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as defendants.
The Court does not agree with petitioners' contention that they were not privy to the negotiations for respondent's possible employment. It
is evident from paragraphs 24 to 28 of the Complaint 16 that, on various occasions, Klepzig conducted negotiations with respondent
regarding the latter's possible employment. In fact, Annex "H" 17 of the complaint shows that it was Klepzig who informed respondent that
his company was no longer interested in employing respondent. Hence, based on the allegations in the Complaint and the annexes attached
thereto, respondent has a cause of action against herein petitioners.

79

As to the question of jurisdiction, this Court has consistently held that where no employer-employee relationship exists between the parties
and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement,
it is the Regional Trial Court that has jurisdiction. 18 In the present case, no employer-employee relationship exists between petitioners and
respondent. In fact, in his complaint, private respondent is not seeking any relief under the Labor Code, but seeks payment of damages on
account of petitioners' alleged breach of their obligation under their agreement to employ him. It is settled that an action for breach of
contractual obligation is intrinsically a civil dispute. 19 In the alternative, respondent seeks redress on the basis of the provisions of Articles
19 and 21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil law, and jurisdiction over it belongs to the
regular courts. 20
With respect to the applicability of the principle of forum non conveniens in the present case, this Court's ruling in Bank of America NT & SA
v. Court of Appeals 21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning 'the forum is inconvenient', emerged in private international law
to deter the practice of global forum shopping, that is to prevent non-resident litigants from choosing the forum or place
wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of
law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or available forum and the
parties are not precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. In the case of Communication Materials and
Design, Inc. vs. Court of Appeals, this Court held that ". . . [a] Philippine Court may assume jurisdiction over the case if
it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the
law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine of forum
non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules
of Court does not include said doctrine as a ground. This Court further ruled that while it is within the
discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the court's desistance; and
that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense. 22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the application of the doctrine of forum non
conveniensare matters of defense, the merits of which should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. No. 125078. May 30, 2011.]
17. BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ, ORLANDITO A. ABISON, FELIPE
ADAYA, ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE ALCANTARA, NUMERIANO S. ALCARIA,
FERNANDO C. ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR
AMOLATA, RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT B. ANOCHE, RAMON E. ANTECRISTO,
ISAGANI D. ANTINO, DOMINGO ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO AQUINO, MARCELO
S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M. ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G.
ARINZOL, EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT,
NELSON M. BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI, HERMOGENES T.
BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO BASAS, ALEJANDR petitioners, vs. HON.
TEODORO A. DIZON, JR., Presiding Judge, Regional Trial Court, Branch 37, General Santos City, SHELL OIL
CO., DOW CHEMICAL CO., OCCIDENTAL CHEMICAL CORP., STANDARD FRUIT CO., STANDARD FRUIT &
STEAMSHIP CO., DOLE FOOD CO., INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A., DEL
MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS INTERNATIONAL, INC. and CHIQUITA BRANDS,
INC., respondents.

DECISION
LEONARDO-DE CASTRO, J p:
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, which arose out of two civil cases
that were filed in different courts but whose factual background and issues are closely intertwined.
The petitions in G.R. Nos. 125078 1 and 125598 2 both assail the Order 3 dated May 20, 1996 of the Regional Trial Court (RTC) of
General Santos City, Branch 37, in Civil Case No. 5617. The said Order decreed the dismissal of the case in view of the perceived lack of

80

jurisdiction of the RTC over the subject matter of the complaint. The petition in G.R. No. 125598 also challenges the Orders dated June 4,
1996 4 and July 9, 1996, 5 which held that the RTC of General Santos City no longer had jurisdiction to proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654, 6 127856, 7 and 128398 8 seek the reversal of the Order 9 dated October 1,
1996 of the RTC of Davao City, Branch 16, in Civil Case No. 24,251-96, which also dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the Resolutions dated February 10, 1997, 10 April 28,
1997 11 and March 10, 1999. 12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state courts by citizens of twelve foreign countries, including
the Philippines. The thousands of plaintiffs sought damages for injuries they allegedly sustained from their exposure
to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while working on farms in 23 foreign countries. The cases
were eventually transferred to, and consolidated in, the Federal District Court for the Southern District of Texas, Houston Division. The cases
therein that involved plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.," which was docketed as
Civil Action No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action No. H-95-1356. The
defendants in the consolidated cases prayed for the dismissal of all the actions under the doctrine of forum non conveniens. DEScaT
In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally granted the defendants' motion to dismiss.
Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the entry of this Memorandum and
Order provided that defendants and third- and fourth-party defendants have:
(1)participated in expedited discovery in the United States . . .;
(2)either waived or accepted service of process and waived any other jurisdictional defense within 40 days
after the entry of this Memorandum and Order in any action commenced by a plaintiff in these actions
in his home country or the country in which his injury occurred. Any plaintiff desiring to bring such an
action will do so within 30 days after the entry of this Memorandum and Order;
(3)waived within 40 days after the entry of this Memorandum and Order any limitations-based defense that has
matured since the commencement of these actions in the courts of Texas;
(4)stipulated within 40 days after the entry of this Memorandum and Order that any discovery conducted
during the pendency of these actions may be used in any foreign proceeding to the same extent as if
it had been conducted in proceedings initiated there; and
(5)submitted within 40 days after the entry of this Memorandum and Order an agreement binding them to
satisfy any final judgment rendered in favor of plaintiffs by a foreign court.
xxx xxx xxx
Notwithstanding the dismissals that may result from this Memorandum and Order, in the event that the highest court of
any foreign country finally affirms the dismissal for lack of jurisdiction of an action commenced by a plaintiff in these
actions in his home country or the country in which he was injured, that plaintiff may return to this court and, upon
proper motion, the court will resume jurisdiction over the action as if the case had never been dismissed for [forum non
conveniens]. 13
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General Santos City (the petitioners in G.R. No. 125078,
hereinafter referred to as NAVIDA, et al.) filed a Joint Complaint 14 in the RTC of General Santos City on August 10, 1995. The case was
docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW); Occidental Chemical
Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter
collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A.
and Del Monte Tropical Fruit Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.;
Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are hereinafter collectively referred to as defendant
companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and injuries to the reproductive systems which they allegedly
suffered because of their exposure to DBCP. They claimed, among others, that they were exposed to this chemical during the early 1970's
up to the early 1980's when they used the same in the banana plantations where they worked at; and/or when they resided within the
agricultural area where such chemical was used. NAVIDA, et al., claimed that their illnesses and injuries were due to the fault or negligence
of each of the defendant companies in that they produced, sold and/or otherwise put into the stream of commerce DBCP-containing
products. According to NAVIDA, et al., they were allowed to be exposed to the said products, which the defendant companies knew, or
ought to have known, were highly injurious to the former's health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed their Motions for Bill of Particulars. 15 During the
pendency of the motions, on March 13, 1996, NAVIDA, et al., filed an Amended Joint Complaint, 16 excluding Dead Sea Bromine Co.,
Ltd., Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of Particulars. 17 On May 15, 1996, DOW filed an Answer with
Counterclaim.18

81

On May 20, 1996, without resolving the motions filed by the parties, the RTC of General Santos City issued an Order dismissing the
complaint. First, the trial court determined that it did not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES
FILED WITH THE REGIONAL TRIAL
COURT SHOULD BE DISMISSED FOR
LACK OF JURISDICTION
xxx xxx xxx
The substance of the cause of action as stated in the complaint against the defendant foreign companies cites activity
on their part which took place abroad and had occurred outside and beyond the territorial domain of the Philippines.
These acts of defendants cited in the complaint included the manufacture of pesticides, their packaging in containers,
their distribution through sale or other disposition, resulting in their becoming part of the stream of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely particular to the present case, consisted of
activity or course of conduct engaged in by foreign defendants outside Philippine territory, hence, outside and beyond
the jurisdiction of Philippine Courts, including the present Regional Trial Court. 19
Second, the RTC of General Santos City declared that the tort alleged by NAVIDA, et al., in their complaint is a tort category that is not
recognized in Philippine laws. Said the trial court: IcaEDC
THE TORT ASSERTED IN THE
PRESENT COMPLAINT AGAINST
DEFENDANT FOREIGN COMPANIES IS
NOT WITHIN THE SUBJECT MATTER
JURISDICTION OF THE REGIONAL
TRIAL COURT, BECAUSE IT IS NOT A
TORT CATEGORY WITHIN THE
PURVIEW OF THE PHILIPPINE LAW

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

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This court frowns upon the fact that the parties herein are both vigorously pursuing their appeal of the decision of the
U.S. District court dismissing the case filed thereat. To allow the parties to litigate in this court when they are actively
pursuing the same cases in another forum, violates the rule on 'forum shopping' so abhorred in this jurisdiction. . . . .
xxx xxx xxx
THE FILING OF THE CASE IN U.S.
DIVESTED THIS COURT OF ITS OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own jurisdiction. This court takes note that
the U.S. District Court did not decline jurisdiction over the cause of action. The case was dismissed on the ground
of forum non conveniens, which is really a matter of venue. By taking cognizance of the case, the U.S. District Court
has, in essence, concurrent jurisdiction with this court over the subject matter of this case. It is settled that initial
acquisition of jurisdiction divests another of its own jurisdiction. . . . .
xxx xxx xxx
THIS CASE IS BARRED BY THE RULE
OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties, same rights and interests, as in this case. There
exists litis pendencia since there are two cases involving the same parties and interests. The court would like to
emphasize that in accordance with the rule on litis pendencia. . .; the subsequent case must be dismissed. Applying the
foregoing [precept] to the case-at-bar, this court concludes that since the case between the parties in the U.S. is still
pending, then this case is barred by the rule on "litis pendencia." 23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with these proceedings, would be violative of the
constitutional provision on the Bill of Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on further proceedings with this case, as it is now presented,
might accord this court a charming appearance. But the same insistence would actually thwart the very ends of justice
which it seeks to achieve. DcCEHI
This evaluation and action is made not on account of but rather with due consideration to the fact that the dismissal of
this case does not necessarily deprive the parties especially the plaintiffs of their possible remedies. The court is
cognizant that the Federal Court may resume proceedings of that earlier case between the herein parties involving the
same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now considered DISMISSED. 24
On June 4, 1996, the RTC of General Santos City likewise issued an Order, 25 dismissing DOW's Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration 26 of the RTC Order dated May 20, 1996, while DOW filed a
motion for reconsideration 27 of the RTC Order dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
Reconsideration 28 of the RTC Order dated May 20, 1996.
In an Order 29 dated July 9, 1996, the RTC of General Santos City declared that it had already lost its jurisdiction over the case as it took
into consideration the Manifestation of the counsel of NAVIDA, et al., which stated that the latter had already filed a petition for review
on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration 30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to assail the RTC Order dated May 20, 1996, which was
docketed asG.R. No. 125078.
The RTC of General Santos City then issued an Order 31 dated August 14, 1996, which merely noted the incidents still pending in Civil Case
No. 5617 and reiterated that it no longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review on Certiorari, 32 challenging the orders of the RTC of General
Santos City dated May 20, 1996, June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred in ruling that it has no jurisdiction over the subject
matter of the case as well as the persons of the defendant companies.
In a Resolution 33 dated October 7, 1996, this Court resolved to consolidate G.R. No. 125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari, 34 which sought the reversal of the RTC Orders dated May 20, 1996, July 9, 1996 and
August 14, 1996. The petition was docketed as G.R. No. 126018. In a Resolution 35 dated November 13, 1996, the Court dismissed the
aforesaid petition for failure of CHIQUITA to show that the RTC committed grave abuse of discretion. CHIQUITA filed a Motion for
Reconsideration, 36 but the same was denied through a Resolution 37 dated January 27, 1997.
Civil Case No. 24,251-96 before the
RTC of Davao City and G.R. Nos.
126654, 127856, and 128398

83

Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL MONTE, and CHIQUITA was filed before Branch 16 of
the RTC of Davao City by 155 plaintiffs from Davao City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs (the
petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.) amended their Joint-Complaint on May 21, 1996. 38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the banana plantation and/or as residents near the
said plantation, they were made to use and/or were exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et
al., such exposure resulted in "serious and permanent injuries to their health, including, but not limited to, sterility and severe injuries to
their reproductive capacities." 39 ABELLA, et al., claimed that the defendant companies manufactured, produced, sold, distributed, used,
and/or made available in commerce, DBCP without warning the users of its hazardous effects on health, and without providing instructions
on its proper use and application, which the defendant companies knew or ought to have known, had they exercised ordinary care and
prudence.
Except for DOW, the other defendant companies filed their respective motions for bill of particulars to which ABELLA, et al., filed their
opposition. DOW and DEL MONTE filed their respective Answers dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint for: Damages filed by the plaintiffs against the
defendants Shell Oil Company, DOW Chemicals Company, Occidental Chemical Corporation, Standard Fruit Company,
Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita Brands
International, Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all foreign corporations with Philippine
Representatives, the Court, as correctly pointed out by one of the defendants, is convinced that plaintiffs "would have
this Honorable Court dismiss the case to pave the way for their getting an affirmance by the Supreme Court" (#10 of
Defendants' Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996).
Consider these:
1)In the original Joint Complaint, plaintiffs state that: defendants have no properties in the Philippines; they
have no agents as well (par. 18); plaintiffs are suing the defendants for tortuous acts committed by these
foreign corporations on their respective countries, as plaintiffs, after having elected to sue in the place of
defendants' residence, are now compelled by a decision of a Texas District Court to file cases under torts in this
jurisdiction for causes of actions which occurred abroad (par. 19); a petition was filed by same plaintiffs against
same defendants in the Courts of Texas, USA, plaintiffs seeking for payment of damages based on negligence,
strict liability, conspiracy and international tort theories (par. 27); upon defendants' Motion to Dismiss on
Forum non [conveniens], said petition was provisionally dismissed on condition that these cases be filed in the
Philippines or before 11 August 1995 (Philippine date; Should the Philippine Courts refuse or deny jurisdiction,
the U. S. Courts will reassume jurisdiction.)
11.In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the Federal District Court issued a
Memorandum and Order conditionally dismissing several of the consolidated actions including those filed by the
Filipino complainants. One of the conditions imposed was for the plaintiffs to file actions in their home countries
or the countries in which they were injured . . . . Notwithstanding, the Memorandum and [O]rder further
provided that should the highest court of any foreign country affirm the dismissal for lack of jurisdictions over
these actions filed by the plaintiffs in their home countries [or] the countries where they were injured, the said
plaintiffs may return to that court and, upon proper motion, the Court will resume jurisdiction as if the case
had never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely on the basis of the above but because it shares
the opinion of legal experts given in the interview made by the Inquirer in its Special report "Pesticide Cause Mass
Sterility," to wit:
1.Former Justice Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines should be an
inconvenient forum to file this kind of damage suit against foreign companies since the causes of
action alleged in the petition do not exist under Philippine laws. There has been no decided case in
Philippine Jurisprudence awarding to those adversely affected by DBCP. This means there is no
available evidence which will prove and disprove the relation between sterility and DBCP.
2.Retired Supreme Court Justice Abraham Sarmiento opined that while a class suit is allowed in the Philippines
the device has been employed strictly. Mass sterility will not qualify as a class suit injury within the
contemplation of Philippine statute.
3.Retired High Court Justice Rodolfo Nocom stated that there is simply an absence of doctrine here that permits
these causes to be heard. No product liability ever filed or tried here.
Case ordered dismissed. 40
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA, et al., assails before this Court the abovequoted order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject matter of the case since Articles 2176 and 2187 of the
Civil Code are broad enough to cover the acts complained of and to support their claims for damages. CaEIST
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal luminaries reported in a newspaper, by the RTC of
Davao City is bereft of basis. According to them, their cause of action is based on quasi-delict under Article 2176 of the Civil Code. They also
maintain that the absence of jurisprudence regarding the award of damages in favor of those adversely affected by the DBCP does not
preclude them from presenting evidence to prove their allegations that their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of the Order dated October 1, 1996 of the RTC of Davao
City. DEL MONTE also filed its motion for reconsideration, which contained an additional motion for the inhibition of the presiding judge.

84

The presiding judge of Branch 16 then issued an Order 41 dated December 2, 1996, voluntarily inhibiting himself from trying the case.
Thus, the case was re-raffled to Branch 13 of the RTC of Davao City.
In an Order 42 dated December 16, 1996, the RTC of Davao City affirmed the Order dated October 1, 1996, and denied the respective
motions for reconsideration filed by defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the Orders dated October 1, 1996 and December 16,
1996 of the RTC of Davao City. This case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the case motu proprio as it acquired jurisdiction over the
subject matter of the case as well as over the persons of the defendant companies which voluntarily appeared before it. CHIQUITA also
claims that the RTC of Davao City cannot dismiss the case simply on the basis of opinions of alleged legal experts appearing in a newspaper
article.
Initially, this Court in its Resolution 43 dated July 28, 1997, dismissed the petition filed by CHIQUITA for submitting a defective certificate
against forum shopping. CHIQUITA, however, filed a motion for reconsideration, which was granted by this Court in the Resolution 44 dated
October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this Court assailing the above-mentioned orders of the
RTC of Davao City. Its petition was docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,251-96, as defined under the law and that the said
court already obtained jurisdiction over its person by its voluntary appearance and the filing of a motion for bill of particulars and, later, an
answer to the complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its authority when it dismissed the
case motu proprio or without any motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this Court consolidated G.R. Nos. 125078, 125598,
126654, 127856, and 128398.
The Consolidated Motion to Drop
DOW, OCCIDENTAL, and SHELL
as Party-Respondents filed by
NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a Consolidated Motion (to Drop PartyRespondents). 45 The plaintiff claimants alleged that they had amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in
July 1997. This settlement agreement was evidenced by facsimiles of the "Compromise Settlement, Indemnity, and Hold Harmless
Agreement," which were attached to the said motion. Pursuant to said agreement, the plaintiff claimants sought to withdraw their petitions
as against DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the settlement entered into between the plaintiff claimants and
DOW, OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties, this Court, in a Resolution dated June 22, 1998, 46 required all
the parties to submit their respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998; 47 SHELL asked to be excused from the filing of a memorandum alleging that it had
already executed a compromise agreement with the plaintiff claimants. 48 DOLE filed its Memorandum on October 12, 1998 49 while DEL
MONTE filed on October 13, 1998. 50 NAVIDA, et al., and ABELLA, et al., filed their Consolidated Memorandum on February 3,
1999; 51 and DOW and OCCIDENTAL jointly filed a Memorandum on December 23, 1999. 52
The Motion to Withdraw Petition for
Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for Review in G.R. No. 125598, 53 explaining that the said
petition "is already moot and academic and no longer presents a justiciable controversy" since they have already entered into an amicable
settlement with NAVIDA,et al. DOW and OCCIDENTAL added that they have fully complied with their obligations set forth in the 1997
Compromise Agreements.
DOLE filed its Manifestation dated September 6, 2004, 54 interposing no objection to the withdrawal of the petition, and further stating that
they maintain their position that DOW and OCCIDENTAL, as well as other settling defendant companies, should be retained as defendants
for purposes of prosecuting the cross-claims of DOLE, in the event that the complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004, 55 stating that they agree with the view of DOW and OCCIDENTAL
that the petition in G.R. No. 125598 has become moot and academic because Civil Case No. 5617 had already been amicably settled by the
parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition for Review Filed by Petitioners in G.R. No.
125598, 56 stating that it has no objections to the withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.
In a Resolution 57 dated October 11, 2004, this Court granted, among others, the motion to withdraw petition for review filed by DOW and
OCCIDENTAL.
THE ISSUES

85

In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the following issues for our consideration:
IN REFUTATION
I.THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.
a)The court did not simply dismiss the case because it was filed in bad faith with petitioners intending to have
the same dismissed and returned to the Texas court.
b)The court dismissed the case because it was convinced that it did not have jurisdiction.
IN SUPPORT OF THE PETITION
II.THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
a.The acts complained of occurred within Philippine territory.
b.Art. 2176 of the Civil Code of the Philippines is broad enough to cover the acts complained of.
c.Assumption of jurisdiction by the U.S. District Court over petitioner[s'] claims did not divest Philippine
[c]ourts of jurisdiction over the same. cICHTD
d.The Compromise Agreement and the subsequent Consolidated Motion to Drop Party Respondents Dow,
Occidental and Shell does not unjustifiably prejudice remaining respondents Dole, Del Monte and
Chiquita. 58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of General Santos City and the RTC of Davao City erred in
dismissing Civil Case Nos. 5617 and 24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft of jurisdiction to determine and resolve the abovestated cases. All parties contend that the RTC of General Santos City and the RTC of Davao City have jurisdiction over the action for
damages, specifically for approximately P2.7 million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or omissions of defendant companies occurred within
Philippine territory. Specifically, the use of and exposure to DBCP that was manufactured, distributed or otherwise put into the stream of
commerce by defendant companies happened in the Philippines. Said fact allegedly constitutes reasonable basis for our courts to assume
jurisdiction over the case. Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary Title of
the Civil Code, as well as Article 2176 thereof, are broad enough to cover their claim for damages. Thus, NAVIDA, et al., and ABELLA, et
al., pray that the respective rulings of the RTC of General Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be
reversed and that the said cases be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute a quasi-delict, which falls under Article 2176 of the Civil
Code. In addition, DOLE states that if there were no actionable wrongs committed under Philippine law, the courts a quo should have
dismissed the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al., and ABELLA, et al., stated no cause of action
against the defendant companies. DOLE also argues that if indeed there is no positive law defining the alleged acts of defendant companies
as actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a decision on the ground of insufficiency of
the law. The court may still resolve the case, applying the customs of the place and, in the absence thereof, the general principles of law.
DOLE posits that the Philippines is the situs of the tortious acts allegedly committed by defendant companies as NAVIDA, et al., and
ABELLA, et al., point to their alleged exposure to DBCP which occurred in the Philippines, as the cause of the sterility and other reproductive
system problems that they allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in relying upon newspaper
reports in dismissing Civil Case No. 24,251-96 given that newspaper articles are hearsay and without any evidentiary value. Likewise, the
alleged legal opinions cited in the newspaper reports were taken judicial notice of, without any notice to the parties. DOLE, however, opines
that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given that plaintiff claimants merely prosecuted the cases with the
sole intent of securing a dismissal of the actions for the purpose of convincing the U.S. Federal District Court to re-assume jurisdiction over
the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject matter of the cases filed before them. The
Amended Joint-Complaints sought approximately P2.7 million in damages for each plaintiff claimant, which amount falls within the
jurisdiction of the RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP, not the place of
manufacture, packaging, distribution, sale, etc., of the said chemical. This is in consonance with the lex loci delicti commisi theory in
determining the situs of a tort, which states that the law of the place where the alleged wrong was committed will govern the action.
CHIQUITA and the other defendant companies also submitted themselves to the jurisdiction of the RTC by making voluntary appearances
and seeking for affirmative reliefs during the course of the proceedings. None of the defendant companies ever objected to the exercise of
jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC
of General Santos City and the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil Case Nos. 5617 and 24,251-96,
respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the
complaint and the character of the relief sought, irrespective of whether the plaintiffs are entitled to all or some of the claims asserted
therein. 59 Once vested by law, on a particular court or body, the jurisdiction over the subject matter or nature of the action cannot be
dislodged by anybody other than by the legislature through the enactment of a law.

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At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under Batas Pambansa Blg. 129, as amended by Republic
Act No. 7691, was:
SEC. 19.Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx xxx xxx
(8)In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or,
in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred
thousand pesos (P200,000.00). 60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2.The exclusion of the term "damages of whatever kind" in determining the jurisdictional amount under Section 19 (8)
and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main
cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the
jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended Joint-Complaints filed before the courts a quo, the
following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that after hearing, judgment be rendered in favor of
the plaintiffs ordering the defendants:
a)TO PAY EACH PLAINTIFF moral damages in the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00);
b)TO PAY EACH PLAINTIFF nominal damages in the amount of Four Hundred Thousand Pesos (P400,000.00) each;
c)TO PAY EACH PLAINTIFF exemplary damages in the amount of Six Hundred Thousand Pesos (P600,000.00);
d)TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand Pesos (P200,000.00); and
e)TO PAY THE COSTS of the suit. 61
From the foregoing, it is clear that the claim for damages is the main cause of action and that the total amount sought in the complaints is
approximately P2.7 million for each of the plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos
City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview of the definition of the jurisdiction of the
RTC under Batas Pambansa Blg. 129. EaIDAT
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
4.The Defendants manufactured, sold, distributed, used, AND/OR MADE AVAILABLE IN COMMERCE nematocides
containing the chemical dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS USED AGAINST the
parasite known as the nematode, which plagued banana plantations, INCLUDING THOSE in the Philippines. AS IT
TURNED OUT, DBCP not only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS
EXPOSED TO IT AFFECTING the human reproductive system as well.
5.The plaintiffs were exposed to DBCP in the 1970s up to the early 1980s WHILE (a) they used this product
in the banana plantations WHERE they were employed, and/or (b) they resided within the agricultural area
WHERE IT WAS USED. As a result of such exposure, the plaintiffs suffered serious and permanent injuries TO THEIR
HEALTH, including, but not limited to, STERILITY and severe injuries to their reproductive capacities.
6.THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN THAT THEY MANUFACTURED, produced, sold,
and/or USED DBCP and/or otherwise, PUT THE SAME into the stream of commerce, WITHOUT INFORMING
THE USERS OF ITS HAZARDOUS EFFECTS ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER
USE AND APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing materials which THEY knew, or in
the exercise of ordinary care and prudence ought to have known, were highly harmful and injurious to the Plaintiffs'
health and well-being.
7.The Defendants WHO MANUFACTURED, PRODUCED, SOLD, DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE
STREAM OF COMMERCE were negligent OR AT FAULT in that they, AMONG OTHERS:
a.Failed to adequately warn Plaintiffs of the dangerous characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b.Failed to provide plaintiffs with information as to what should be reasonably safe and sufficient clothing and
proper protective equipment and appliances, if any, to protect plaintiffs from the harmful effects of
exposure to DBCP, or to cause their subsidiaries or affiliates to do so;

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c.Failed to place adequate warnings, in a language understandable to the worker, on containers of DBCPcontaining materials to warn of the dangers to health of coming into contact with DBCP, or to cause
their subsidiaries or affiliates to do so;
d.Failed to take reasonable precaution or to exercise reasonable care to publish, adopt and enforce a safety
plan and a safe method of handling and applying DBCP, or to cause their subsidiaries or affiliates to do
so;
e.Failed to test DBCP prior to releasing these products for sale, or to cause their subsidiaries or affiliates to do
so; and
f.Failed to reveal the results of tests conducted on DBCP to each plaintiff, governmental agencies and the
public, or to cause their subsidiaries or affiliate to do so.
8.The illnesses and injuries of each plaintiff are also due to the FAULT or negligence of defendants Standard Fruit
Company, Dole Fresh Fruit Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita Brands International,
Inc. in that they failed to exercise reasonable care to prevent each plaintiff's harmful exposure to DBCP-containing
products which defendants knew or should have known were hazardous to each plaintiff in that they, AMONG OTHERS:
a.Failed to adequately supervise and instruct Plaintiffs in the safe and proper application of DBCP-containing
products;
b.Failed to implement proper methods and techniques of application of said products, or to cause such to be
implemented;
c.Failed to warn Plaintiffs of the hazards of exposure to said products or to cause them to be so warned;
d.Failed to test said products for adverse health effects, or to cause said products to be tested;
e.Concealed from Plaintiffs information concerning the observed effects of said products on Plaintiffs;
f.Failed to monitor the health of plaintiffs exposed to said products;
g.Failed to place adequate labels on containers of said products to warn them of the damages of said products;
and
h.Failed to use substitute nematocides for said products or to cause such substitutes to [be]
used. 62 (Emphasis supplied and words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and ABELLA, et al., attribute to defendant companies
certain acts and/or omissions which led to their exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical caused ill effects, injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff claimants a quasi-delict, which under the Civil Code is
defined as an act, or omission which causes damage to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code
provides:
Article 2176.Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et al., point to the acts and/or omissions of the
defendant companies in manufacturing, producing, selling, using, and/or otherwise putting into the stream of commerce, nematocides
which contain DBCP, "without informing the users of its hazardous effects on health and/or without instructions on its proper use and
application." 63
Verily, in Citibank, N.A. v. Court of Appeals, 64 this Court has always reminded that jurisdiction of the court over the subject matter of the
action is determined by the allegations of the complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some
of the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the
motion to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendants. What determines the
jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and
the character of the relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies constitute a quasi-delict which is the basis for the claim for
damages filed by NAVIDA, et al., and ABELLA, et al., with individual claims of approximately P2.7 million for each plaintiff claimant, which
obviously falls within the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly suffered resulted from their exposure to DBCP while
they were employed in the banana plantations located in the Philippines or while they were residing within the agricultural areas also located
in the Philippines. The factual allegations in the Amended Joint-Complaints all point to their cause of action, which undeniably occurred in
the Philippines. The RTC of General Santos City and the RTC of Davao City obviously have reasonable basis to assume jurisdiction over the
cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases on the ground of lack of jurisdiction on the mistaken
assumption that the cause of action narrated by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside and beyond
the territorial boundaries of the Philippines, i.e., "the manufacture of the pesticides, their packaging in containers, their distribution through
sale or other disposition, resulting in their becoming part of the stream of commerce," 65 and, hence, outside the jurisdiction of the RTCs.

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Certainly, the cases below are not criminal cases where territoriality, or the situs of the act complained of, would be determinative of
jurisdiction and venue for trial of cases. In personal civil actions, such as claims for payment of damages, the Rules of Court allow the action
to be commenced and tried in the appropriate court, where any of the plaintiffs or defendants resides, or in the case of a non-resident
defendant, where he may be found, at the election of the plaintiff. 66 HCDAcE
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et al., and ABELLA, et al., are available only in the
Philippines. First, plaintiff claimants are all residents of the Philippines, either in General Santos City or in Davao City. Second, the specific
areas where they were allegedly exposed to the chemical DBCP are within the territorial jurisdiction of the courts a quo wherein NAVIDA, et
al., and ABELLA, et al., initially filed their claims for damages. Third, the testimonial and documentary evidence from important witnesses,
such as doctors, co-workers, family members and other members of the community, would be easier to gather in the Philippines.
Considering the great number of plaintiff claimants involved in this case, it is not far-fetched to assume that voluminous records are
involved in the presentation of evidence to support the claim of plaintiff claimants. Thus, these additional factors, coupled with the fact that
the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the defendant companies for damages occurred in the
Philippines, demonstrate that, apart from the RTC of General Santos City and the RTC of Davao City having jurisdiction over the subject
matter in the instant civil cases, they are, indeed, the convenient fora for trying these cases. 67
The RTC of General Santos City
and the RTC of Davao City validly
acquired jurisdiction over the
persons of all the defendant
companies
It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction over the cases filed before them. All parties
are one in asserting that the RTC of General Santos City and the RTC of Davao City have validly acquired jurisdiction over the persons of the
defendant companies in the action below. All parties voluntarily, unconditionally and knowingly appeared and submitted themselves to the
jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he defendant's voluntary appearance in the action shall be
equivalent to service of summons." In this connection, all the defendant companies designated and authorized representatives to receive
summons and to represent them in the proceedings before the courts a quo. All the defendant companies submitted themselves to the
jurisdiction of the courts a quo by making several voluntary appearances, by praying for various affirmative reliefs, and by actively
participating during the course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v. Sandiganbayan, 68 held that jurisdiction over the person of
the defendant in civil cases is acquired either by his voluntary appearance in court and his submission to its authority or by service of
summons. Furthermore, the active participation of a party in the proceedings is tantamount to an invocation of the court's jurisdiction and a
willingness to abide by the resolution of the case, and will bar said party from later on impugning the court or body's jurisdiction. 69
Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant
companies, as well as over the subject matter of the instant case. What is more, this jurisdiction, which has been acquired and has been
vested on the courts a quo,continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the "exercise of jurisdiction." Jurisdiction refers to the authority to
decide a case, not the orders or the decision rendered therein. Accordingly, where a court has jurisdiction over the persons of the
defendants and the subject matter, as in the case of the courts a quo, the decision on all questions arising therefrom is but an exercise of
such jurisdiction. Any error that the court may commit in the exercise of its jurisdiction is merely an error of judgment, which does not
affect its authority to decide the case, much less divest the court of the jurisdiction over the case. 70
Plaintiffs' purported bad faith in
filing the subject civil cases in
Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith merely to procure a dismissal of the same and to
allow them to return to the forum of their choice, this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported by evidence on record. This Court does not rule on
allegations which are manifestly conjectural, as these may not exist at all. This Court deals with facts, not fancies; on realities, not
appearances. When this Court acts on appearances instead of realities, justice and law will be short-lived. 71 This is especially true with
respect to allegations of bad faith, in line with the basic rule that good faith is always presumed and bad faith must be proved. 72
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City have jurisdiction over the subject matter of the
amended complaints filed by NAVIDA, et al., and ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons
of all the defendant companies, it therefore, behooves this Court to order the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of
General Santos City and the RTC of Davao City, respectively.
On the issue of the dropping of
DOW, OCCIDENTAL and SHELL
as respondents in view of their
amicable settlement with NAVIDA,
et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL be dropped as respondents in G.R. Nos. 125078
and 126654, as well as in Civil Case Nos. 5617 and 24,251-96. The non-settling defendants allegedly manifested that they intended to file
their cross-claims against their co-defendants who entered into compromise agreements. NAVIDA, et al., and ABELLA, et al., argue that the
non-settling defendants did not aver any cross-claim in their answers to the complaint and that they subsequently sought to amend their
answers to plead their cross-claims only after the settlement between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL were
executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that the cross-claims are already barred.

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In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et al., and ABELLA, et al., since the latter's Amended
Complaints cited several instances of tortious conduct that were allegedly committed jointly and severally by the defendant companies. This
solidary obligation on the part of all the defendants allegedly gives any co-defendant the statutory right to proceed against the other codefendants for the payment of their respective shares. Should the subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the
Court subsequently orders the remand of the action to the trial court for continuance, CHIQUITA and DOLE would allegedly be deprived of
their right to prosecute their cross-claims against their other co-defendants. Moreover, a third party complaint or a separate trial, according
to CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and DOLE similarly insist that the motion of NAVIDA, et
al., and ABELLA, et al., to drop DOW, SHELL and OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos.
5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective memoranda, DEL MONTE filed a Manifestation and
Motion 73 before the Court, stating that similar settlement agreements were allegedly executed by the plaintiff claimants with DEL MONTE
and CHIQUITA sometime in 1999. Purportedly included in the agreements were Civil Case Nos. 5617 and 24,251-96. Attached to the said
manifestation were copies of the Compromise Settlement, Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling
plaintiffs, as well as the Release in Full executed by the latter. 74 DEL MONTE specified therein that there were "only four (4) plaintiffs in
Civil Case No. 5617 who are claiming against the Del Monte parties" 75and that the latter have executed amicable settlements which
completely satisfied any claims against DEL MONTE. In accordance with the alleged compromise agreements with the four plaintiffs in Civil
Case No. 5617, DEL MONTE sought the dismissal of the Amended Joint-Complaint in the said civil case. Furthermore, in view of the above
settlement agreements with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that it no longer wished to pursue its petition in
G.R. No. 127856 and accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of General Santos City and the RTC of Davao
City, respectively, the Court deems that the Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et
al., should likewise be referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced." Like any other contract, an extrajudicial compromise agreement is not excepted from rules and
principles of a contract. It is a consensual contract, perfected by mere consent, the latter being manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to constitute the contract. 76 Judicial approval is not required for its
perfection. 77 A compromise has upon the parties the effect and authority of res judicata 78 and this holds true even if the agreement has
not been judicially approved. 79 In addition, as a binding contract, a compromise agreement determines the rights and obligations
of only the parties to it. 80
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao City should first receive in evidence and
examine all of the alleged compromise settlements involved in the cases at bar to determine the propriety of dropping any party as a
defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed by NAVIDA, et al., and ABELLA, et al., only
pertained to DOW, OCCIDENTAL and SHELL in view of the latter companies' alleged compromise agreements with the plaintiff claimants.
However, in subsequent developments, DEL MONTE and CHIQUITA supposedly reached their own amicable settlements with the plaintiff
claimants, but DEL MONTE qualified that it entered into a settlement agreement with only four of the plaintiff claimants in Civil Case No.
5617. These four plaintiff claimants were allegedly the only ones who were asserting claims against DEL MONTE. However, the said
allegation of DEL MONTE was simply stipulated in their Compromise Settlement, Indemnity, and Hold Harmless Agreement and its truth
could not be verified with certainty based on the records elevated to this Court. Significantly, the 336 plaintiff claimants in Civil Case No.
5617 jointly filed a complaint without individually specifying their claims against DEL MONTE or any of the other defendant companies.
Furthermore, not one plaintiff claimant filed a motion for the removal of either DEL MONTE or CHIQUITA as defendants in Civil Case Nos.
5617 and 24,251-96. IaDcTC
There is, thus, a primary need to establish who the specific parties to the alleged compromise agreements are, as well as their
corresponding rights and obligations therein. For this purpose, the courts a quo may require the presentation of additional evidence from
the parties. Thereafter, on the basis of the records of the cases at bar and the additional evidence submitted by the parties, if any, the trial
courts can then determine who among the defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more persons who are liable for the same quasi-delict is
solidary. A solidary obligation is one in which each of the debtors is liable for the entire obligation, and each of the creditors is entitled to
demand the satisfaction of the whole obligation from any or all of the debtors. 81
In solidary obligations, the paying debtor's right of reimbursement is provided for under Article 1217 of the Civil Code, to wit:
Art. 1217.Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest
for the payment already made. If the payment is made before the debt is due, no interest for the intervening period
may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the
obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the corresponding liability of the co-debtors to reimburse, will only arise,
however, if a solidary debtor who is made to answer for an obligation actually delivers payment to the creditor. As succinctly held
in Lapanday Agricultural Development Corporation v. Court of Appeals, 82 "[p]ayment, which means not only the delivery of money but
also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek
reimbursement for the share which corresponds to each of the [other] debtors." 83
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the merits must necessarily be conducted
first in order to establish whether or not defendant companies are liable for the claims for damages filed by the plaintiff
claimants, which would necessarily give rise to an obligation to pay on the part of the defendants.
At the point in time where the proceedings below were prematurely halted, no cross-claims have been interposed by any defendant against
another defendant. If and when such a cross-claim is made by a non-settling defendant against a settling defendant, it is within the

90

discretion of the trial court to determine the propriety of allowing such a cross-claim and if the settling defendant must remain a party to
the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 84 the Court had the occasion to state that "where
there are, along with the parties to the compromise, other persons involved in the litigation who have not taken part in concluding the
compromise agreement but are adversely affected or feel prejudiced thereby, should not be precluded from invoking in the same
proceedings an adequate relief therefor." 85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales, 86 the Court upheld the ruling of the trial court that, in a joint and
solidary obligation, the paying debtor may file a third-party complaint and/or a cross-claim to enforce his right to seek contribution from his
co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above situation, if proper, is not affected by the compromise
agreements allegedly entered into by NAVIDA, et al., and ABELLA, et al., with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos. 125078, 126654, and 128398.
We REVERSE and SET ASIDEthe Order dated May 20, 1996 of the Regional Trial Court of General Santos City, Branch 37, in Civil Case No.
5617, and the Order dated October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its subsequent Order dated December
16, 1996 denying reconsideration in Civil Case No. 24,251-96, and REMAND the records of this case to the respective Regional Trial Courts
of origin for further and appropriate proceedings in line with the ruling herein that said courts have jurisdiction over the subject matter of
the amended complaints in Civil Case Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R. No. 127856. In view of the previous grant of the
motion to withdraw the petition in G.R. No. 125598, both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Peralta * and Perez, JJ., concur.
THIRD DIVISION
[G.R. No. 149177. November 23, 2007.]
18. KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD., petitioners, vs. MINORU
KITAMURA,respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 18, 2001 Decision 1 of the Court
of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution 2 denying the motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm providing technical and
management support in the infrastructure projects of foreign governments, 3 entered into an Independent Contractor Agreement
(ICA) with respondent Minoru Kitamura, a Japanese national permanently residing in the Philippines. 4 The agreement provides that
respondent was to extend professional services to Nippon for a year starting on April 1, 1999. 5 Nippon then assigned respondent to work
as the project manager of the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's consultancy
contract with the Philippine Government. 6
When the STAR Project was near completion, the Department of Public Works and Highways (DPWH) engaged the consultancy services of
Nippon, on January 28, 2000, this time for the detailed engineering and construction supervision of the Bongabon-Baler Road
Improvement (BBRI) Project. 7Respondent was named as the project manager in the contract's Appendix 3.1. 8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International Division, informed respondent that the
company had no more intention of automatically renewing his ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry. 9 cDSAEI
Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation conference and demanded that he be
assigned to the BBRI project. Nippon insisted that respondent's contract was for a fixed term that had already expired, and refused to
negotiate for the renewal of the ICA. 10
As he was not able to generate a positive response from the petitioners, respondent consequently initiated on June 1, 2000 Civil Case No.
00-0264 for specific performance and damages with the Regional Trial Court of Lipa City. 11
For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and between Japanese nationals, moved to
dismiss the complaint for lack of jurisdiction. They asserted that the claim for improper pre-termination of respondent's ICA could only be
heard and ventilated in the proper courts of Japan following the principles of lex loci celebrationis and lex contractus. 12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by a certain Y. Kotake as project
manager of the BBRI Project. 13

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On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank 14 that matters connected with the performance of
contracts are regulated by the law prevailing at the place of performance, 15 denied the motion to dismiss. 16 The trial court subsequently
denied petitioners' motion for reconsideration, 17 prompting them to file with the appellate court, on August 14, 2000, their first Petition
for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205]. 18 On August 23, 2000, the CA resolved to dismiss the petition on
procedural grounds for lack of statement of material dates and for insufficient verification and certification against forum shopping. 19 An
Entry of Judgment was later issued by the appellate court on September 20, 2000. 20
Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the reglementary period,
a second Petition for Certiorariunder Rule 65 already stating therein the material dates and attaching thereto the proper verification and
certification. This second petition, which substantially raised the same issues as those in the first, was docketed as CA-G.R. SP
No. 60827. 21 DTESIA
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001 Decision 22 finding no grave abuse of
discretion in the trial court's denial of the motion to dismiss. The CA ruled, among others, that the principle of lex loci celebrationis was not
applicable to the case, because nowhere in the pleadings was the validity of the written agreement put in issue. The CA thus declared that
the trial court was correct in applying instead the principle of lex loci solutionis. 23
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25, 2001 Resolution. 24
Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Review
on Certiorari 25 imputing the following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE
TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL
LAWS. 26
The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of Philippine courts in civil cases for
specific performance and damages involving contracts executed outside the country by foreign nationals may be assailed on the
principles of lex loci celebrationis, lex contractus, the "state of the most significant relationship rule," or forum non conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters raised by the respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already barred the filing of the second
petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the first one) and the instant petition for
review thereof. cDEICH
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective certification of non-forum shopping, it
was a dismissal without prejudice. 27 The same holds true in the CA's dismissal of the said case due to defects in the formal requirement of
verification 28 and in the other requirement in Rule 46 of the Rules of Court on the statement of the material dates. 29 The dismissal being
without prejudice, petitioners can re-file the petition, or file a second petition attaching thereto the appropriate verification and certification
as they, in fact did and stating therein the material dates, within the prescribed period 30 in Section 4, Rule 65 of the said Rules. 31
The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the parties free to litigate the matter
in a subsequent action as though the dismissed action had not been commenced. In other words, the termination of a case not on the
merits does not bar another action involving the same parties, on the same subject matter and theory. 32
Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and even if petitioners still indicated in the
verification and certification of the second certiorari petition that the first had already been dismissed on procedural grounds, 33 petitioners
are no longer required by the Rules to indicate in their certification of non-forum shopping in the instant petition for review of the second
certiorari petition, the status of the aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum shopping
about any event that will not constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant the
dismissal and nullification of the entire proceedings, considering that the evils sought to be prevented by the said certificate are no longer
present. 34
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to verify and certify, on behalf of
Nippon, thecertiorari petition filed with the CA and not the instant petition. True, the Authorization 35 dated September 4, 2000, which is
attached to the secondcertiorari petition and which is also attached to the instant petition for review, is limited in scope its wordings
indicate that Hasegawa is given the authority to sign for and act on behalf of the company only in the petition filed with the appellate court,
and that authority cannot extend to the instant petition for review. 36 In a plethora of cases, however, this Court has liberally applied the
Rules or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment of the requirements have been
made. 37 Given that petitioners herein sufficiently explained their misgivings on this point and appended to their Reply 38 an updated
Authorization 39 for Hasegawa to act on behalf of the company in the instant petition, the Court finds the same as sufficient compliance
with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and certification. As respondent pointed out,
and to which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000
Authorization and even the subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief executive officer,

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not by the company's board of directors. In not a few cases, we have ruled that corporate powers are exercised by the board of directors;
thus, no person, not even its officers, can bind the corporation, in the absence of authority from the board. 40 Considering that Hasegawa
verified and certified the petition only on his behalf and not on behalf of the other petitioner, the petition has to be denied pursuant
to Loquias v. Office of the Ombudsman. 41 Substantial compliance will not suffice in a matter that demands strict observance of the
Rules. 42 While technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are intended to effect the
proper and orderly disposition of cases and effectively prevent the clogging of court dockets. 43 CSTDIE
Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the trial court's denial of their motion to
dismiss. It is a well-established rule that an order denying a motion to dismiss is interlocutory, and cannot be the subject of the
extraordinary petition for certiorari ormandamus. The appropriate recourse is to file an answer and to interpose as defenses the objections
raised in the motion, to proceed to trial, and, in case of an adverse decision, to elevate the entire case by appeal in due course. 44 While
there are recognized exceptions to this rule, 45 petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear and resolve the civil case for
specific performance and damages filed by the respondent. The ICA subject of the litigation was entered into and perfected in
Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts have no
substantial relationship to the parties 46 following the [state of the] most significant relationship rule in Private International Law. 47
The Court notes that petitioners adopted an additional but different theory when they elevated the case to the appellate court. In the Motion
to Dismiss48 filed with the trial court, petitioners never contended that the RTC is an inconvenient forum. They merely argued that the
applicable law which will determine the validity or invalidity of respondent's claim is that of Japan, following the principles of lex loci
celebrationis and lex contractus. 49 While not abandoning this stance in their petition before the appellate court, petitioners
on certiorari significantly invoked the defense of forum non conveniens. 50On petition for review before this Court, petitioners dropped their
other arguments, maintained the forum non conveniens defense, and introduced their new argument that the applicable principle is the
[state of the] most significant relationship rule. 51
Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in theory, as explained in Philippine Ports
Authority v. City of Iloilo. 52 We only pointed out petitioners' inconstancy in their arguments to emphasize their incorrect assertion of
conflict of laws principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments. Corresponding to these phases are the following questions: (1) Where can or should litigation be
initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be enforced? 53 HDTISa
Analytically, jurisdiction and choice of law are two distinct concepts. 54 Jurisdiction considers whether it is fair to cause a defendant to
travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits
of the case is fair to both parties. The power to exercise jurisdiction does not automatically give a state constitutional authority to apply
forum law. While jurisdiction and the choice of thelex fori will often coincide, the "minimum contacts" for one do not always provide the
necessary "significant contacts" for the other. 55 The question of whether the law of a state can be applied to a transaction is different from
the question of whether the courts of that state have jurisdiction to enter a judgment. 56
In this case, only the first phase is at issue jurisdiction. Jurisdiction, however, has various aspects. For a court to validly exercise its
power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over
the subject matter, over the issues of the case and, in cases involving property, over the res or the thing which is the subject of the
litigation. 57 In assailing the trial court's jurisdiction herein, petitioners are actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which establishes and organizes the
court. It is given only by law and in the manner prescribed by law. 58 It is further determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. 59 To succeed in its motion for the dismissal of
an action for lack of jurisdiction over the subject matter of the claim, 60 the movant must show that the court or tribunal cannot act on the
matter submitted to it because no law grants it the power to adjudicate the claims. 61
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly vested by law with jurisdiction to
hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific performance and damages is one not capable of pecuniary
estimation and is properly cognizable by the RTC of Lipa City. 62 What they rather raise as grounds to question subject matter jurisdiction
are the principles of lex loci celebrationis and lex contractus, and the "state of the most significant relationship rule."
The Court finds the invocation of these grounds unsound. DCASIT
Lex loci celebrationis relates to the "law of the place of the ceremony" 63 or the law of the place where a contract is made. 64 The doctrine
of lex contractus or lex loci contractus means the "law of the place where a contract is executed or to be performed." 65 It controls the
nature, construction, and validity of the contract 66 and it may pertain to the law voluntarily agreed upon by the parties or the law intended
by them either expressly or implicitly. 67 Under the "state of the most significant relationship rule," to ascertain what state law to
apply to a dispute, the court should determine which state has the most substantial connection to the occurrence and the parties. In
a case involving a contract, the court should consider where the contract was made, was negotiated, was to be performed, and the
domicile, place of business, or place of incorporation of the parties. 68 This rule takes into account several contacts and evaluates them
according to their relative importance with respect to the particular issue to be resolved. 69
Since these three principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper for the second phase,
the choice of law. 70 They determine which state's law is to be applied in resolving the substantive issues of a conflicts

93

problem. 71 Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet
called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed out any conflict
between the laws of Japan and ours. Before determining which law should apply, first there should exist a conflict of laws
situation requiring the application of the conflict of laws rules. 72 Also, when the law of a foreign country is invoked to
provide the proper rules for the solution of a case, the existence of such law must be pleaded and proved. 73
It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or administrative agency, there are
three alternatives open to the latter in disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to assume
jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction over
the case and take into account or apply the law of some other State or States. 74 The court's power to hear cases and controversies is
derived from the Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is not limited by foreign
sovereign law short of treaties or other formal agreements, even in matters regarding rights provided by foreign sovereigns. 75 EASIHa
Neither can the other ground raised, forum non conveniens, 76 be used to deprive the trial court of its jurisdiction herein. FIRST, it is not
a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not include it as a
ground. 77 SECOND, whether a suit should be entertained or dismissed on the basis of the said doctrine depends largely upon the facts of
the particular case and is addressed to the sound discretion of the trial court. 78 In this case, the RTC decided to assume jurisdiction.
THIRD, the propriety of dismissing a case based on this principle requires a factual determination; hence, this conflicts principle is more
properly considered a matter of defense. 79
Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by respondent and the grounds raised by
petitioners to assail that jurisdiction are inappropriate, the trial and appellate courts correctly denied the petitioners' motion to dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED. SO ORDERED.
FIRST DIVISION
[G.R. No. 136804. February 19, 2003.]
19. MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL BANK, petitioners, vs. RAFAEL MA.
GUERRERO, respondent.
Sycip Salazar Hernandez and Gatmaitan for petitioners.
P.C. Nolasco & Associates for respondent.
SYNOPSIS
Respondent filed a complaint for damages against petitioner bank for illegally withholding taxes charged against interest on his checking
account, returning a check due to signature verification problems, and unauthorized conversion of his account. In answer thereto, petitioner
alleged that the issue should be limited to actual damages as respondent's account is governed by the New York law. In support thereof,
petitioner presented the authenticated affidavit of New York Attorney Alyssa Walden. Thus, petitioner filed a motion for partial summary
judgment. ATICcS
Petitioner's motion for summary judgment is not proper as it does not demonstrate that respondent's claims are sham, fictitious, or
contrived. There can be no summary judgment where material allegations of the pleadings are in dispute and can be resolved only by trial
on the merits. On the alleged foreign law applicable, the Walden affidavit and attached US court decisions therein are not proper
substantiation thereof for failure to comply with Sec. 24, Rule 132 on proof of foreign laws, records, and decisions.

DECISION
CARPIO, J p:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set aside the Court of Appeals 1 Decision of August 24, 1998 and
Resolution of December 14, 1998 in CA-G.R. SP No. 42310 2 affirming the trial court's denial of petitioners' motion for partial summary
judgment.
The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero ("Guerrero" for brevity) filed a complaint for damages against petitioner Manufacturers
Hanover Trust Co. and/or Chemical Bank ("the Bank" for brevity) with the Regional Trial Court of Manila ("RTC" for brevity). Guerrero sought
payment of damages allegedly for (1) illegally withheld taxes charged against interests on his checking account with the Bank; (2) a
returned check worth US$18,000.00 due to signature verification problems; and (3) unauthorized conversion of his account. Guerrero
amended his complaint on April 18, 1995.

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On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by stipulation Guerrero's account is governed by New York law
and this law does not permit any of Guerrero's claims except actual damages. Subsequently, the Bank filed a Motion for Partial
Summary Judgment seeking the dismissal of Guerrero's claims for consequential, nominal, temperate, moral and exemplary damages as
well as attorney's fees on the same ground alleged in its Answer. The Bank contended that the trial should be limited to the issue of actual
damages. Guerrero opposed the motion.
The affidavit of Alyssa Walden, a NEW YORK ATTORNEY, supported the Bank's Motion for Partial Summary Judgment. Alyssa Walden's
affidavit ("Walden affidavit" for brevity) stated that Guerrero's New York bank account stipulated that the governing law is New York law and
that this law bars all of Guerrero's claims except actual damages. The Philippine Consular Office in New York authenticated the Walden
affidavit. STHAaD
The RTC denied the Bank's Motion for Partial Summary Judgment and its motion for reconsideration on March 6, 1996 and July 17, 1996,
respectively. The Bank filed a petition for certiorari and prohibition with the Court of Appeals assailing the RTC Orders. In its Decision dated
August 24, 1998, the Court of Appeals dismissed the petition. On December 14, 1998, the Court of Appeals denied the Bank's motion for
reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for partial summary judgment. The Court of Appeals ruled that the
Walden AFFIDAVIT does not serve as PROOF of the New York LAW and jurisprudence relied on by the Bank to support its motion.
The Court of Appeals considered the New York law and jurisprudence AS PUBLIC DOCUMENTS defined in Section 19 , Rule 132 of
the Rules on Evidence, as follows:
"SEC. 19.Classes of Documents. For the purpose of their presentation in evidence, documents are either public or
private.
Public documents are:
(a)The written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or of a foreign country;
xxx xxx xxx."
The Court of Appeals opined that the following procedure outlined in Section 24, Rule 132 should be followed in proving foreign law:
"SEC. 24.Proof of official record. The record of public documents referred to in paragraph (a) of Section 19, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy ATTESTED by the
officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a CERTIFICATE that such officer has the custody. If the office in which the record is kept is in a
foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul,
vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office."
The Court of Appeals likewise rejected the Bank's argument that Section 2, Rule 34 of the old Rules of Court allows the Bank to move with
the supporting Walden affidavit for partial summary judgment in its favor. The Court of Appeals clarified that the Walden affidavit is not the
supporting affidavit referred to in Section 2, Rule 34 that would prove the lack of genuine issue between the parties. The Court of Appeals
concluded that even if the Walden affidavit is used for purposes of summary judgment, the Bank must still comply with the procedure
prescribed by the Rules to prove the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error in
". . . HOLDING THAT [THE BANK'S] PROOF OF FACTS TO SUPPORT ITS MOTION FOR SUMMARY JUDGMENT MAY NOT BE
GIVEN BY AFFIDAVIT;
. . . HOLDING THAT [THE BANK'S] AFFIDAVIT, WHICH PROVES FOREIGN LAW AS A FACT, IS "HEARSAY" AND THEREBY
'CANNOT SERVE AS PROOF OF THE NEW YORK LAW RELIED UPON BY PETITIONERS IN THEIR MOTION FOR SUMMARY
JUDGMENT . . . .'" 3
First, the Bank argues that in moving for partial summary judgment, it was entitled to use the Walden affidavit to prove that the
stipulated foreign law bars the claims for consequential, moral, temperate, nominal and exemplary damages and attorney's fees.
Consequently, outright dismissal by summary judgment of these claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the requirements of Rule 35 on summary judgments and those of a trial on the
merits in considering the Walden affidavit as "hearsay." The Bank points out that the Walden affidavit is not hearsay since Rule 35 expressly
permits the use of affidavits.

95

Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit to refute the facts contained in the Walden
affidavit, he failed to show the need for a trial on his claims for damages other than actual.
The Court's Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to Section 2, Rule 34 of the old Rules of Court which reads:
"Section 2.Summary judgment for defending party. A party against whom a claim, counterclaim, or cross-claim is
asserted or a declaratory relief is sought may, at any time, move with supporting affidavits for a summary judgment in
his favor as to all or any part thereof."
A court may grant a summary judgment to settle expeditiously a case if, on motion of either party, there appears from the pleadings,
depositions, admissions, and affidavits that no important issues of fact are involved, except the amount of damages. In such event,
the moving party is entitled to a judgment as a matter of law. 4
In a motion for summary judgment, the crucial question is: are the issues raised in the pleadings genuine, sham or fictitious, as shown
by affidavits, depositions or admissions accompanying the motion? 5
A genuine issue means an issue of fact which calls for the presentation of evidence as distinguished from an issue which
is fictitious or contrived so as not to constitute a genuine issue for trial. 6
A perusal of the parties' respective pleadings would show that there are genuine issues of fact that necessitate formal trial. Guerrero's
complaint before the RTC contains a statement of the ultimate facts on which he relies for his claim for damages. He is seeking damages for
what he asserts as "illegally withheld taxes charged against interests on his checking account with the Bank, a returned check worth
US$18,000.00 due to signature verification problems, and unauthorized conversion of his account." In its Answer, the Bank set up its
defense that the agreed foreign law to govern their contractual relation bars the recovery of damages other than actual. Apparently, facts
are asserted in Guerrero's complaint while specific denials and affirmative defenses are set out in the Bank's answer. aHSTID
True, the court can determine whether there are genuine issues in a case based merely on the affidavits or counter-affidavits submitted by
the parties to the court. However, as correctly ruled by the Court of Appeals, the Bank's motion for partial summary judgment as supported
by the Walden affidavit does not demonstrate that Guerrero's claims are sham, fictitious or contrived. On the contrary, the Walden affidavit
shows that the facts and material allegations as pleaded by the parties are disputed and there are substantial triable issues necessitating a
formal trial.
There can be no summary judgment where questions of fact are in issue or where material allegations of the pleadings are in dispute. 7 The
resolution of whether a foreign law allows only the recovery of actual damages is a question of fact as far as the trial court is concerned
since foreign laws do not prove themselves in our courts. 8 Foreign laws are not a matter of judicial notice. 9 Like any other fact, they must
be alleged and proven. Certainly, the conflicting allegations as to whether New York law or Philippine law applies to Guerrero's claims
present a clear dispute on material allegations which can be resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may be proved by (1) an official
publication thereof or (2) a copy attested by the officer having the legal custody thereof. Such official publication or copy must be
accompanied, if the record is not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof. The
certificate may be issued by any of the authorized Philippine embassy or consular officials stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v. Court of Appeals 10 which held that:
"xxx xxx xxx:
Although it is desirable that foreign law be proved in accordance with the above rule, however, the Supreme Court held
in the case of Willamette Iron and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of the
Revised Rules of Court) does not exclude the presentation of other competent evidence to prove the existence of a
foreign law. In that case, the Supreme Court considered the testimony under oath of an attorney-at-law of San
Francisco, California, who quoted verbatim a section of California Civil Code and who stated that the same was in force
at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. Accordingly, in
line with this view, the Supreme Court in the Collector of Internal Revenue v. Fisher, et al., upheld the Tax Court in
considering the pertinent law of California as proved by the respondents' witness. In that case, the counsel for
respondent "testified that as an active member of the California Bar since 1951, he is familiar with the revenue and
taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards
exemption of intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal
and Revenue Code as published in Derring's California Code, a publication of Bancroft-Whitney Co., Inc. And as part of
his testimony, a full quotation of the cited section was offered in evidence by respondents." Likewise, in several
naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity regarding the
acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for
favorable action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written proof
offered." Thus, in a number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law." (Italics supplied)

96

The Bank, however, cannot rely on Willamete Iron and Steel Works v. Muzzal or Collector of Internal Revenue v. Fisher to support
its cause. These cases involved attorneys testifying in open court during the trial in the Philippines and quoting the particular foreign
laws sought to be established. On the other hand, the Walden affidavit was taken abroad ex parte and the affiant never testified in open
court. The Walden affidavit cannot be considered as proof of New York law on damages not only because it is self-serving but also because it
does not state the specific New York law on damages. We reproduce portions of the Walden affidavit as follows:
"3.In New York, "[n]ominal damages are damages in name only, trivial sums such as six cents or $1. Such damages are
awarded both in tort and contract cases when the plaintiff establishes a cause of action against the defendant, but is
unable to prove" actual damages. Dobbs, Law of Remedies, 3.32 at 294 (1993). Since Guerrero is claiming for actual
damages, he cannot ask for nominal damages.
4.There is no concept of temperate damages in New York law. I have reviewed Dobbs, a well-respected treatise, which
does not use the phrase "temperate damages" in its index. I have also done a computerized search for the phrase in all
published New York cases, and have found no cases that use it. I have never heard the phrase used in American law.
5.The Uniform Commercial Code ("UCC") governs many aspects of a Bank's relationship with its depositors. In this case,
it governs Guerrero's claim arising out of the non-payment of the $18,000 check. Guerrero claims that this was a
wrongful dishonor. However, the UCC states that "justifiable refusal to pay or accept" as opposed to dishonor, occurs
when a bank refuses to pay a check for reasons such as a missing indorsement, a missing or illegible signature or a
forgery, 3-510, Official Comment 2. . . . to the Complaint, MHT returned the check because it had no signature card
on . . . and could not verify Guerrero's signature. In my opinion, consistent with the UCC, that is a legitimate and
justifiable reason not to pay.
6.Consequential damages are not available in the ordinary case of a justifiable refusal to pay. UCC 1-106 provides that
"neither consequential or special or punitive damages may be had except as specifically provided in the Act or by other
rule of law." UCC 4-103 further provides that consequential damages can be recovered only where there is bad faith.
This is more restrictive than the New York common law, which may allow consequential damages in a breach of contract
case (as does the UCC where there is a wrongful dishonor).

7.Under New York law, requests for lost profits, damage to reputation and mental distress are considered consequential
damages. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif
Construction Corp. v. Buffalo Savings Bank, 50 A.D.2d 718, 374 N.Y.S..2d 868, 869-70 (4th Dep't 1975) damage to
reputation); Dobbs, Law of Remedies 12.4(1) at 63 (emotional distress).
8.As a matter of New York law, a claim for emotional distress cannot be recovered for a breach of contract. Geler v.
National Westminster Bank U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d
860, 540 N.Y.S.2d 387, 390 (3d Dep't 1989)Martin v. Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd
Dep't 1976). Damage to reputation is also not recoverable for a contract.Motif Construction Corp. v. Buffalo Savings
Bank, 374 N.Y.S.2d at 869-70.
9.In cases where the issue is the breach of a contract to purchase stock, New York courts will not take into consideration
the performance of the stock after the breach. Rather, damages will be based on the value of the stock at the time of
the breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th Dep't 1982), app. den. 59 N.Y.2d 601, 449
N.E.2d 1276, 463 N.Y.S.2d 1023 (1983). TADaCH
10.Under New York law, a party can only get consequential damages if they were the type that would naturally arise
from the breach and if they were "brought within the contemplation of parties as the probable result of the breach at
the time of or prior to contracting." Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989),
(quoting Chapman v. Fargo, 223 N.Y. 32, 36 (1918).
11.Under New York law, a plaintiff is not entitled to attorneys' fees unless they are provided by contract or
statute. E.g., Geler v. National Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing Mach, Inc.
v. F.M. Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dep't 1992); Stanisic v. Soho Landmark Assocs., 73
A.D.2d 268, 577 N.Y.S.2d 280, 281 (1st Dep't 1991). There is no statute that permits attorney's fees in a case of this
type.
12.Exemplary, or punitive damages are not allowed for a breach of contract, even where the plaintiff claims the
defendant acted with malice.Geler v. National Westminster Bank, 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Catalogue
Service of . . . chester 11 v. Insurance Co. of North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637 (2d Dep't
1980); Senior v. Manufacturers Hanover Trust Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dep't 1985).
13.Exemplary or punitive damages may be recovered only where it is alleged and proven that the wrong supposedly
committed by defendant amounts to a fraud aimed at the public generally and involves a high moral culpability. Walker
v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961).
14.Furthermore, it has been consistently held under New York law that exemplary damages are not available for a mere
breach of contract for in such a case, as a matter of law, only a private wrong and not a public right is involved. Thaler
v. The North Insurance Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dep't 1978)." 12

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The Walden affidavit states conclusions from the affiant's personal interpretation and opinion of the facts of the case vis a vis the
alleged laws and jurisprudence without citing any law in particular. The citations in the Walden affidavit of various U.S. court decisions
do not constitute proof of the official records or decisions of the U.S. courts. While the Bank attached copies of some of the U.S. court
decisions cited in the Walden affidavit, these copies do not comply with Section 24 of Rule 132 on proof of official records or decisions of
foreign courts.
The Bank's intention in presenting the Walden affidavit is to prove New York law and jurisprudence. However, because of the failure to
comply with Section 24 of Rule 132 on how to prove a foreign law and decisions of foreign courts, the Walden affidavit did not prove the
current state of New York law and jurisprudence. Thus, the Bank has only alleged, but has not proved, what New York law and jurisprudence
are on the matters at issue.
Next, the Bank makes much of Guerrero's failure to submit an opposing affidavit to the Walden affidavit. However, the pertinent provision of
Section 3, Rule 35 of the old Rules of Court did not make the submission of an opposing affidavit mandatory, thus:
"SEC. 3.Motion and proceedings thereon. The motion shall be served at least ten (10) days before the time specified
for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings, depositions and admissions on file, together with the
affidavits, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." (Italics supplied)
It is axiomatic that the term "may" as used in remedial law, is only permissive and not mandatory. 13
Guerrero cannot be said to have admitted the averments in the Bank's motion for partial summary judgment and the Walden affidavit just
because he failed to file an opposing affidavit. Guerrero opposed the motion for partial summary judgment, although he did not present an
opposing affidavit. Guerrero may not have presented an opposing affidavit, as there was no need for one, because the Walden affidavit did
not establish what the Bank intended to prove. Certainly, Guerrero did not admit, expressly or impliedly, the veracity of the statements in
the Walden affidavit. The Bank still had the burden of proving New York law and jurisprudence even if Guerrero did not present an opposing
affidavit. As the party moving for summary judgment, the Bank has the burden of clearly demonstrating the absence of any genuine issue
of fact and that any doubt as to the existence of such issue is resolved against the movant. 14
Moreover, it would have been redundant and pointless for Guerrero to submit an opposing affidavit considering that what the Bank seeks to
be opposed is the very subject matter of the complaint. Guerrero need not file an opposing affidavit to the Walden affidavit because his
complaint itself controverts the matters set forth in the Bank's motion and the Walden affidavit. A party should not be made to deny
matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a quo correctly denied the Bank's motion for partial summary
judgment. There is a need to determine by presentation of evidence in a regular trial if the Bank is guilty of any wrongdoing and if it is liable
for damages under the applicable laws. DTEScI
This case has been delayed long enough by the Bank's resort to a motion for partial summary judgment. Ironically, the Bank has
successfully defeated the very purpose for which summary judgments were devised in our rules, which is, to aid parties in avoiding the
expense and loss of time involved in a trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 24, 1998 and the Resolution dated December 14,
1998 of the Court of Appeals in CA-G.R. SP No. 42310 is AFFIRMED.
SO ORDERED.
SECOND DIVISION
[G.R. No. 183622. February 8, 2012.]
20. MEROPE ENRIQUEZ VDA. DE CATALAN, petitioner, vs. LOUELLA A. CATALAN-LEE, respondent.
RESOLUTION
SERENO, J p:
Before us is a Petition for Review assailing the Court of Appeals (CA) Decision 1 and Resolution 2 regarding the issuance of letters of
administration of the intestate estate of Orlando B. Catalan.
The facts are as follows:
Orlando B. Catalan was a naturalized American citizen. After allegedly obtaining a divorce in the United States from his first wife,
Felicitas Amor, he contracted a second marriage with MEROPE ENRIQUEZ VDA. DE CATALAN
On 18 November 2004, Orlando died intestate in the Philippines.
Thereafter, on 25 February 2005, petitioner filed with the Regional Trial Court (RTC) of Burgos, Pangasinan a Petition for the issuance of
letters of administration for her appointment as administratrix of the intestate estate of Orlando. The case was docketed as Special
Proceedings (Spec. Proc.) No. 228.

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On 3 March 2005, while Spec. Proc. No. 228 was pending, respondent Louella A. Catalan-Lee, one of the children of Orlando from his
first marriage, filed a similar petition with the RTC docketed as Spec. Proc. No. 232.
The two cases were subsequently consolidated.
Petitioner prayed for the dismissal of Spec. Proc. No. 232 on the ground of litis pendentia, considering that Spec. Proc. No. 228 covering the
same estate was already pending. HcaDIA
On the other hand, Louella alleged that petitioner was not considered an interested person qualified to file a petition for the issuance of
letters of administration of the estate of Orlando. In support of her contention, respondent alleged that a criminal case for bigamy was filed
against Merope before Branch 54 of the RTC of Alaminos, Pangasinan, and docketed as Crim. Case No. 2699-A.
Apparently, Felicitas Amor filed a Complaint for bigamy, alleging that Merope contracted a second marriage to Orlando despite having been
married to one Eusebio Bristol on 12 December 1959.
On 6 August 1998, the RTC had ACQUITTED petitioner of bigamy. 3 The trial court ruled that since the deceased was a divorced American
citizen, and since that divorce was not recognized under Philippine jurisdiction, the MARRIAGE between him and petitioner was NOT valid.
Furthermore, it took note of the action for declaration of nullity then pending action with the trial court in Dagupan City filed by Felicitas
Amor against the deceased and petitioner. It considered the pending action to be a prejudicial question in determining the guilt of
Merope for the crime of bigamy.
Finally, the trial court found that, in the first place, Merope had never been married to Eusebio Bristol.
On 26 June 2006, Branch 70 of the RTC of Burgos, Pangasinan dismissed the Petition for the issuance of letters of administration filed by
Merope and granted that of Louella. Contrary to its findings in Crim. Case No. 2699-A, the RTC held that the marriage between Merope and
Eusebio Bristol was valid and subsisting when she married Orlando. Without expounding, it reasoned further that her acquittal in the
previous bigamy case was fatal to her cause. Thus, the trial court held that Merope was not an interested party who may file a petition
for the issuance of letters of administration. 4
After the subsequent denial of her Motion for Reconsideration, petitioner elevated the matter to the Court of Appeals (CA) via her Petition
for Certiorari,alleging grave abuse of discretion on the part of the RTC in dismissing her Petition for the issuance of letters of
administration. HCEcaT
Petitioner reiterated before the CA that the Petition filed by respondent should have been dismissed on the ground of litis pendentia. She
also insisted that, while a petition for letters of administration may have been filed by an "uninterested person," the defect was cured by the
appearance of a real party-in-interest. Thus, she insisted that, to determine who has a better right to administer the decedent's properties,
the RTC should have first required the parties to present their evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed Decision. First, it held that petitioner undertook the wrong remedy. She should have
instead filed a petition for review rather than a petition for certiorari. Nevertheless, since the Petition for Certiorari was filed within the
fifteen-day reglementary period for filing a petition for review under Sec. 4 of Rule 43, the CA allowed the Petition and continued to decide
on the merits of the case. Thus, it ruled in this wise:
As to the issue of litis pendentia, we find it not applicable in the case. For litis pendentia to be a ground for the dismissal
of an action, there must be: (a) identity of the parties or at least such as to represent the same interest in both actions;
(b) identity of rights asserted and relief prayed for, the relief being founded on the same acts, and (c) the identity in the
two cases should be such that the judgment which may be rendered in one would, regardless of which party is
successful, amount to res judicata in the other. A petition for letters of administration is a special proceeding. A special
proceeding is an application or proceeding to establish the status or right of a party, or a particular fact. And, in contrast
to an ordinary civil action, a special proceeding involves no defendant or respondent. The only party in this kind of
proceeding is the petitioner of the applicant. Considering its nature, a subsequent petition for letters of administration
can hardly be barred by a similar pending petition involving the estate of the same decedent unless both petitions are
filed by the same person. In the case at bar, the petitioner was not a party to the petition filed by the private
respondent, in the same manner that the latter was not made a party to the petition filed by the former. The first
element of litis pendentiais wanting. The contention of the petitioner must perforce fail.
Moreover, to yield to the contention of the petitioner would render nugatory the provision of the Rules requiring a
petitioner for letters of administration to be an "interested party," inasmuch as any person, for that matter, regardless of
whether he has valid interest in the estate sought to be administered, could be appointed as administrator for as long as
he files his petition ahead of any other person, in derogation of the rights of those specifically mentioned in the order of
preference in the appointment of administrator under Rule 78, Section 6 of the Revised Rules of Court, which provides:
xxx xxx xxx
The petitioner, armed with a marriage certificate, filed her petition for letters of administration. As a spouse, the
petitioner would have been preferred to administer the estate of Orlando B. Catalan. However, a marriage certificate,
like any other public document, is only prima facieevidence of the facts stated therein. The fact that the petitioner
had been charged with bigamy and was acquitted has not been disputed by the petitioner. Bigamy is an illegal
marriage committed by contracting a second or subsequent marriage before the first marriage has been dissolved or
before the absent spouse has been declared presumptively dead by a judgment rendered in a proper proceedings. The
deduction of the trial court that the acquittal of the petitioner in the said case negates the validity of her

99

subsequent marriage with Orlando B. Catalan has not been disproved by her. There was not even an
attempt from the petitioner to deny the findings of the trial court. There is therefore no basis for us to make a
contrary finding. Thus, not being an interested party and a stranger to the estate of Orlando B. Catalan, the dismissal of
her petition for letters of administration by the trial court is in place.
xxx xxx xxx
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. No pronouncement as to
costs. AacDHE
SO ORDERED. 5 (Emphasis supplied)
Petitioner moved for a reconsideration of this Decision. 6 She alleged that the reasoning of the CA was illogical in stating, on the one hand,
that she was acquitted of bigamy, while, on the other hand, still holding that her marriage with Orlando was invalid. She insists that with her
acquittal of the crime of bigamy, the marriage enjoys the presumption of validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special proceedings failed to appreciate the finding of the RTC in Crim. Case No. 2699-A that
petitioner was never married to Eusebio Bristol. Thus, the trial court concluded that, because petitioner was acquitted of bigamy, it follows
that the first marriage with Bristol still existed and was valid. By failing to take note of the findings of fact on the nonexistence of the
marriage between petitioner and Bristol, both the RTC and CA held that petitioner was not an interested party in the estate of Orlando.
Second, it is imperative to note that at the time the bigamy case in Crim. Case No. 2699-A was dismissed, we had already ruled that under
the principles of comity, our jurisdiction recognizes a valid divorce obtained by a spouse of foreign nationality. This doctrine was established
as early as 1985 in Van Dorn v. Romillo, Jr. 7 wherein we said:
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are
covered by the policy against absolute divorces[,] the same being considered contrary to our concept of public policy
and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines,
provided they are valid according to their national law. In this case, the divorce in Nevada released private
respondent from the marriage from the standards of American law, under which divorce dissolves the
marriage. . . .
We reiterated this principle in Llorente v. Court of Appeals, 8 to wit:
In Van Dorn v. Romillo, Jr. we held that owing to the nationality principle embodied in Article 15 of the Civil Code, only
Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our
concept of public policy and morality. In the same case, the Court ruled that aliens may obtain divorces abroad,
provided they are valid according to their national law. CaTcSA
Citing this landmark case, the Court held in Quita v. Court of Appeals, that once proven that respondent was
no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would
become applicable and petitioner could "very well lose her right to inherit" from him.
In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the respondent in his country, the Federal Republic of
Germany. There, we stated that divorce and its legal effects may be recognized in the Philippines insofar as
respondent is concerned in view of the nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. We hold that the divorce
obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a
matter of comity. . . .
Nonetheless, the fact of divorce must still first be proven as we have enunciated in Garcia v. Recio, 9 to wit:
Respondent is getting ahead of himself. Before a foreign judgment is given presumptive evidentiary value, the
document must first be presented and admitted in evidence. A divorce obtained abroad is proven by the divorce decree
itself. Indeed the best evidence of a judgment is the judgment itself. The decree purports to be a written act or
record of an act of an official body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven as a public or official
record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer having legal
custody of the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in
which the record is kept and (b) authenticated by the seal of his office.
The divorce decree between respondent and Editha Samson appears to be an authentic one issued by an Australian
family court. However, appearance is not sufficient; compliance with the aforementioned rules on evidence must
be demonstrated. TCaADS

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Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was submitted in evidence, counsel for
petitioner objected, not to its admissibility, but only to the fact that it had not been registered in the Local Civil Registry
of Cabanatuan City. The trial court ruled that it was admissible, subject to petitioner's qualification. Hence, it was
admitted in evidence and accorded weight by the judge. Indeed, petitioner's failure to object properly rendered the
divorce decree admissible as a written act of the Family Court of Sydney, Australia.
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary; respondent was no longer
bound by Philippine personal laws after he acquired Australian citizenship in 1992. Naturalization is the legal act of
adopting an alien and clothing him with the political and civil rights belonging to a citizen. Naturalized citizens, freed
from the protective cloak of their former states, don the attires of their adoptive countries. By becoming an Australian,
respondent severed his allegiance to the Philippines and the vinculum juris that had tied him to Philippine personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law falls upon petitioner, because she is the party
challenging the validity of a foreign judgment. He contends that petitioner was satisfied with the original of the divorce
decree and was cognizant of the marital laws of Australia, because she had lived and worked in that country for quite a
long time. Besides, the Australian divorce law is allegedly known by Philippine courts; thus, judges may take judicial
notice of foreign laws in the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the "party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an action." In civil cases, plaintiffs have the burden of proving
the material allegations of the complaint when those are denied by the answer; and defendants have the
burden of proving the material allegations in their answer when they introduce new matters. Since the
divorce was a defense raised by respondent, the burden of proving the pertinent Australian law validating it
falls squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws. Like any
other facts, they must be alleged and proved. Australian marital laws are not among those matters that
judges are supposed to know by reason of their judicial function. The power of judicial notice must be
exercised with caution, and every reasonable doubt upon the subject should be resolved in the
negative. (Emphasis supplied) aTIEcA
It appears that the trial court no longer required petitioner to prove the validity of Orlando's divorce under the laws of the United States and
the marriage between Merope and Orlando. Thus, there is a need to remand the proceedings to the trial court for further reception
of evidence to establish the fact of divorce.
Should petitioner prove the validity of the divorce and the subsequent marriage, she has the preferential right to be issued the
letters of administration over the estate. Otherwise, letters of administration may be issued to respondent, who is undisputedly the
daughter or next of kin of the deceased, in accordance with Sec. 6 of Rule 78 of the Revised Rules of Court.
This is consistent with our ruling in San Luis v. San Luis, 10 in which we said:
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee which absolutely
allowed Felicisimo to remarry, would have vested Felicidad with the legal personality to file the present petition as
Felicisimo's surviving spouse. However, the records show that there is insufficient evidence to prove the
validity of the divorce obtained by Merry Lee as well as the marriage of respondent and Felicisimo under the
laws of the U.S.A. In Garcia v. Recio, the Court laid down the specific guidelines for pleading and proving foreign law
and divorce judgments. It held that presentation solely of the divorce decree is insufficient and that proof of its
authenticity and due execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or document may
be proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof
attested by the officer having LEGAL CUSTODY of the document. If the record is not kept in the Philippines, such
copy must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the
Philippine foreign service stationed in the foreign country in which the record is kep t and (b) authenticated
by the seal of his office.
With regard to respondent's marriage to Felicisimo allegedly solemnized in California, U.S.A., she submitted photocopies
of the Marriage Certificate and the annotated text of the Family Law Act of California which purportedly show that their
marriage was done in accordance with the said law. As stated in Garcia, however, the Court cannot take judicial notice
of foreign laws as they must be alleged and proved.
Therefore, this case should be remanded to the trial court for further reception of evidence on the divorce
decree obtained by Merry Lee and the marriage of respondent and Felicisimo. (Emphasis supplied)
Thus, it is imperative for the trial court to first determine the validity of the divorce to ascertain the rightful party to be issued the letters of
administration over the estate of Orlando B. Catalan.
WHEREFORE, premises considered, the Petition is hereby PARTIALLY GRANTED. The Decision dated 18 October 2007 and the Resolution
dated 20 June 2008 of the Court of Appeals are hereby REVERSED and SET ASIDE. Let this case be REMANDED to Branch 70 of the
Regional Trial Court of Burgos, Pangasinan for further proceedings in accordance with this Decision. DcSEHT
SO ORDERED.

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THIRD DIVISION
[G.R. No. 133743. February 6, 2007.]
21. EDGAR SAN LUIS, petitioner, vs. FELICIDAD SAN LUIS, respondent.
[G.R. No. 134029. February 6, 2007]
RODOLFO SAN LUIS, petitioner, vs. FELICIDAD SAGALONGOS alias FELICIDAD SAN LUIS, respondent.

DECISION
YNARES-SANTIAGO, J p:
Before us are consolidated petitions for review assailing the February 4, 1998 Decision 1 of the Court of Appeals in CA-G.R. CV No. 52647,
which reversed and set aside the September 12, 1995 2 and January 31, 1996 3 Resolutions of the Regional Trial Court of Makati City,
Branch 134 in SP. Proc. No. M-3708; and its May 15, 1998 Resolution 4 denying petitioners' motion for reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who was the former governor of the Province of
Laguna. During his lifetime, Felicisimo contracted three marriages. His first marriage was with Virginia Sulit on March 17, 1942 out of which
were born six children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963, Virginia predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son, Tobias. However, on October 15, 1971,
Merry Lee, an American citizen, filed a Complaint for Divorce 5 before the Family Court of the First Circuit, State of Hawaii, United States
of America (U.S.A.), which issued a Decree Granting ABSOLUTE Divorce and Awarding Child Custody on December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos, before Rev. Fr. William Meyer, Minister of
the United Presbyterian at Wilshire Boulevard, Los Angeles, California, U.S.A. 7 He had no children with respondent but lived with her for
18 years from the time of their marriage up to his death on December 18, 1992.
Thereafter, Felicidad sought the dissolution of their conjugal partnership assets and the settlement of Felicisimo's estate . On
December 17, 1993, she filed a petition for letters of administration 8 before the Regional Trial Court of Makati City, docketed as SP. Proc.
No. M-3708 which was raffled to Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the decedent was residing at 100 San Juanico
Street, New Alabang Village, Alabang, Metro Manila; that the decedent's surviving heirs are respondent as legal spouse, his six children by
his first marriage, and son by his second marriage; that the decedent left real properties, both conjugal and exclusive, valued at
P30,304,178.00 more or less; that the decedent does not have any unpaid debts. Respondent prayed that the conjugal partnership assets
be liquidated and that letters of administration be issued to her. TAaIDH
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first marriage, filed a motion to dismiss 9 on the
grounds of improper venue and failure to state a cause of action. Rodolfo claimed that the petition for letters of administration should
have been filed in the Province of Laguna because this was Felicisimo's place of residence prior to his death. He further claimed that
Felicidad has no legal personality to file the petition because she was only a mistress of Felicisimo since the latter, at the time of his death,
was still legally married to Merry Lee.
On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in seeking the dismissal 10 of the petition. On
February 28, 1994, the trial court issued an Order 11 denying the two motions to dismiss.
Unaware of the denial of the motions to dismiss, Felicidad filed on March 5, 1994 her opposition 12 thereto. She submitted documentary
evidence showing that while Felicisimo exercised the powers of his public office in Laguna, he regularly went home to their house in New
Alabang Village, Alabang, Metro Manila which they bought sometime in 1982. Further, she presented the decree of absolute divorce issued
by the Family Court of the First Circuit, State of Hawaii to prove that the marriage of Felicisimo to Merry Lee had already been dissolved.
Thus, she claimed that Felicisimo had the legal capacity to marry her by virtue of paragraph 2, 13 Article 26 of the Family Code and the
doctrine laid down in Van Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for reconsideration from the Order denying their
motions to dismiss. 15 They asserted that paragraph 2, Article 26 of the Family Code cannot be given retroactive effect to validate
respondent's bigamous marriage with Felicisimo because this would impair vested rights in derogation of Article 256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a motion to disqualify Acting Presiding Judge Anthony E.
Santos from hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the motions for reconsideration. It ruled that Felicidad, as widow of the
decedent, possessed the legal standing to file the petition and that venue was properly laid. Meanwhile, the motion for disqualification was
deemed moot and academic 18 because then Acting Presiding Judge Santos was substituted by Judge Salvador S. Tensuan pending the
resolution of said motion.

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Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On even date, Edgar also filed a motion for
reconsideration 20 from the Order denying their motion for reconsideration arguing that it does not state the facts and law on which it was
based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for inhibition. The case was re-raffled to Branch 134
presided by Judge Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their respective position papers on the twin issues of venue and legal
capacity of respondent to file the petition. On May 5, 1995, Edgar manifested 23 that he is adopting the arguments and evidence set forth
in his previous motion for reconsideration as his position paper. Respondent and Rodolfo filed their position papers on June 14, 24 and June
20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for letters of administration. It held that, at the time of his death, Felicisimo
was the duly elected governor and a resident of the Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and
not in Makati City. It also ruled that respondent was without legal capacity to file the petition for letters of administration because her
marriage with Felicisimo was bigamous, thus, void ab initio. It found that the decree of absolute divorce dissolving Felicisimo's marriage to
Merry Lee was not valid in the Philippines and did not bind Felicisimo who was a Filipino citizen. It also ruled that paragraph 2, Article 26 of
the Family Code cannot be retroactively applied because it would impair the vested rights of Felicisimo's legitimate children. CDTHSI
Respondent moved for reconsideration 26 and for the disqualification 27 of Judge Arcangel but said motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial court in its assailed Decision dated
February 4, 1998, the dispositive portion of which states:
WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996 are hereby REVERSED and SET ASIDE; the
Orders dated February 28 and October 24, 1994 are REINSTATED; and the records of the case is REMANDED to the trial
court for further proceedings. 29
The appellate court ruled that under Section 1, Rule 73 of the Rules of Court, the term "place of residence" of the decedent, for purposes of
fixing the venue of the settlement of his estate, refers to the personal, actual or physical habitation, or actual residence or place of abode of
a person as distinguished from legal residence or domicile. It noted that although Felicisimo discharged his functions as governor in Laguna,
he actually resided in Alabang, Muntinlupa. Thus, the petition for letters of administration was properly filed in Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by virtue of paragraph 2, Article 26 of the Family Code
and the rulings in Van Dorn v. Romillo, Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that the marriage between Felicisimo and Merry Lee
was validly dissolved by virtue of the decree of absolute divorce issued by the Family Court of the First Circuit, State of Hawaii. As a result,
under paragraph 2, Article 26, Felicisimo was capacitated to contract a subsequent marriage with respondent. Thus
With the well-known rule express mandate of paragraph 2, Article 26, of the Family Code of the Philippines, the
doctrines in Van Dorn, Pilapil, and the reason and philosophy behind the enactment of E.O. No. 227, there is no
justiciable reason to sustain the individual view sweeping statement of Judge Arc[h]angel, that "Article 26, par. 2
of the Family Code, contravenes the basic policy of our state against divorce in any form whatsoever." Indeed, courts
cannot deny what the law grants. All that the courts should do is to give force and effect to the express mandate of the
law. The foreign divorce having been obtained by the Foreigner on December 14, 1992, 32 the Filipino divorcee,
"shall . . . have capacity to remarry under Philippine laws". For this reason, the marriage between the deceased and
petitioner should not be denominated as "a bigamous marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the surviving spouse can institute the judicial
proceeding for the settlement of the estate of the deceased. . . . 33
Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were denied by the Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition for review on certiorari. 35 Rodolfo later filed a manifestation and
motion to adopt the said petition which was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject petition for letters of administration was
improperly laid because at the time of his death, Felicisimo was a resident of Sta. Cruz, Laguna. They contend that pursuant to our rulings
in Nuval v. Guray 37 andRomualdez v. RTC, Br. 7, Tacloban City, 38 "residence" is synonymous with "domicile" which denotes a fixed
permanent residence to which when absent, one intends to return. They claim that a person can only have one domicile at any given time.
Since Felicisimo never changed his domicile, the petition for letters of administration should have been filed in Sta. Cruz, Laguna.
Petitioners also contend that respondent's marriage to Felicisimo was void and bigamous because it was performed during the subsistence
of the latter's marriage to Merry Lee. They argue that paragraph 2,
The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent has legal capacity to file the subject petition for
letters of administration. DScTaC
The petition lacks merit.
Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration of the estate of Felicisimo should be filed in the
Regional Trial Court of the province "in which he resides at the time of his death." In the case of Garcia Fule v. Court of Appeals, 40 we laid

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down the doctrinal rule for determining the residence as contradistinguished from domicile of the decedent for purposes of fixing the
venue of the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as distinguished from "legal residence or domicile." This
term "resides," like the terms "residing" and "residence," is elastic and should be interpreted in the light of the object or
purpose of the statute or rule in which it is employed. In the application of venue statutes and rules Section 1, Rule
73 of the Revised Rules of Court is of such nature residence rather than domicile is the significant factor. Even where
the statute uses the word "domicile" still it is construed as meaning residence and not domicile in the technical sense.
Some cases make a distinction between the terms "residence" and "domicile" but as generally used in statutes fixing
venue, the terms are synonymous, and convey the same meaning as the term "inhabitant." In other words, "resides"
should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a
person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this
popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile.
Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in
that place and also an intention to make it one's domicile. No particular length of time of residence is required though;
however, the residence must be more than temporary. 41 (Emphasis supplied) STIcEA
It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of the settlement of the estate of Felicisimo, is
synonymous with "domicile." The rulings in Nuval and Romualdez are inapplicable to the instant case because they involve election cases.
Needless to say, there is a distinction between "residence" for purposes of election laws and "residence" for purposes of fixing the venue of
actions. In election cases, "residence" and "domicile" are treated as synonymous terms, that is, the fixed permanent residence to which
when absent, one has the intention of returning. 42However, for purposes of fixing venue under the Rules of Court, the "residence" of a
person is his personal, actual or physical habitation, or actual residence or place of abode, which may not necessarily be his legal residence
or domicile provided he resides therein with continuity and consistency. 43Hence, it is possible that a person may have his residence in one
place and domicile in another.
In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz, Laguna, respondent proved that he also
maintained a residence in Alabang, Muntinlupa from 1982 up to the time of his death. Respondent submitted in evidence the Deed of
Absolute Sale 44 dated January 5, 1983 showing that the deceased purchased the aforesaid property. She also presented billing
statements 45 from the Philippine Heart Center and Chinese General Hospital for the period August to December 1992 indicating the
address of Felicisimo at "100 San Juanico, Ayala Alabang, Muntinlupa." Respondent also presented proof of membership of the deceased in
the Ayala Alabang Village Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from 1988 to 1990 sent by the deceased's
children to him at his Alabang address, and the deceased's calling cards 49 stating that his home/city address is at "100 San Juanico, Ayala
Alabang Village, Muntinlupa" while his office/provincial address is in "Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for purposes of fixing the venue of the settlement of his
estate. Consequently, the subject petition for letters of administration was validly filed in the Regional Trial Court 50 which has territorial
jurisdiction over Alabang, Muntinlupa. The subject petition was filed on December 17, 1993. At that time, Muntinlupa was still a municipality
and the branches of the Regional Trial Court of the National Capital Judicial Region which had territorial jurisdiction over Muntinlupa were
then seated in Makati City as per Supreme Court Administrative Order No. 3. 51 Thus, the subject petition was validly filed before the
Regional Trial Court of Makati City.
Anent the issue of respondent Felicidad's legal personality to file the petition for letters of administration, we must first resolve the issue of
whether a Filipino who is divorced by his alien spouse abroad may validly remarry under the Civil Code, considering that Felicidad's marriage
to Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3, 1988. In resolving this issue, we need
not retroactively apply the provisions of the Family Code, particularly Art. 26, par. (2) considering that there is sufficient jurisprudential
basis allowing us to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a foreigner and his Filipino wife, which marriage was
subsequently dissolved through a divorce obtained abroad by the latter. Claiming that the divorce was not valid under Philippine law,
the alien spouse alleged that his interest in the properties from their conjugal partnership should be protected. The Court, however,
recognized the validity of the divorce and held that the alien spouse had no interest in the properties acquired by the Filipino wife after
the divorce. Thus:
In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law,
under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton
vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony by a competent jurisdiction are to
change the existing status or domestic relation of husband and wife, and to free them both from the bond. The
marriage tie, when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife
without a husband, is unknown to the law. When the law provides, in the nature of a penalty, that the guilty
party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former
marriage."
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no
standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is
bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he
does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged
conjugal property. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longer be considered married to the alien spouse.
Further, she should not be required to perform her marital duties and obligations. It held:

104

To maintain, as private respondent does, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil
Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render
support to private respondent. The latter should not continue to be one of her heirs with possible rights to conjugal
property. She should not be discriminated against in her own country if the ends of justice are to be
served. 54 (Emphasis added) AcaEDC
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court recognized the validity of a divorce obtained abroad. In
the said case, it was held that the alien spouse is not a proper party in filing the adultery suit against his Filipino wife. The Court stated that
"the severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not
affect or cast obloquy on the other." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is divorced by his naturalized foreign spouse, the ruling
in Van Dornapplies. 58 Although decided on December 22, 1998, the divorce in the said case was obtained in 1954 when the Civil Code
provisions were still in effect.
The significance of the Van Dorn case to the development of limited recognition of divorce in the Philippines cannot be denied. The ruling
has long been interpreted as severing marital ties between parties in a mixed marriage and capacitating the Filipino spouse to remarry as a
necessary consequence of upholding the validity of a divorce obtained abroad by the alien spouse. In his treatise, Dr. Arturo M. Tolentino
cited Van Dorn stating that "if the foreigner obtains a valid foreign divorce, the Filipino spouse shall have capacity to remarry under
Philippine law." 59 In Garcia v. Recio, 60 the Court likewise cited the aforementioned case in relation to Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical background and legislative intent behind paragraph 2, Article 26 of the
Family Code were discussed, to wit:
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise known as the
"Family Code," which took effect on August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this country, except those prohibited under Articles 35, 37,
and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was likewise signed into
law, amending Articles 26, 36, and 39 of 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)
xxx xxx xxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article 26,
according to Judge Alicia Sempio-Diy, a member of 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.
The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court held therein
that a divorce decree validly obtained by the alien spouse is valid in the Philippines, and consequently, the
Filipino spouse is capacitated to remarry under Philippine law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly obtained abroad by the alien spouse. With
the enactment of the Family Code and paragraph 2, Article 26 thereof, our lawmakers codified the law already established through judicial
precedent. HAaECD
Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one of the parties and productive of no
possible good to the community, relief in some way should be obtainable. 64 Marriage, being a mutual and shared commitment between
two parties, cannot possibly be productive of any good to the society where one is considered released from the marital bond while the
other remains bound to it. Such is the state of affairs where the alien spouse obtains a valid divorce abroad against the Filipino spouse, as in
this case.

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Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is void under Philippine law insofar as Filipinos are
concerned. However, in light of this Court's rulings in the cases discussed above, the Filipino spouse should not be discriminated against in
his own country if the ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court stated:
But as has also been aptly observed, we test a law by its results; and likewise, we may add, by its purposes. It is a
cardinal rule that, in seeking the meaning of the law, the first concern of the judge should be to discover in its
provisions the intent of the lawmaker. Unquestionably, the law should never be interpreted in such a way as to cause
injustice as this is never within the legislative intent. An indispensable part of that intent, in fact, for we presume the
good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance with justice. Law and justice are
inseparable, and we must keep them so. To be sure, there are some laws that, while generally valid, may seem arbitrary
when applied in a particular case because of its peculiar circumstances. In such a situation, we are not bound, because
only of our nature and functions, to apply them just the same, in slavish obedience to their language. What we do
instead is find a balance between the word and the will, that justice may be done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply the law as it is worded, yielding like
robots to the literal command without regard to its cause and consequence. "Courts are apt to err by sticking too closely
to the words of a law," so we are warned, by Justice Holmes again, "where these words import a policy that goes
beyond them."
xxx xxx xxx
More than twenty centuries ago, Justinian defined justice "as the constant and perpetual wish to render every one his
due." That wish continues to motivate this Court when it assesses the facts and the law in every case brought to it for
decision. Justice is always an essential ingredient of its decisions. Thus when the facts warrants, we interpret the law in
a way that will render justice, presuming that it was the intention of the lawmaker, to begin with, that the law be
dispensed with justice. 69
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry Lee which absolutely allowed Felicisimo to
remarry, would have vested Felicidad with the legal personality to file the present petition as Felicisimo's surviving spouse. However, the
records show that there is insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well as the
marriage of respondent and Felicisimo under the laws of the U.S.A. In Garcia v. Recio, 70 the Court laid down the specific guidelines
for pleading and proving foreign law and divorce judgments. It held that presentation solely of the divorce decree is insufficient and that
proof of its authenticity and due execution must be presented. Under Sections 24 and 25 of Rule 132, a writing or document may be
proven as a public or official record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the
officer having legal custody of the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a
certificate issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his office . 71
With regard to respondent's marriage to Felicisimo allegedly solemnized in California, U.S.A., she submitted photocopies of the Marriage
Certificate and the ANNOTATED text 72 of the Family Law Act of California which purportedly show that their marriage was
done in accordance with the said law. As stated in Garcia, however, the Court cannot take judicial notice of foreign laws as they must be
alleged and proved. 73
Therefore, this case should be remanded to the trial court for further reception of evidence on the divorce decree obtained by
Merry Lee and the marriage of respondent and Felicisimo.
Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we find that the latter has the legal
personality to file the subject petition for letters of administration, as she may be considered the co-owner of Felicisimo as regards the
properties that were acquired through their joint efforts during their cohabitation. TIEHDC
Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be granted to the surviving spouse of the decedent.
However, Section 2, Rule 79 thereof also provides in part:
SEC. 2.Contents of petition for letters of administration. A petition for letters of administration must be filed by
an interested person and must show, as far as known to the petitioner: . . . .
An "interested person" has been defined as one who would be BENEFITED by the estate, such as an heir, or one who has a claim against the
estate, such as a creditor. The interest must be material and direct, and not merely indirect or contingent. 75
In the instant case, respondent would qualify as an interested person who has a direct interest in the estate of Felicisimo by virtue of their
cohabitation, the existence of which was not denied by petitioners. If she proves the validity of the divorce and Felicisimo's capacity to
remarry, but fails to prove that her marriage with him was validly performed under the laws of the U.S.A., then she may be considered as a
co-owner under Article 144 76 of the Civil Code. This provision governs the property relations between parties who live together as husband
and wife without the benefit of marriage, or their marriage is void from the beginning. It provides that the property acquired by either or
both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership. In a co-ownership,
it is not necessary that the property be acquired through their joint labor, efforts and industry. Any property acquired during the union
is prima facie presumed to have been obtained through their joint efforts. Hence, the portions belonging to the co-owners shall be
presumed equal, unless the contrary is proven. 77

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Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage, the applicable provision would be Article 148 of the
Family Code which has filled the hiatus in Article 144 of the Civil Code by expressly regulating the property relations of couples living
together as husband and wife but are incapacitated to marry. 78 In Saguid v. Court of Appeals, 79 we held that even if the cohabitation or
the acquisition of property occurred before the Family Code took effect, Article 148 governs. 80 The Court described the property regime
under this provision as follows:
The regime of limited co-ownership of property governing the union of parties who are not legally capacitated to marry
each other, but who nonetheless live together as husband and wife, applies to properties acquired during said
cohabitation in proportion to their respective contributions. Co-ownership will only be up to the extent of the proven
actual contribution of money, property or industry. Absent proof of the extent thereof, their contributions and
corresponding shares shall be presumed to be equal.
xxx xxx xxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership of properties
acquired by the parties to a bigamous marriage and an adulterous relationship, respectively, we ruled that proof of
actual contribution in the acquisition of the property is essential. . . .
As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or the nature of
the case, asserts an affirmative issue. Contentions must be proved by competent evidence and reliance must be had on
the strength of the party's own evidence and not upon the weakness of the opponent's defense. . . . 81
In view of the foregoing, we find that respondent's legal capacity to file the subject petition for letters of administration may arise from her
status as the surviving wife of Felicisimo or as his co-owner under Article 144 of the Civil Code or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating and affirming the February 28, 1994 Order of the
Regional Trial Court which denied petitioners' motion to dismiss and its October 24, 1994 Order which dismissed petitioners' motion for
reconsideration is AFFIRMED. Let this case be REMANDED to the trial court for further proceedings.
SO ORDERED.
Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
SECOND DIVISION
[G.R. No. 196049. June 26, 2013.]
22. MINORU FUJIKI, petitioner, vs. MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL
REGISTRAR OF QUEZON CITY, and THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF THE
NATIONAL STATISTICS OFFICE, respondents.

DECISION
CARPIO, J p:
The Case
This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107, Quezon City, through a petition for review
on certiorari under Rule 45 of the Rules of Court on a pure question of law. The petition assails the Order 1 dated 31 January 2011 of the
RTC in Civil Case No. Q-11-68582 and its Resolution dated 2 March 2011 denying petitioner's Motion for Reconsideration. The RTC dismissed
the petition for "Judicial Recognition of Foreign Judgment (or Decree of Absolute Nullity of Marriage)" based on improper venue and the lack
of personality of petitioner, Minoru Fujiki, to file the petition.
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz Galela Marinay (Marinay) in the Philippines 2 on
23 January 2004. The marriage did not sit well with petitioner's parents. Thus, Fujiki could not bring his wife to Japan where he resides.
Eventually, they lost contact with each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first marriage being dissolved, Marinay and Maekara
were married on 15 May 2008 in Quezon City, Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly suffered
physical abuse from Maekara. She left Maekara and started to contact Fujiki. 3
Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In 2010, Fujiki helped Marinay obtain a judgment from
a family court in Japan which declared the marriage between Marinay and Maekara void on the ground of bigamy. 4 On 14 January 2011,
Fujiki filed a petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or Decree of Absolute Nullity of Marriage)." Fujiki prayed
that (1) the Japanese Family Court judgment be recognized; (2) that the bigamous marriage between Marinay and Maekara be
declared void ab initio under Articles 35 (4) and 41 of the Family Code of the Philippines; 5 and (3) for the RTC to direct the Local Civil

107

Registrar of Quezon City to annotate the Japanese Family Court judgment on the Certificate of Marriage between Marinay and Maekara and
to endorse such annotation to the Office of the Administrator and Civil Registrar General in the National Statistics Office (NSO). 6
The Ruling of the Regional Trial Court
A few days after the filing of the petition, the RTC immediately issued an Order dismissing the petition and withdrawing the case from its
active civil docket. 7 The RTC cited the following provisions of the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment
of Voidable Marriages (A.M. No. 02-11-10-SC):
Sec. 2.Petition for declaration of absolute nullity of void marriages.
(a)Who may file. A petition for declaration of absolute nullity of void marriage may be filed solely by the husband
or the wife.
xxx xxx xxx
Sec. 4.Venue. The petition shall be filed in the Family Court of the province or city where the petitioner or the
respondent has been residing for at least six months prior to the date of filing, or in the case of a non-resident
respondent, where he may be found in the Philippines, at the election of the petitioner. . . .
The RTC ruled, without further explanation, that the petition was in "gross violation" of the above provisions. The trial court based its
dismissal on Section 5 (4) of A.M. No. 02-11-10-SC which provides that "[f]ailure to comply with any of the preceding requirements
may be a ground for immediate dismissal of the petition." 8 Apparently, the RTC took the view that only "the husband or the wife," in
this case either Maekara or Marinay, can file the petition to declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC contemplated ordinary civil actions for declaration
of nullity and annulment of marriage. Thus, A.M. No. 02-11-10-SC does not apply. A petition for recognition of foreign judgment is a
special proceeding, which "seeks to establish a status, a right or a particular fact," 9 and not a civil action which is "for the enforcement or
protection of a right, or the prevention or redress of a wrong." 10 In other words, the petition in the RTC sought to establish (1) the
status and concomitant rights of Fujiki and Marinay as husband and wife and (2) the fact of the rendition of the Japanese Family Court
judgment declaring the marriage between Marinay and Maekara as void on the ground of bigamy. The petitioner contended that the
Japanese judgment was consistent with Article 35 (4) of the Family Code of the Philippines 11 on bigamy and was therefore entitled to
recognition by Philippine courts. 12
In any case, it was also Fujiki's view that A.M. No. 02-11-10-SC applied only to void marriages under Article 36 of the Family Code
on the ground of psychological incapacity. 13 Thus, Section 2 (a) of A.M. No. 02-11-10-SC provides that "a petition for declaration of
absolute nullity of void marriages may be filed solely by the husband or the wife." To apply Section 2 (a) in bigamy would be absurd
because only the guilty parties would be permitted to sue. In the words of Fujiki, "[i]t is not, of course, difficult to realize that the party
interested in having a bigamous marriage declared a nullity would be the husband in the prior, pre-existing marriage." 14 Fujiki had
material interest and therefore the personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of the Rules of Court is applicable. Rule 108 is the
"procedural implementation" of the Civil Register Law (Act No. 3753) 15 in relation to Article 413 of the Civil Code. 16 The Civil Register
Law imposes a duty on the "successful petitioner for divorce or annulment of marriage to send a copy of the final decree of the court to the
local registrar of the municipality where the dissolved or annulled marriage was solemnized." 17 Section 2 of Rule 108 provides that entries
in the civil registry relating to "marriages," "judgments of annulments of marriage" and "judgments declaring marriages void from the
beginning" are subject to cancellation or correction. 18 The petition in the RTC sought (among others) to annotate the judgment of the
Japanese Family Court on the certificate of marriage between Marinay and Maekara. CaAIES
Fujiki's motion for reconsideration in the RTC also asserted that the trial court "gravely erred" when, on its own, it dismissed the petition
based on improper venue. Fujiki stated that the RTC may be confusing the concept of venue with the concept of jurisdiction, because it is
lack of jurisdiction which allows a court to dismiss a case on its own. Fujiki cited Dacoycoy v. Intermediate Appellate Court 19 which held
that the "trial court cannot pre-empt the defendant's prerogative to object to the improper laying of the venue by motu proprio dismissing
the case." 20 Moreover, petitioner alleged that the trial court should not have "immediately dismissed" the petition under Section 5 of A.M.
No. 02-11-10-SC because he substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioner's motion for reconsideration. In its Resolution, the RTC stated that A.M. No. 02-1110-SC applies because the petitioner, in effect, prays for a decree of absolute nullity of marriage. 21 The trial court reiterated its two
grounds for dismissal, i.e., lack of personality to sue and improper venue under Sections 2 (a) and 4 of A.M. No. 02-11-10-SC. The RTC
considered Fujiki as a "third person" 22 in the proceeding because he "is not the husband in the decree of divorce issued by the Japanese
Family Court, which he now seeks to be judicially recognized, . . . ." 23 On the other hand, the RTC did not explain its ground of impropriety
of venue. It only said that "[a]lthough the Court cited Sec. 4 (Venue) . . . as a ground for dismissal of this case[,] it should be taken
together with the other ground cited by the Court . . . which is Sec. 2 (a) . . . ." 24
The RTC further justified its motu proprio dismissal of the petition based on Braza v. The City Civil Registrar of Himamaylan City, Negros
Occidental. 25The Court in Braza ruled that "[i]n a special proceeding for correction of entry under Rule 108 (Cancellation or Correction of
Entries in the Original Registry), the trial court has no jurisdiction to nullify marriages . . . ." 26 Braza emphasized that the "validity of
marriages as well as legitimacy and filiation can be questioned only in a direct action seasonably filed by the proper party, and not through a
collateral attack such as [a] petition [for correction of entry] . . . ." 27
The RTC considered the petition as a collateral attack on the validity of marriage between Marinay and Maekara. The trial court held that this
is a "jurisdictional ground" to dismiss the petition. 28 Moreover, the verification and certification against forum shopping of the petition was

108

not authenticated as required under Section 5 29 of A.M. No. 02-11-10-SC. Hence, this also warranted the "immediate dismissal" of the
petition under the same provision.
The Manifestation and Motion of the Office of the Solicitor General and
the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment on the petition for review. 30 The public respondents, the Local Civil
Registrar of Quezon City and the Administrator and Civil Registrar General of the NSO, participated through the Office of the Solicitor
General. Instead of a comment, the Solicitor General filed a Manifestation and Motion. 31
The Solicitor General agreed with the petition. He prayed that the RTC's "pronouncement that the petitioner failed to comply with . . . A.M.
No. 02-11-10-SC . . . be set aside" and that the case be reinstated in the trial court for further proceedings. 32 The Solicitor General argued
that Fujiki, as the spouse of the first marriage, is an injured party who can sue to declare the bigamous marriage between Marinay and
Maekara void. The Solicitor General citedJuliano-Llave v. Republic 33 which held that Section 2 (a) of A.M. No. 02-11-10-SC does not apply
in cases of bigamy. In Juliano-Llave, this Court explained: SCHATc
[t]he subsequent spouse may only be expected to take action if he or she had only discovered during the connubial
period that the marriage was bigamous, and especially if the conjugal bliss had already vanished. Should parties in a
subsequent marriage benefit from the bigamous marriage, it would not be expected that they would file an action to
declare the marriage void and thus, in such circumstance, the "injured spouse" who should be given a legal remedy is
the one in a subsisting previous marriage. The latter is clearly the aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse. The subsequent marriage will always be a reminder of the infidelity of the spouse and the
disregard of the prior marriage which sanctity is protected by the Constitution. 34
The Solicitor General contended that the petition to recognize the Japanese Family Court judgment may be made in a Rule 108
proceeding. 35 In Corpuz v. Santo Tomas, 36 this Court held that "[t]he recognition of the foreign divorce decree may be made in a Rule
108 proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to establish the status
or right of a party or a particular fact." 37 WhileCorpuz concerned a foreign divorce decree, in the present case the Japanese Family Court
judgment also affected the civil status of the parties, especially Marinay, who is a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to record "[a]cts, events and judicial decrees concerning
the civil status of persons" in the civil registry as required by Article 407 of the Civil Code. In other words, "[t]he law requires the entry in
the civil registry of judicial decrees that produce legal consequences upon a person's legal capacity and status . . . ." 38 The Japanese
Family Court judgment directly bears on the civil status of a Filipino citizen and should therefore be proven as a fact in a Rule 108
proceeding.
Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing a void marriage under Rule 108, citing De Castro
v. De Castro 39and Nial v. Bayadog 40 which declared that "[t]he validity of a void marriage may be collaterally attacked." 41
Marinay and Maekara individually sent letters to the Court to comply with the directive for them to comment on the petition. 42 Maekara
wrote that Marinay concealed from him the fact that she was previously married to Fujiki. 43 Maekara also denied that he inflicted any form
of violence on Marinay.44 On the other hand, Marinay wrote that she had no reason to oppose the petition. 45 She would like to maintain
her silence for fear that anything she say might cause misunderstanding between her and Fujiki. 46 ScTaEA
The Issues
Petitioner raises the following legal issues:
(1)Whether the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is
applicable.
(2)Whether a husband or wife of a prior marriage can file a petition to recognize a foreign judgment nullifying the subsequent marriage
between his or her spouse and a foreign citizen on the ground of bigamy.
(3)Whether the Regional Trial Court can recognize the foreign judgment in a proceeding for cancellation or correction of entries in the Civil
Registry under Rule 108 of the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) does not apply
in a petition to recognize a foreign judgment relating to the status of a marriage where one of the parties is a citizen of a foreign country.
Moreover, in Juliano-Llave v. Republic, 47 this Court held that the rule in A.M. No. 02-11-10-SC that only the husband or wife can file a
declaration of nullity or annulment of marriage "does not apply if the reason behind the petition is bigamy." 48
I.
For Philippine courts to recognize a foreign judgment relating to the status of a marriage where one of the parties is a citizen of a foreign
country, the petitioner only needs to prove the foreign judgment as a fact under the Rules of Court. To be more specific, a copy of the

109

foreign judgment may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48
(b) of the Rules of Court. 49 Petitioner may prove the Japanese Family Court judgment through (1) an official publication or (2) a
certification or copy attested by the officer who has custody of the judgment. If the office which has custody is in a foreign country such
as Japan, the certification may be made by the proper diplomatic or consular officer of the Philippine foreign service in Japan and
authenticated by the seal of office. 50 EaISTD
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign judgment would mean that the trial court
and the parties should follow its provisions, including the form and contents of the petition, 51 the service of
summons, 52 the investigation of the public prosecutor, 53 the setting of pre-trial, 54 the trial 55 and the judgment of the
trial court. 56 This is absurd because it will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues. " 57 The interpretation of the RTC is tantamount to
relitigating the case on the merits. In Mijares v. Raada, 58 this Court explained that "[i]f every judgment of a foreign court were
reviewable on the merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial the previously
concluded litigation." 59
A foreign judgment relating to the status of a marriage affects the civil status, condition and legal capacity of its parties. However, the effect
of a foreign judgment is not automatic. To extend the effect of a foreign judgment in the Philippines, Philippine courts must determine if the
foreign judgment is consistent with domestic public policy and other mandatory laws. 60 Article 15 of the Civil Code provides that "[l]aws
relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines,
even though living abroad." This is the rule of lex nationalii in private international law. Thus, the Philippine State may require, for effectivity
in the Philippines, recognition by Philippine courts of a foreign judgment affecting its citizen, over whom it exercises personal jurisdiction
relating to the status, condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does not require relitigation under a Philippine court of the case as if it
were a new petition for declaration of nullity of marriage. Philippine courts cannot presume to know the foreign laws under which the foreign
judgment was rendered. They cannot substitute their judgment on the status, condition and legal capacity of the foreign citizen who is
under the jurisdiction of another state. Thus, Philippine courts can only recognize the foreign judgment as a fact according to the rules of
evidence. ECcTaS
Section 48 (b), Rule 39 of the Rules of Court provides that a foreign judgment or final order against a person creates a "presumptive
evidence of a right as between the parties and their successors in interest by a subsequent title." Moreover, Section 48 of the Rules of Court
states that "the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact." Thus, Philippine courts exercise limited review on foreign judgments. Courts are not allowed to delve into
the merits of a foreign judgment. Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on grounds
external to its merits, i.e., "want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact." The
rule on limited review embodies the policy of efficiency and the protection of party expectations, 61 as well as respecting the jurisdiction of
other states. 62
Since 1922 in Adong v. Cheong Seng Gee, 63 Philippine courts have recognized foreign divorce decrees between a Filipino and a foreign
citizen if they are successfully proven under the rules of evidence. 64 Divorce involves the dissolution of a marriage, but the recognition of a
foreign divorce decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the rules of ordinary trial. While the
Philippines does not have a divorce law, Philippine courts may, however, recognize a foreign divorce decree under the second paragraph of
Article 26 of the Family Code, to capacitate a Filipino citizen to remarry when his or her foreign spouse obtained a divorce decree
abroad. 65
There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family Court judgment nullifying the marriage between
Marinay and Maekara on the ground of bigamy. While the Philippines has no divorce law, the Japanese Family Court judgment is fully
consistent with Philippine public policy, as bigamous marriages are declared void from the beginning under Article 35 (4) of the Family
Code. Bigamy is a crime under Article 349 of the Revised Penal Code. Thus, Fujiki can prove the existence of the Japanese Family Court
judgment in accordance with Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48 (b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be made in a special proceeding for
cancellation or correction of entries in the civil registry under Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court
provides that "[a] special proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact." Rule 108
creates a remedy to rectify facts of a person's life which are recorded by the State pursuant to the Civil Register Law or Act No. 3753. These
are facts of public consequence such as birth, death or marriage, 66which the State has an interest in recording. As noted by the Solicitor
General, in Corpuz v. Sto. Tomas this Court declared that "[t]he recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to establish the status or
right of a party or a particular fact." 67 AIaHES
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. Any person interested in any act, event, order or decree concerning the civil
status of persons which has been recorded in the civil register, may file a verified petition for the cancellation
or correction of any entry relating thereto, with the Regional Trial Court of the province where the corresponding civil
registry is located. (Emphasis supplied)
Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment nullifying the marriage between Marinay
and Maekara on the ground of bigamy because the judgment concerns his civil status as married to Marinay. For the same
reason he has the personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay and Maekara in the civil
registry on the basis of the decree of the Japanese Family Court.

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There is no doubt that the prior spouse has a personal and material interest in maintaining the integrity of the marriage he contracted and
the property relations arising from it. There is also no doubt that he is interested in the cancellation of an entry of a bigamous marriage in
the civil registry, which compromises the public record of his marriage. The interest derives from the substantive right of the spouse not
only to preserve (or dissolve, in limited instances) 68 his most intimate human relation, but also to protect his property interests that arise
by operation of law the moment he contracts marriage. 69 These property interests in marriage include the right to be supported "in
keeping with the financial capacity of the family" 70 and preserving the property regime of the marriage. 71
Property rights are already substantive rights protected by the Constitution, 72 but a spouse's right in a marriage extends further to
relational rights recognized under Title III ("Rights and Obligations between Husband and Wife") of the Family Code. 73 A.M. No. 02-11-10SC cannot "diminish, increase, or modify" the substantive right of the spouse to maintain the integrity of his marriage. 74 In any case,
Section 2 (a) of A.M. No. 02-11-10-SC preserves this substantive right by limiting the personality to sue to the husband or the wife of
the union recognized by law. DHSCTI
Section 2 (a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to question the validity of a subsequent
marriage on the ground of bigamy. On the contrary, when Section 2 (a) states that "[a] petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife" 75 it refers to the husband or the wife of the SUBSISTING marriage.
Under Article 35 (4) of the Family Code, bigamous marriages are void from the beginning. Thus, the parties in a bigamous marriage
are neither the husband nor the wife under the law. The husband or the wife of the prior subsisting marriage is the one who has the
personality to file a petition for declaration of absolute nullity of void marriage under Section 2 (a) of A.M. No. 02-11-10-SC.
Article 35 (4) of the Family Code, which declares bigamous marriages void from the beginning, is the civil aspect of Article 349 of the
Revised Penal Code,76 which penalizes bigamy. Bigamy is a public crime. Thus, anyone can initiate prosecution for bigamy because any
citizen has an interest in the prosecution and prevention of crimes. 77 If anyone can file a criminal action which leads to the declaration of
nullity of a bigamous marriage, 78 there is more reason to confer personality to sue on the husband or the wife of a subsisting marriage.
The prior spouse does not only share in the public interest of prosecuting and preventing crimes, he is also personally interested in the
purely civil aspect of protecting his marriage.
When the right of the spouse to protect his marriage is violated, the spouse is clearly an injured party and is therefore interested in the
judgment of the suit. 79 Juliano-Llave ruled that the prior spouse "is clearly the aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership aspect of the prior marriage but most of all, it causes an emotional burden to the prior
spouse." 80 Being a real party in interest, the prior spouse is entitled to sue in order to declare a bigamous marriage void. For this purpose,
he can petition a court to recognize a foreign judgment nullifying the bigamous marriage and judicially declare as a fact that such judgment
is effective in the Philippines. Once established, there should be no more impediment to cancel the entry of the bigamous marriage in the
civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court held that a "trial court has no jurisdiction to nullify
marriages" in a special proceeding for cancellation or correction of entry under Rule 108 of the Rules of Court. 81 Thus, the "validity of
marriage[] . . . can be questioned only in a direct action" to nullify the marriage. 82 The RTC relied on Braza in dismissing the petition for
recognition of foreign judgment as a collateral attack on the marriage between Marinay and Maekara. EAcTDH
Braza is not applicable because Braza does not involve a recognition of a foreign judgment nullifying a bigamous marriage where one of the
parties is a citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in the civil registry cannot substitute for an action to invalidate a marriage. A
direct action is necessary to prevent circumvention of the substantive and procedural safeguards of marriage under the Family Code, A.M.
No. 02-11-10-SC and other related laws. Among these safeguards are the requirement of proving the limited grounds for the dissolution of
marriage, 83 support pendente lite of the spouses and children, 84 the liquidation, partition and distribution of the properties of the
spouses, 85 and the investigation of the public prosecutor to determine collusion. 86 A direct action for declaration of nullity or annulment
of marriage is also necessary to prevent circumvention of the jurisdiction of the Family Courts under the Family Courts Act of 1997 (Republic
Act No. 8369), as a petition for cancellation or correction of entries in the civil registry may be filed in the Regional Trial Court "where the
corresponding civil registry is located." 87 In other words, a Filipino citizen cannot dissolve his marriage by the mere expedient of
changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation of a civil registry entry based on the recognition of a foreign
judgment annulling a marriage where one of the parties is a citizen of the foreign country. There is neither circumvention of the substantive
and procedural safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A. No. 8369. A recognition of a
foreign judgment is not an action to nullify a marriage. It is an action for Philippine courts to recognize the effectivity of a foreign
judgment, which presupposes a case which was already tried and decided under foreign law. The procedure in A.M. No. 02-11-10SC does not apply in a petition to recognize a foreign judgment annulling a bigamous marriage where one of the parties is a citizen of the
foreign country. Neither can R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a foreign divorce decree to a Filipino spouse
without undergoing trial to determine the validity of the dissolution of the marriage. The second paragraph of Article 26 of the Family Code
provides that "[w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law."
In Republic v. Orbecido, 88 this Court recognized the legislative intent of the second paragraph of Article 26 which is "to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino
spouse" 89 under the laws of his or her country. The second paragraph of Article 26 of the Family Code only authorizes Philippine courts to
adopt the effects of a foreign divorce decree precisely because the Philippines does not allow divorce. Philippine courts cannot try the case
on the merits because it is tantamount to trying a case for divorce.

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The second paragraph of Article 26 is only a corrective measure to address the anomaly that results from a marriage between a Filipino,
whose laws do not allow divorce, and a foreign citizen, whose laws allow divorce. The anomaly consists in the Filipino spouse being tied to
the marriage while the foreign spouse is free to marry under the laws of his or her country. The correction is made by extending in the
Philippines the effect of the foreign divorce decree, which is already effective in the country where it was rendered. The second paragraph of
Article 26 of the Family Code is based on this Court's decision in Van Dorn v. Romillo 90 which declared that the Filipino spouse "should not
be discriminated against in her own country if the ends of justice are to be served." 91 IDETCA
The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a foreign citizen who obtains a foreign judgment
nullifying the marriage on the ground of bigamy. The Filipino spouse may file a petition abroad to declare the marriage void on the ground
of bigamy. The principle in the second paragraph of Article 26 of the Family Code applies because the foreign spouse, after the foreign
judgment nullifying the marriage, is capacitated to remarry under the laws of his or her country. If the foreign judgment is not recognized in
the Philippines, the Filipino spouse will be discriminated the foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered to correct a situation where the Filipino
spouse is still tied to the marriage while the foreign spouse is free to marry. Moreover, notwithstanding Article 26 of the Family Code,
Philippine courts already have jurisdiction to extend the effect of a foreign judgment in the Philippines to the extent that the foreign
judgment does not contravene domestic public policy. A critical difference between the case of a foreign divorce decree and a foreign
judgment nullifying a bigamous marriage is that bigamy, as a ground for the nullity of marriage, is fully consistent with Philippine public
policy as expressed in Article 35 (4) of the Family Code and Article 349 of the Revised Penal Code. The Filipino spouse has the option to
undergo full trial by filing a petition for declaration of nullity of marriage under A.M. No. 02-11-10-SC, but this is not the only
remedy available to him or her. Philippine courts have jurisdiction to recognize a foreign judgment nullifying a bigamous
marriage, without prejudice to a criminal prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are incompetent to substitute their judgment on how a case was decided under
foreign law. They cannot decide on the "family rights and duties, or on the status, condition and legal capacity" of the foreign citizen who is
a party to the foreign judgment. Thus, Philippine courts are limited to the question of whether to extend the effect of a foreign judgment in
the Philippines. In a foreign judgment relating to the status of a marriage involving a citizen of a foreign country, Philippine courts only
decide whether to extend its effect to the Filipino party, under the rule of lex nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether the foreign judgment is inconsistent with an overriding public policy in
the Philippines; and (2) whether any alleging party is able to prove an extrinsic ground to repel the foreign judgment, i.e., want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. If there is neither inconsistency with public policy
nor adequate proof to repel the judgment, Philippine courts should, by default, recognize the foreign judgment as part of the comity of
nations. Section 48 (b), Rule 39 of the Rules of Court states that the foreign judgment is already "presumptive evidence of a right between
the parties." Upon recognition of the foreign judgment, this right becomes conclusive and the judgment serves as the basis for the
correction or cancellation of entry in the civil registry. The recognition of the foreign judgment nullifying a bigamous marriage is a
subsequent event that establishes a new status, right and fact 92 that needs to be reflected in the civil registry. Otherwise, there will be an
inconsistency between the recognition of the effectivity of the foreign judgment and the public records in the Philippines.
However, the recognition of a foreign judgment nullifying a bigamous marriage is without prejudice to prosecution for bigamy under Article
349 of the Revised Penal Code. 93 The recognition of a foreign judgment nullifying a bigamous marriage is not a ground for extinction of
criminal liability under Articles 89 and 94 of the Revised Penal Code. Moreover, under Article 91 of the Revised Penal Code, "[t]he term of
prescription [of the crime of bigamy] shall not run when the offender is absent from the Philippine archipelago." CcHDSA
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to address the questions on venue and the
contents and form of the petition under Sections 4 and 5, respectively, of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the Resolution dated 2 March 2011 of the Regional Trial
Court, Branch 107, Quezon City, in Civil Case No. Q-11-68582 are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in accordance with this Decision.
SO ORDERED.
Brion, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
SECOND DIVISION
[G.R. No. 172342. July 13, 2009.]
23. LWV CONSTRUCTION CORPORATION, petitioner, vs. MARCELO B. DUPO, respondent.
DECISION
QUISUMBING, J p:
Petitioner LWV Construction Corporation appeals the Decision 1 dated December 6, 2005 of the Court of Appeals in CA-G.R. SP No. 76843
and its Resolution 2 dated April 12, 2006, denying the motion for reconsideration. The Court of Appeals had ruled that under Article 87 of
the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo Dupo is entitled to a service award or longevity pay amounting
to US$12,640.33.
The antecedent facts are as follows:
LWV CONSTRUCTION, a domestic corporation which recruits Filipino workers, hired DUPO as Civil Structural Superintendent to work in
Saudi Arabia for its principal, Mohammad Al-Mojil Group/Establishment (MMG). On February 26, 1992, DUPO signed his first overseas
employment contract, renewable after one year. It was renewed five times on the following dates: May 10, 1993, November 16, 1994,
January 22, 1996, April 14, 1997, and March 26, 1998. All were fixed-period contracts for one year. The sixth and last contract stated that

112

DUPO's employment starts upon reporting to work and ends when he leaves the work site. DUPO left Saudi Arabia on April 30, 1999 and
arrived in the Philippines on May 1, 1999.
On May 28, 1999, DUPO informed MMG, through the petitioner, that he needs to extend his vacation because his son was hospitalized. He
also sought a promotion with salary adjustment. 3 In reply, MMG informed DUPO that his promotion is subject to management's review;
that his services are still needed; that he was issued a plane ticket for his return flight to Saudi Arabia on May 31, 1999; and that his
decision regarding his employment must be made within seven days, otherwise, MMG "will be compelled to cancel [his] slot". 4
On July 6, 1999, DUPO resigned. In his letter to MMG, he also stated:
xxx xxx xxx
I am aware that I still have to do a final settlement with the company and hope that during my more than seven (7) [years] services, as the
Saudi Law stated, I am entitled for a long service award. 5 (Emphasis supplied.)
xxx xxx xxx
According to DUPO, when he followed up his claim for long service award on December 7, 2000, LWV CONSTRUCTION informed him that
MMG did not respond. 6
On December 11, 2000, DUPO filed a complaint 7 for payment of service award against LWV CONSTRUCTION before the National Labor
Relations Commission (NLRC), Regional Arbitration Branch, Cordillera Administrative Region, Baguio City. In support of his claim, DUPO
averred in his position paper that:
xxx xxx xxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5) years in a company within the jurisdiction of Saudi Arabia, is
entitled to the so-called long service award which is known to others as longevity pay of at least one half month pay for every year of
service. In excess of five years an employee is entitled to one month pay for every year of service. In both cases inclusive of all benefits
and allowances.
This benefit was offered to complainant before he went on vacation, hence, this was engrained in his mind. He reconstructed the
computation of his long service award or longevity pay and he arrived at the following computation exactly the same with the amount he
was previously offered [which is US$12,640.33]. 8 (Emphasis supplied.)
xxx xxx xxx
DUPO said that he did not grab the offer for he intended to return after his vacation.
For its part, LWV CONSTRUCTION offered payment and prescription as defenses. LWV CONSTRUCTION maintained that MMG "pays its
workers theirService Award or Severance Pay every conclusion of their Labor Contracts pursuant to Article 87 of the [Saudi Labor Law]".
Under Article 87, "payment of the award is at the end or termination of the Labor Contract concluded for a specific period". Based on the
payroll, 9 DUPO was already paid his service award or severance pay for his latest (sixth) employment contract.
LWV CONSTRUCTION added that under Article 13 10 of the Saudi Labor Law, the action to enforce payment of the service award must be
filed within one year from the termination of a labor contract for a specific period. DUPO's six contracts ended when he left Saudi Arabia on
the following dates: April 15, 1993, June 8, 1994, December 18, 1995, March 21, 1997, March 16, 1998 and April 30, 1999. LWV
CONSTRUCTION concluded that the one-year prescriptive period had lapsed because DUPO filed his complaint on December 11, 2000 or one
year and seven months after his sixth contract ended. 11 STcADa
In his June 18, 2001 Decision, 12 the Labor Arbiter ordered LWV CONSTRUCTION to pay DUPO longevity pay of US$12,640.33 or
P648,562.69 and attorney's fees of P64,856.27 or a total of P713,418.96. 13
The Labor Arbiter ruled that DUPO's seven-year employment with MMG had sufficiently oriented him on the benefits given to workers; that
LWV CONSTRUCTION was unable to convincingly refute DUPO's claim that MMG offered him longevity pay before he went on vacation on
May 1, 1999; and that DUPO's claim was not barred by prescription since his claim on July 6, 1999, made a month after his cause of action
accrued, interrupted the prescriptive period under the Saudi Labor Law until his claim was categorically denied.
LWV CONSTRUCTION appealed. However, the NLRC dismissed the appeal and affirmed the Labor Arbiter's decision. 14 The NLRC ruled that
DUPO is entitled to longevity pay which is different from severance pay.
Aggrieved, LWV CONSTRUCTION brought the case to the Court of Appeals through a petition for certiorari under Rule 65 of the Rules of
Court. The Court of Appeals denied the petition and affirmed the NLRC. The Court of Appeals ruled that service award is the same as
longevity pay, and that the severance pay received by DUPO cannot be equated with service award. The dispositive portion of the Court of
Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack or in (sic) excess of jurisdiction on the part of public DUPO NLRC, the
petition is denied. The NLRC decision dated November 29, 2002 as well as and (sic) its January 31, 2003 Resolution are
hereby AFFIRMED in toto.
SO ORDERED. 15
After its motion for reconsideration was denied, LWV CONSTRUCTION filed the instant petition raising the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION ON THE PART OF PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE SERVICE AWARD OF THE RESPONDENT [HAS] NOT
PRESCRIBED WHEN HIS COMPLAINT WAS FILED ON DECEMBER 11, 2000. caCEDA
III.

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WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING IN THE CASE AT BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE NO. 7 OF THE SAUDI LABOR AND WORKMEN LAW
TO SUPPORT ITS FINDING THAT THE BASIS OF THE SERVICE AWARD IS LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN
EMPLOYEE. 16
Essentially, the issue is whether the Court of Appeals erred in ruling that DUPO is entitled to a service award or longevity pay of
US$12,640.33 under the provisions of the Saudi Labor Law. Related to this issue are LWV CONSTRUCTION's defenses of payment and
prescription.
LWV CONSTRUCTION points out that the Labor Arbiter awarded longevity pay although the Saudi Labor Law grants no such benefit, and the
NLRC confused longevity pay and service award. LWV CONSTRUCTION maintains that the benefit granted by Article 87 of the Saudi Labor
Law is service award which was already paid by MMG each time DUPO's contract ended.
LWV CONSTRUCTION insists that prescription barred DUPO's claim for service award as the complaint was filed one year and seven months
after the sixth contract ended. LWV CONSTRUCTION alleges that the Court of Appeals erred in ruling that DUPO's July 6, 1999 claim
interrupted the running of the prescriptive period. Such ruling is contrary to Article 13 of the Saudi Labor Law which provides that no case or
claim relating to any of the rights provided for under said law shall be heard after the lapse of 12 months from the date of the termination
of the contract.
DUPO counters that he is entitled to longevity pay under the provisions of the Saudi Labor Law and quotes extensively the decision of the
Court of Appeals. He points out that LWV CONSTRUCTION has not refuted the Labor Arbiter's finding that MMG offered him longevity pay of
US$12,640.33 before his one-month vacation in the Philippines in 1999. Thus, he "submits that such offer indeed exists" as he sees no
reason for MMG to offer the benefit if no law grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals. We find that DUPO's service award under Article 87 of
the Saudi Labor Law has already been paid. Our computation will show that the severance pay received by DUPO was his service award.
Article 87 clearly grants a service award. It reads: HAEDIS
Article 87
Where the term of a labor contract concluded for a specified period comes to an end or where the employer cancels a contract of
unspecified period, the employer shall pay to the workman an award for the period of his service to be computed on the basis of
half a month's pay for each of the first five years and one month's pay for each of the subsequent years. The last rate of pay shall be taken
as basis for the computation of the award. For fractions of a year, the workman shall be entitled to an award which is proportionate to his
service period during that year. Furthermore, the workman shall be entitled to the service award provided for at the beginning of this
article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his control. 17 (Emphasis supplied.)
DUPO, however, has called the benefit other names such as long service award and longevity pay. On the other hand, LWV CONSTRUCTION
claimed that the service award is the same as severance pay. Notably, the Labor Arbiter was unable to specify any law to support his award
of longevity pay. 18 He anchored the award on his finding that DUPO's allegations were more credible because his seven-year employment
at MMG had sufficiently oriented him on the benefits given to workers. To the NLRC, DUPO is entitled to service award or longevity
pay under Article 87 and that longevity pay is different from severance pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree with DUPO that service award is the same as
longevity pay, and wrong to agree with LWV CONSTRUCTION that service award is the same as severance pay? And why would it be correct
to say that service award is severance pay, and wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented. DUPO's position paper mentioned how his long service award or longevity
pay is computed: half-month's pay per year of service and one-month's pay per year after five years of service. Article 87 has the same
formula to compute the service award.
The payroll submitted by LWV CONSTRUCTION showed that DUPO received severance pay of SR2,786 for his sixth employment contract
covering the period April 21, 1998 to April 29, 1999. 19 The computation below shows that DUPO's severance pay of SR2,786 was
his service award under Article 87.
Service Award = 1/2 (SR5,438) + (9 days/365 days) x 1/2 (SR5,438)
Service Award = SR2,786.04
DUPO's service award for the sixth contract is equivalent only to half-month's pay plus the proportionate amount for the additional nine days
of service he rendered after one year. DUPO's employment contracts expressly stated that his employment ended upon his departure from
work. Each year he departed from work and successively new contracts were executed before he reported for work anew. His service was
not cumulative. Pertinently, in Brent School, Inc. v. Zamora, 22 we said that "a fixed term is an essential and natural appurtenance" of
overseas employment contracts, 23 as in this case. We also said in that case that under American law, "[w]here a contract specifies the
period of its duration, it terminates on the expiration of such period. A contract of employment for a definite period terminates by its own
terms at the end of such period." 24 As it is, Article 72 of the Saudi Labor Law is also of similar import. It reads: HIACEa
A labor contract concluded for a specified period shall terminate upon the expiry of its term. If both parties continue to enforce the contract,
thereafter, it shall be considered renewed for an unspecified period. 25
Regarding DUPO's claim that he was offered US$12,640.33 as longevity pay before he returned to the Philippines on May 1, 1999, we find
that he was not candid on this particular point. His categorical assertion about the offer being "engrained in his mind" such that he
"reconstructed the computation . . . and arrived at the . . . computation exactly the same with the amount he was previously offered" is not
only beyond belief. Such assertion is also a stark departure from his July 6, 1999 letter to MMG where he could only express his hope that
he was entitled to a long service award and where he never mentioned the supposed previous offer. Moreover, DUPO's claim that his
monthly compensation is SR10,248.92 26 is belied by the payroll which shows that he receives SR5,438 per month.

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We therefore emphasize that such payroll should have prompted the lower tribunals to examine closely DUPO's computation of his supposed
longevity pay before adopting that computation as their own.
On the matter of prescription, however, we cannot agree with LWV CONSTRUCTION that DUPO's action has prescribed under Article 13 of
the Saudi Labor Law. What applies is Article 291 of our Labor Code which reads:
ART. 291. Money claims. All money claims arising from 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
In Cadalin v. POEA's Administrator, 27 we held that Article 291 covers all money claims from employer-employee relationship and is
broader in scope than claims arising from a specific law. It is not limited to money claims recoverable under the Labor Code, but applies also
to claims of overseas contract workers. 28 The following ruling in Cadalin v. POEA's Administrator is instructive:
First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law
on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the date of the expiry of the
contract" . . . .
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is based upon a
foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]). ScCIaA
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive,
depending on the characterization given such a law.
xxx xxx xxx
However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has
a "borrowing statute". Said statute has the practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws, 152-153 [1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations to the
pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes", one form
provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even though the local statute has
not run against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides:
"If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippine Islands."
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said Code repealed only those provisions
of the Code of Civil Procedure as to which were inconsistent with it. There is no provision in the Civil Code of the Philippines, which is
inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure] cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy . . . . To enforce the one-year prescriptive
period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the protection to
labor. 29
xxx xxx xxx
Thus, in our considered view, DUPO's complaint was filed well within the three-year prescriptive period under Article 291 of our
Labor Code. This point, however, has already been mooted by our finding that DUPO's service award had been paid, albeit the payroll
termed such payment as severance pay.
WHEREFORE, the petition is GRANTED. The assailed Decision dated December 6, 2005 and Resolution dated April 12, 2006, of the Court
of Appeals in CA-G.R. SP No. 76843, as well as the Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case No. RAB-CAR-12-064900 and the Decision dated November 29, 2002 and Resolution dated January 31, 2003 of the NLRC in NLRC CA No. 028994-01 (NLRC RABCAR-12-0649-00) are REVERSED and SET ASIDE. The Complaint of DUPO is hereby DISMISSED. DTaSIc
No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 178551. October 11, 2010.]
24. ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-KUWAIT, petitioners,vs. MA. JOSEFA
ECHIN, respondent.
DECISION
CARPIO MORALES, J p:
Josefina Echin was hired by ATCI Overseas Corporation in behalf of its principal-co-ATCI Corporation, the Ministry of Public Health of
Kuwait (the Ministry), for the position of medical technologist under a two-year contract, denominated as a Memorandum of
Agreement (MOA), with a monthly salary of US$1,200.00.
Under the MOA, 1 all newly-hired employees undergo a probationary period of one (1) year and are covered by Kuwait's Civil Service Board
Employment Contract No. 2.

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ECHIN was deployed on February 17, 2000 but was terminated from employment on February 11, 2001, she not having allegedly
passed the probationary period.
As the Ministry denied ECHIN's request for reconsideration, she returned to the Philippines on March 17, 2001, shouldering her own air
fare.
On July 27, 2001, ECHIN filed with the National Labor Relations Commission (NLRC) a complaint 2 for illegal dismissal against ATCI
Corporation ATCI as the local recruitment agency, represented by ATCI Corporation, Amalia Ikdal (Ikdal), and the Ministry, as the foreign
principal.
By Decision 3 of November 29, 2002, the Labor Arbiter, finding that ATCI Corporations neither showed that there was just cause to warrant
ECHIN's dismissal nor that she failed to qualify as a regular employee, held that ECHIN was illegally dismissed and accordingly ordered ATCI
Corporations to pay her US$3,600.00, representing her salary for the three months unexpired portion of her contract.
On appeal of ATCI Corporations ATCI and Ikdal, the NLRC affirmed the Labor Arbiter's decision by Resolution 4 of January 26, 2004. ATCI
Corporations' motion for reconsideration having been denied by Resolution 5 of April 22, 2004, they appealed to the Court of Appeals,
contending that their principal, the Ministry, being a foreign government agency, is immune from suit and, as such, the immunity extended
to them; and that ECHIN was validly dismissed for her failure to meet the performance rating within the one-year period as required under
Kuwait's Civil Service Laws. ATCI Corporations further contended that Ikdal should not be liable as an officer of ATCI Corporation ATCI.
By Decision 6 of March 30, 2007, the appellate court affirmed the NLRC Resolution.
In brushing aside ATCI Corporations' contention that they only acted as agent of the Ministry and that they cannot be held jointly and
solidarily liable with it, the appellate court noted that under the law, a private employment agency shall assume all responsibilities for the
implementation of the contract of employment of an overseas worker, hence, it can be sued jointly and severally with the foreign principal
for any violation of the recruitment agreement or contract of employment. ATcaHS
As to Ikdal's liability, the appellate court held that under Sec. 10 of Republic Act No. 8042, the "Migrant and Overseas Filipinos' Act of 1995,"
corporate officers, directors and partners of a recruitment agency may themselves be jointly and solidarily liable with the recruitment
agency for money claims and damages awarded to overseas workers.
ATCI Corporations' motion for reconsideration having been denied by the appellate court by Resolution 7 of June 27, 2007, the present
petition for review on certiorari was filed.
ATCI Corporations maintain that they should not be held liable because ECHIN's employment contract specifically stipulates that her
employment shall be governed by the Civil Service Law and Regulations of Kuwait . They thus conclude that it was patent error for
the labor tribunals and the appellate court to apply the Labor Code provisions governing probationary employment in deciding the
present case.
Further, ATCI Corporations argue that even the Philippine Overseas Employment Act (POEA) Rules relative to master employment contracts
(Part III, Sec. 2 of the POEA Rules and Regulations) accord respect to the "customs, practices, company policies and labor laws and
legislation of the host country."
Finally, ATCI Corporations posit that assuming arguendo that Philippine labor laws are applicable, given that the foreign principal is a
government agency which is immune from suit, as in fact it did not sign any document agreeing to be held jointly and solidarily liable,
ATCI Corporation ATCI cannot likewise be held liable, more so since the Ministry's liability had not been judicially determined as
jurisdiction was not acquired over it.
The petition fails.
ATCI Corporation ATCI, as a private recruitment agency, cannot evade responsibility for the money claims of Overseas Filipino workers
(OFWs) which it deploys abroad by the mere expediency of claiming that its foreign principal is a government agency clothed
with immunity from suit, or that such foreign principal's liability must first be established before it, as agent, can be held jointly and
solidarily liable.
In providing for the joint and solidary liability of private recruitment agencies with their foreign principals, Republic Act No. 8042 precisely
affords the OFWs with a recourse and assures them of immediate and sufficient payment of what is due them.Skippers United Pacific v.
Maguad 8 explains:
. . . [T]he obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign
principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement,
the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to
and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment
agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for
foreign jobs abroad was enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line with the policy of the state to protect and alleviate the plight of the working
class. 9 Verily, to allow ATCI Corporations to simply invoke the immunity from suit of its foreign principal or to wait for the judicial
determination of the foreign principal's liability before ATCI Corporation can be held liable renders the law on joint and solidary liability
inutile.
As to ATCI Corporations' contentions that Philippine labor laws on probationary employment are not applicable since it was expressly
provided in ECHIN's employment contract, which she voluntarily entered into, that the terms of her engagement shall be governed by
prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules accord respect to such rules, customs and practices of the
host country, the same was not substantiated.
Indeed, a contract freely entered into is considered the law between the parties who can establish stipulations, clauses, terms and
conditions as they may deem convenient, including the laws which they wish to govern their respective obligations, as long as they are not
contrary to law, morals, good customs, public order or public policy.
It is hornbook principle, however, that the party invoking the application of a foreign law has the burden of proving the law, under the
doctrine of processual presumption which, in this case, ATCI Corporations failed to discharge. The Court's ruling in EDI-Staffbuilders Int'l. v.
NLRC 10 illuminates:
In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g., specific causes for termination, termination procedures, etc.). Being the law intended by the

116

parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the
employment of Gran. HcACTE
In international law, the party who wants to have a foreign law applied to a dispute or case HAS THE BURDEN OF PROVING
THE FOREIGN LAW. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor
arbiter cannot take judicial notice of a foreign law. He is presumed to know only domestic or forum law.
Unfortunately for ATCI Corporation, it did not prove the pertinent Saudi laws on the matter; thus, the International Law
doctrine of presumed-identity approach or processual presumption comes into play. Where a foreign law is not pleaded or,
even if pleaded, is not proved, the presumption is that foreign law is the same as ours. Thus, we apply Philippine labor laws in
determining the issues presented before us. (emphasis and underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they must be proven. To prove a foreign
law, the party invoking it must present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which
reads:
SEC. 24.Proof of official record. The record of public documents referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or
by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office
in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his office. (emphasis supplied)
SEC. 25.What attestation of copy must state. Whenever a copy of a document or record is attested for the purpose of the
evidence, the attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the
case may be. The attestation must be under the official seal of the attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court.
To prove the Kuwaiti law, ATCI Corporations submitted the following: MOA between ECHIN and the Ministry, as represented by ATCI, which
provides that the employee is subject to a probationary period of one (1) year and that the host country's Civil Service Laws and
Regulations apply; a translated copy 11 (Arabic to English) of the termination letter to ECHIN stating that she did not pass the probation
terms, without specifying the grounds therefor, and a translated copy of the certificate of termination, 12 both of which documents were
certified by Mr. Mustapha Alawi, Head of the Department of Foreign Affairs-Office of Consular Affairs Inslamic Certification and Translation
Unit; and ECHIN's letter 13 of reconsideration to the Ministry, wherein she noted that in her first eight (8) months of employment, she was
given a rating of "Excellent" albeit it changed due to changes in her shift of work schedule.
These documents, whether taken singly or as a whole, do not sufficiently prove that ECHIN was validly terminated as a probationary
employee under Kuwaiti civil service laws. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly authenticated and
translated by Embassy officials thereat, as required under the Rules, what ATCI Corporations submitted were mere
certifications attesting only to the correctness of the translations of the MOA and the termination letter which does not prove
at all that Kuwaiti civil service laws differ from Philippine laws and that under such Kuwaiti laws, ECHIN was validly
terminated. Thus the subject certifications read:
xxx xxx xxx
This is to certify that the herein attached translation/s from Arabic to English/Tagalog and or vice versa was/were presented to this Office for
review and certification and the same WAS/WERE FOUND TO BE IN ORDER. This Office, however, assumes no responsibility as to
the contents of the document/s.
This certification is being issued upon request of the interested party for whatever legal purpose it may serve. (emphasis supplied)
Respecting Ikdal's joint and solidary liability as a corporate officer, the same is in order too following the express provision of R.A. 8042 on
money claims, viz.:
SEC. 10.Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual moral, exemplary and other forms of damages. cHDAIS
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and
several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its
approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages. (emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SECOND DIVISION
[G.R. No. 120135. March 31, 2003.]
25. BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD., petitioners, vs. COURT OF APPEALS, HON. MANUEL
PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA, JR., respondents.
Agcaoili & Associates for petitioner.
William R. Veto for respondent.
SYNOPSIS
The Litonjuas were engaged in the shipping business and owned two vessels, through their wholly-owned corporations. With their business
doing well, the petitioner banks induced them to increase the number of their ships in operation, offering them easy loans to acquire said
vessels. Thereafter, petitioners acquired, through Litonjuas' corporations as borrowers, four additional vessels which were registered in the
names of their corporations. The Litonjuas claimed, among others, that petitioners as trustees did not fully render an account of all the
income derived from the operation of the vessels as well as the proceeds of the subsequent foreclosure sale and that the loans acquired for

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the purchase of the four additional vessels matured and remained unpaid, prompting petitioners to have all the six vessels, including the
two vessels originally owned by the private respondents, foreclosed and sold at public auction. Petitioners filed a motion to dismiss on
grounds of forum non conveniens and lack of cause of action against them, but the same was denied by the trial court. The Court of Appeals
denied petitioners' petition for review on certiorari and motion for reconsideration. Hence, this petition.
In denying the petition, the Supreme Court ruled that it is not the lack or absence of cause of action that is a ground for dismissal of the
complaint, but rather the fact that the complaint states no cause of action. Failure to state a cause of action refers to the insufficiency of
allegation in the pleading, unlike lack of cause of action which refers to the insufficiency of factual basis for the action. In the case at bar,
the complaint contains the three elements of a cause of action.
The Court further ruled that whether a suit should be entertained or dismissed on the basis of the doctrine of forum non
conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that a Philippine Court may assume jurisdiction over the
case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and (3) that
the Philippine Court has or is likely to have the power to enforce its decision. Evidently, all these requisites are present in the instant case.

DECISION
AUSTRIA-MARTINEZ, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the November 29, 1994 decision of the Court of
Appeals 1 and the April 28, 1995 resolution denying petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint 2 before the Regional Trial Court
of Pasig against the Bank of America NT&SA and Bank of America International, Ltd. (defendant banks for brevity) alleging that: they were
engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion, through their wholly-owned
corporations; they deposited their revenues from said business together with other funds with the branches of said banks in the United
Kingdom and Hongkong up to 1979; with their business doing well, the defendant banks induced them to increase the number of their
ships in operation, offering them easy loans to acquire said vessels; 3thereafter, the defendant banks acquired, through their
(Litonjuas') corporations as the borrowers: (a) El Carrier 4 ; (b) El General 5 ; (c) El Challenger 6 ; and (d) El Conqueror 7 ; the
vessels were registered in the names of their corporations; the operation and the funds derived therefrom were placed under the
complete and exclusive control and disposition of the BANK OF AMERICAs; 8 and the possession of the vessels was also placed by
defendant banks in the hands of persons selected and designated by them (defendant banks). 9
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income derived from the operation of
the vessels as well as of the proceeds of the subsequent foreclosure sale; 10 because of the breach of their fiduciary duties
and/or negligence of the BANK OF AMERICAs and/or the persons designated by them in the operation of private respondents' six vessels,
the revenues derived from the operation of all the vessels declined drastically; the loans acquired for the purchase of the four
additional vessels then matured and remained unpaid, prompting defendant banks to have all the six vessels, including the two
vessels originally owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for
and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten
percent (10%) of the acquisition cost of the four vessels and were left with the unpaid balance of their loans with defendant banks. 11 The
Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and of the proceeds of the sale thereof at the
foreclosure proceedings instituted by BANK OF AMERICAs; damages for breach of trust; exemplary damages and attorney's fees. 12
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action against them. 13
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to Dismiss is hereby DENIED. The defendant is therefore, given a
period of ten (10) days to file its Answer to the complaint.
"SO ORDERED." 14
Instead of filing an answer the defendant banks went to the Court of Appeals on a "Petition for Review on Certiorari" 15 which was aptly
treated by the appellate court as a petition for certiorari. They assailed the above-quoted order as well as the subsequent denial of their
Motion for Reconsideration. 16 The appellate court dismissed the petition and denied BANK OF AMERICAs' Motion for Reconsideration. 17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT THE SEPARATE PERSONALITIES OF THE PRIVATE
RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN CORPORATIONS (THE REAL BORROWERS) CLEARLY SUPPORT, BEYOND ANY
DOUBT, THE PROPOSITION THAT THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT
MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO FOLLOW IN DETERMINING WHETHER THE CHOICE OF FORUM SHOULD BE
DISTURBED. UNDER THE CIRCUMSTANCES SURROUNDING THE INSTANT CASE, DISMISSAL OF THE COMPLAINT ON THE GROUND
OF FORUM NON-CONVENIENS IS MORE APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF FOREIGN
ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL OF THE COMPLAINT FILED BY THE PRIVATE RESPONDENT. COROLLARY TO THIS,
THE RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE GUILTY OF FORUM
SHOPPING." 18
As to the first assigned error: BANK OF AMERICAs argue that the borrowers and the registered owners of the vessels are the foreign
corporations and not private respondents Litonjuas who are mere stockholders; and that the revenues derived from the operations of
all the vessels are deposited in the accounts of the corporations. Hence, BANK OF AMERICAs maintain that these foreign corporations are
the legal entities that have the personalities to sue and not herein private respondents; that private respondents, being mere
shareholders, have no claim on the vessels as owners since they merely have an inchoate right to whatever may remain upon the
dissolution of the said foreign corporations and after all creditors have been fully paid and satisfied; 19 and that while private respondents

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may have allegedly spent amounts equal to 10% of the acquisition costs of the vessels in question, their 10% however represents their
investments as stockholders in the foreign corporations. 20
Anent the second assigned error, BANK OF AMERICAs posit that while the application of the principle of forum non conveniens is
discretionary on the part of the Court, said discretion is limited by the guidelines pertaining to the private as well as public
interest factors in determining whether plaintiffs' choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert 21 and Piper Aircraft Co. vs. Reyno, 22 to wit:
"Private interest factors include: (a) the relative ease of access to sources of proof; (b) the availability of compulsory process for
the attendance of unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all other practical
problems that make trial of a case easy, expeditious and inexpensive. Public interest factors include: (a) the administrative
difficulties flowing from court congestion; (b) the local interest in having localized controversies decided at home; (c) the
avoidance of unnecessary problems in conflict of laws or in the application of foreign law; or (d) the unfairness of burdening
citizens in an unrelated forum with jury duty." 23
In support of their claim that the local court is not the proper forum, BANK OF AMERICAs allege the following:
"i) The Bank of America Branches involved, as clearly mentioned in the Complaint, are based in Hongkong and England. As such, the
evidence and the witnesses are not readily available in the Philippines;
"ii) The loan transactions were obtained, perfected, performed, consummated and partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore, the mortgaged vessels were part of an offshore fleet, not based
in the Philippines;
"iv) All the loans involved were granted to the Private Respondents' foreign CORPORATIONS;
"v) The Restructuring Agreements were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged vessels and the application of the sales proceeds occurred and transpired outside the
Philippines, and the deliveries of the sold mortgaged vessels were likewise made outside the Philippines;
"vii) The revenues of the vessels and the proceeds of the sales of these vessels were ALL deposited to the Accounts of the
foreign CORPORATIONS abroad; and
"viii) Bank of America International Ltd. is not licensed nor engaged in trade or business in the Philippines." 24
BANK OF AMERICAs argue further that the loan agreements, security documentation and all subsequent restructuring agreements
uniformly, unconditionally and expressly provided that they will be governed by the laws of England; 25 that Philippine Courts would
then have to apply English law in resolving whatever issues may be presented to it in the event it recognizes and accepts herein case; that
it would then be imposing a significant and unnecessary expense and burden not only upon the parties to the transaction but also to the
local court. BANK OF AMERICAs insist that the inconvenience and difficulty of applying English law with respect to a wholly foreign
transaction in a case pending in the Philippines may be avoided by its dismissal on the ground of forum non conveniens. 26
Finally, BANK OF AMERICAs claim that private respondents have already waived their alleged causes of action in the case at bar for
their refusal to contest the foreign civil cases earlier filed by the BANK OF AMERICAs against them in Hongkong and England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench Division Commercial Court (1992-Folio No. 2098) against (a)
LIBERIAN TRANSPORT NAVIGATION, SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA;
(e) PACIFIC NAVIGATORS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c) EDUARDO KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN LITONJUA.
"3.) Civil action in the Supreme Court of Hongkong High Court (Action No. 4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b)
EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO
KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No. 4040 of 1992); against (a) ESHLEY COMPANIA NAVIERA S.A.,
(b) EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO
KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by the pendency of another action or by litis pendentia as shown
above. 27
On the other hand, private respondents contend that certain material facts and pleadings are omitted and/or misrepresented in the
present petition for certiorari; that the prefatory statement failed to state that part of the security of the foreign loans were mortgages
on a 39-hectare piece of real estate located in the Philippines; 28 that while the complaint was filed only by the stockholders of the
corporate borrowers, the latter are wholly-owned by the private respondents who are Filipinos and therefore under Philippine laws,
aside from the said corporate borrowers being but their alter-egos, they have interests of their own in the vessels. 29 Private respondents
also argue that the dismissal by the Court of Appeals of the petition forcertiorari was justified because there was neither allegation nor any
showing whatsoever by the BANK OF AMERICAs that they had no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law from the Order of the trial judge denying their Motion to Dismiss; that the remedy available to the BANK OF AMERICAs after
their Motion to Dismiss was denied was to file an Answer to the complaint; 30 that as upheld by the Court of Appeals, the decision of the
trial court in not applying the principle of forum non conveniens is in the lawful exercise of its discretion. 31 Finally, private respondents
aver that the statement of BANK OF AMERICAs that the doctrine of res judicata also applies to foreign judgment is merely an opinion
advanced by them and not based on a categorical ruling of this Court; 32 and that herein private respondents did not actually participate in
the proceedings in the foreign courts. 33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss CANNOT be the subject of petition for certiorari. BANK OF
AMERICAs should have filed an answer to the complaint, proceed to trial and await judgment before making an appeal. As repeatedly held
by this Court:

119

"An order denying a motion to dismiss is interlocutory and cannot be the subject of the extraordinary petition forcertiorari or mandamus.
The remedy of the aggrieved party is to file an answer and to interpose as defenses the objections raised in his motion to dismiss, proceed
to trial, and in case of an adverse decision, to elevate the entire case by appeal in due course. . . . Under certain situations, recourse
to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued the order without or in excess of jurisdiction; (b)
where there is patent grave abuse of discretion by the trial court; or (c) appeal would not prove to be a speedy and adequate remedy as
when an appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order maintaining the plaintiff's
baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another futile
case." 34
Records show that the trial court acted within its jurisdiction when it issued the assailed Order denying BANK OF AMERICAs' motion to
dismiss. Does the denial of the motion to dismiss constitute a patent grave abuse of discretion? Would appeal, under the circumstances, not
prove to be a speedy and adequate remedy? We will resolve said questions in conjunction with the issues raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the complaint on the ground that plaintiffs have no
cause of action against defendants since plaintiffs are merely stockholders of the corporations which are the registered owners of the
vessels and the borrowers of BANK OF AMERICAs?
No. BANK OF AMERICAs' argument that private respondents, being mere stockholders of the foreign corporations, have no personalities to
sue, and therefore, the complaint should be dismissed, is untenable. A case is dismissible for lack of personality to sue upon proof that the
plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a ground for a Motion to Dismiss based on the fact that
the complaint, on the face thereof, evidently states no cause of action.35 In San Lorenzo Village Association, Inc. vs. Court of
Appeals, 36 this Court clarified that a complaint states a cause of action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right. If these elements are absent, the complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action. 37 To emphasize, it is not the lack or absence of cause of action that is a ground for
dismissal of the complaint but rather the fact that the complaint states NO cause of action. 38 "Failure to state a cause of action" refers
to the insufficiency of allegation in the pleading, unlike "lack of cause of action" which refers to the insufficiency of factual basis for
the action. "Failure to state a cause of action" may be raised at the earliest stages of an action through a motion to dismiss the complaint,
while "lack of cause of action" may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions
or evidence presented. 39
In the case at bar, the complaint contains the three elements of a cause of action. It alleges that: (1) plaintiffs, herein private
respondents, have the right to demand for an accounting from defendants (herein BANK OF AMERICAs), as trustees by reason of the
fiduciary relationship that was created between the parties involving the vessels in question; (2) BANK OF AMERICAs have the obligation,
as trustees, to render such an accounting; and (3) BANK OF AMERICAs failed to do the same.
BANK OF AMERICAs insist that they do not have any obligation to the private respondents as they are mere stockholders of the corporation;
that the corporate entities have juridical personalities separate and distinct from those of the private respondents. Private respondents
maintain that the corporations are wholly owned by them and prior to the incorporation of such entities, they were clients of BANK
OF AMERICAs which induced them to acquire loans from said BANK OF AMERICAs to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case, 40
". . . assuming that the allegation of facts constituting plaintiffs' cause of action is not as clear and categorical as would otherwise be
desired, any uncertainty thereby arising should be so resolved as to enable a full inquiry into the merits of the action."
As this Court has explained in the San Lorenzo case, such a course, would preclude multiplicity of suits which the law abhors, and conduce
to the definitive determination and termination of the dispute. To do otherwise, that is, to abort the action on account of the alleged fatal
flaws of the complaint would obviously be indecisive and would not end the controversy, since the institution of another action upon a
revised complaint would not be foreclosed. 41
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient', emerged in private international law to deter the
practice of global forum shopping, 42 that is to prevent non-resident litigants from choosing the forum or place wherein to bring their suit
for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to
select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not
the most "convenient" or available forum and the parties are not precluded from seeking remedies elsewhere. 43
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the particular case
and is addressed to the sound discretion of the trial court. 44 In the case of Communication Materials and Design, Inc. vs. Court of
Appeals, 45 this Court held that ". . . [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the
following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have
power to enforce its decision." 46 Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, 47 that the doctrine of forum non
conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming jurisdiction on
this ground, it should do so only after vital facts are established, to determine whether special circumstances require the court's desistance;
and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual determination, hence it is
more properly considered a matter of defense. 48
Third issue. Are private respondents guilty of forum shopping because of the pendency of foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a final judgment in one case will amount to res
judicata in the other. 49 Parenthetically, for litis pendentia to be a ground for the dismissal of an action there must be: (a) identity of the
parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other. 50
In case at bar, not all the requirements for litis pendentia are present. While there may be identity of parties, notwithstanding the presence
of other respondents, 51 as well as the reversal in positions of plaintiffs and defendants 52 , still the other requirements necessary for litis
pendentia were not shown by BANK OF AMERICA. It merely mentioned that civil cases were filed in Hongkong and England without however
showing the identity of rights asserted and the reliefs sought for as well as the presence of the elements of res judicata should one of the
cases be adjudged.

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As the Court of Appeals aptly observed:


. . . [T]he BANK OF AMERICAs, by simply enumerating the civil actions instituted abroad involving the parties herein . . ., failed to provide
this Court with relevant and clear specifications that would show the presence of the above-quoted elements or requisites for res judicata.
While it is true that the BANK OF AMERICAs in their motion for reconsideration (CA Rollo, p. 72), after enumerating the various civil actions
instituted abroad, did aver that "Copies of the foreign judgments are hereto attached and made integral parts hereof as Annexes 'B', 'C', 'D'
and `E'", they failed, wittingly or inadvertently, to include a single foreign judgment in their pleadings submitted to this Court as annexes to
their petition. How then could We have been expected to rule on this issue even if We were to hold that foreign judgments could be the
basis for the application of the aforementioned principle of res judicata? 53
Consequently, both courts correctly denied the dismissal of herein subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against BANK OF AMERICAs. TIcEDC
SO ORDERED.
SECOND DIVISION
[G.R. No. 145587. October 26, 2007.]
26. EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S.
GRAN, respondents.
DECISION
VELASCO, JR., J p:
The Case
This Petition for Review on Certiorari 1 seeks to set aside the October 18, 2000 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No.
56120 which affirmed the January 15, 1999 Decision 3 and September 30, 1999 Resolution 4 rendered by the National Labor Relations
Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search International (ESI), EDI-Staffbuilders
International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar S. Gran (Gran) the amount of USD
16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs). 5 ESI is another
recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia. 6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified applicants for the position of "Computer
Specialist." 7 In a facsimile transmission dated November 29, 1993, OAB informed EDI that, from the applicants'curricula vitae submitted to
it for evaluation, it selected Gran for the position of "Computer Specialist." The faxed letter also stated that if Gran agrees to the terms and
conditions of employment contained in it, one of which was a monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange
for Gran's immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an employment contract 9 that granted him a monthly salary of USD 850.00 for
a period of two years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary his employment contract stated USD 850.00; while his
Philippine Overseas Employment Agency (POEA) Information Sheet indicated USD 600.00 only. However, through the assistance of the EDI
office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his employment was terminated through OAB's July 9, 1994 letter, 11 on the
following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment agency[,] vide OAB letter ref. F-5751-93, dated October 3,
1993. 12
3. Insubordination or disobedience to Top Management Order and/or instructions (non-submittal of daily activity reports despite several
instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his final pay, and on the same day, he executed a
Declaration 13 releasing OAB from any financial obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against ESI/EDI, OAB, Country Bankers Insurance
Corporation, and Western Guaranty Corporation with the NLRC, National Capital Region, Quezon City, which was docketed as POEA ADJ (L)
94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision, 14 Labor Arbiter Manuel R. Caday, to whom Gran's case was assigned, ruled that there was neither
underpayment nor illegal dismissal. ICDcEA
The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-Overseas Contract Worker (OCW)
Information Sheet, Gran's monthly salary was USD 600.00, and in his Confirmation of Appointment as Computer Specialist, his monthly
basic salary was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim for unpaid salaries or wages against OAB.

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With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute EDI's allegations; namely, (1) that Gran did
not submit a single activity report of his daily activity as dictated by company policy; (2) that he was not qualified for the job as computer
specialist due to his insufficient knowledge in programming and lack of knowledge in ACAD system; (3) that Gran refused to follow
management's instruction for him to gain more knowledge of the job to prove his worth as computer specialist; (4) that Gran's employment
contract had never been substituted; (5) and that Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly as food
allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due to insubordination, disobedience, and his failure
to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal 15 on April 6, 1998 with the NLRC, Third Division. However, it appears from the records that Gran failed to
furnish EDI with a copy of his Appeal Memorandum. SETAcC
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually "reprocessing," which is a prohibited transaction
under Article 34 (b) of the Labor Code. This scheme constituted misrepresentation through the conspiracy between EDI and ESI in
misleading Gran and even POEA of the actual terms and conditions of the OFW's employment. In addition, it was found that Gran did not
commit any act that constituted a legal ground for dismissal. The alleged non-compliance with contractual stipulations relating to Gran's
salary and contract duration, and the absence of pre-qualification requirements cannot be attributed to Gran but to EDI, which dealt directly
with OAB. In addition, the charge of insubordination was not substantiated, and Gran was not even afforded the required notice and
investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise Search International, Inc., EDI Staffbuilders Int'l., Inc. and Omar
Ahmed Ali Bin Bechr Est. (OAB) are hereby ordered jointly and severally liable to pay the complainant Eleazar Gran the Philippine peso
equivalent at the time of actual payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16,150.00) representing his
salaries for the unexpired portion of his contract.
SO ORDERED. 16
Gran then filed a Motion for Execution of Judgment 17 on March 29, 1999 with the NLRC and petitioner receiving a copy of this motion on
the same date. 18
To prevent the execution, petitioner filed an Opposition 19 to Gran's motion arguing that the Writ of Execution cannot issue because it was
not notified of the appellate proceedings before the NLRC and was not given a copy of the memorandum of appeal nor any opportunity to
participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition, petitioner filed, on August 26, 1999, a Motion for
Reconsideration of the NLRC Decision after receiving a copy of the Decision on August 16, 1999. 20
The NLRC then issued a Resolution 21 denying petitioner's Motion for Reconsideration, ratiocinating that the issues and arguments raised in
the motion "had already been amply discussed, considered, and ruled upon" in the Decision, and that there was "no cogent reason or patent
or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA. Petitioner claimed in its petition that the NLRC
committed grave abuse of discretion in giving due course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition. CIDTcH
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of his appeal memorandum [to EDI was] a mere
formal lapse, an excusable neglect and not a jurisdictional defect which would justify the dismissal of his appeal."22 The court also held that
petitioner EDI failed to prove that private respondent was terminated for a valid cause and in accordance with due process; and that Gran's
Declaration releasing OAB from any monetary obligation had no force and effect. The appellate court ratiocinated that EDI had the burden of
proving Gran's incompetence; however, other than the termination letter, no evidence was presented to show how and why Gran was
considered to be incompetent. The court held that since the law requires the recruitment agencies to subject OFWs to trade tests before
deployment, Gran must have been competent and qualified; otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily Activity Report," the appellate court found
that EDI failed to show that the submission of the "Daily Activity Report" was a part of Gran's duty or the company's policy. The court also
held that even if Gran was guilty of insubordination, he should have just been suspended or reprimanded, but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide by the twin notice requirement. The court
found that Gran was terminated on the same day he received the termination letter, without having been apprised of the bases of his
dismissal or afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. The appellate
court found that the Declaration was in the form of a quitclaim, and as such is frowned upon as contrary to public policy especially where
the monetary consideration given in the Declaration was very much less than what he was legally entitled to his backwages amounting to
USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:

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I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF
GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY
REASON OF INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT OF APPEALS, IS
APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY
REASON OF INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS CONTRACT. 23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide
Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum constitutes a jurisdictional defect and a deprivation
of due process that would warrant a rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the
appeal.
In Estrada v. National Labor Relations Commission, 24 this Court set aside the order of the NLRC which dismissed an appeal on the sole
ground that the appellant did not furnish the appellee a memorandum of appeal contrary to the requirements of Article 223 of the New
Labor Code and Section 9, Rule XIII of its Implementing Rules and Regulations. SEHaTC
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an appeal to the NLRC based on the ground that "there is
no showing whatsoever that a copy of the appeal was served by the appellant on the appellee" 25 was annulled. The Court ratiocinated as
follows:
The failure to give a copy of the appeal to the adverse party was a mere formal lapse, an excusable neglect. Time and again We have acted
on petitions to review decisions of the Court of Appeals even in the absence of proof of service of a copy thereof to the Court of Appeals as
required by Section 1 of Rule 45, Rules of Court. We act on the petitions and simply require the petitioners to comply with the
rule. 26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v. National Labor Relations
Commission, 27 Pagdonsalan v. NLRC, 28 and in Sunrise Manning Agency, Inc. v. NLRC. 29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party with a copy of the appeal is treated only as a
formal lapse, an excusable neglect, and hence, not a jurisdictional defect. Accordingly, in such a situation, the appeal should not be
dismissed; however, it should not be given due course either. As enunciated in J.D. Magpayo, the duty that is imposed on the NLRC, in
such a case, is to require the appellant to comply with the rule that the opposing party should be provided with a copy of the
appeal memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable, the abject failure of the NLRC to order Gran to
furnish EDI with the Appeal Memorandum constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal Memorandum. The NLRC then ordered
Gran to present proof of service. In compliance with the order, Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent
on April 7, 1998. 30 The post office's list shows that private respondent Gran sent two pieces of mail on the same date: one addressed to a
certain Dan O. de Guzman of Legaspi Village, Makati; and the other appears to be addressed to Neil B. Garcia (or Gran), 31 of Ermita,
Manila both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in proceedings before the NLRC:
Section 5. 32 Proof and completeness of service. The return is prima facie proof of the facts indicated therein.Service by registered
mail is complete upon receipt by the addressee or his agent; but if the addressee fails to claim his mail from the post office within
five (5) days from the date of first notice of the postmaster, service shall take effect after such time. (Emphasis supplied.)
Hence, if the service is done through registered mail, it is only deemed complete when the addressee or his agent received the mail or after
five (5) days from the date of first notice of the postmaster. However, the NLRC Rules do not state what would constitute proper proof of
service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service: AHacIS
Section 13. Proof of service. Proof of personal service shall consist of a written admission of the party served or the official return of the
server, or the affidavit of the party serving, containing a full statement of the date, place and manner of service. If the service is by ordinary
mail, proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. If service is
made by registered mail, proof shall be made by such affidavit and registry receipt issued by the mailing office. The registry
return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not conclusive proof that he had served a copy of his appeal
memorandum to EDI, nor is it conclusive proof that EDI received its copy of the Appeal Memorandum. He should have submitted an affidavit
proving that he mailed the Appeal Memorandum together with the registry receipt issued by the post office; afterwards, Gran should have
immediately filed the registry return card.

123

Hence, after seeing that Gran failed to attach the proof of service, the NLRC should not have simply accepted the post office's list of mail
and parcels sent; but it should have required Gran to properly furnish the opposing parties with copies of his Appeal
Memorandum as prescribed in J.D. Magpayo and the other cases. The NLRC should not have proceeded with the adjudication of the
case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of the Appeal Memorandum before rendering
judgment reversing the dismissal of Gran's complaint constitutes an evasion of the pertinent NLRC Rules and established jurisprudence.
Worse, this failure deprived EDI of procedural due process guaranteed by the Constitution which can serve as basis for the nullification of
proceedings in the appeal before the NLRC. One can only surmise the shock and dismay that OAB, EDI, and ESI experienced when they
thought that the dismissal of Gran's complaint became final, only to receive a copy of Gran's Motion for Execution of Judgment which also
informed them that Gran had obtained a favorable NLRC Decision. This is not level playing field and absolutely unfair and discriminatory
against the employer and the job recruiters. The rights of the employers to procedural due process cannot be cavalierly disregarded for they
too have rights assured under the Constitution.
However, instead of annulling the dispositions of the NLRC and remanding the case for further proceedings we will resolve the petition based
on the records before us to avoid a protracted litigation. 33
The second and third issues have a common matter whether there was just cause for Gran's dismissal hence, they will be discussed
jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable
by reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the local recruiter/agent, and the foreign
employer/principal are governed by the employment contract. A contract freely entered into is considered law between the parties; and
hence, should be respected. In formulating the contract, the parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. 34 HAaDcS
In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for
in the contract (e.g. specific causes for termination, termination procedures, etc.). Being the law intended by the parties (lex loci
intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case has the burden of PROVING the foreign law.
The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine ofpresumedidentity approach or processual presumption comes into play. 36 Where a foreign law is not pleaded or, even if pleaded, is not proved,
the presumption is that foreign law is the same as ours. 37 Thus, we apply Philippine labor laws in determining the issues
presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the employer should prove that the
dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code 38 states that:
ART. 277. MISCELLANEOUS PROVISIONS 39
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by
the employer shall be without prejudice to the right of the workers to contest the validity or legality of his dismissal by filing a complaint
with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer. . . .
In many cases, it has been held that in termination disputes or illegal dismissal cases, the employer has the burden of proving that the
dismissal is for just and valid causes; and failure to do so would necessarily mean that the dismissal was not justified and therefore
illegal. 40 Taking into account the character of the charges and the penalty meted to an employee, the employer is bound to adduce clear,
accurate, consistent, and convincing evidence to prove that the dismissal is valid and legal. 41 This is consistent with the principle
of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of the Labor Code of the Philippines. 42 aEAIDH
In the instant case, petitioner claims that private respondent Gran was validly dismissed for just cause, due to incompetence and
insubordination or disobedience. To prove its allegations, EDI submitted two letters as evidence. The first is the July 9, 1994 termination
letter, 43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is an unsigned April 11, 1995 letter 44 from
OAB addressed to EDI and ESI, which outlined the reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because he had "insufficient knowledge in
programming and zero knowledge of [the] ACAD system." 45 Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed to submit the required "Daily Activity Reports." 46 However, other than the
abovementioned letters, no other evidence was presented to show how and why Gran was considered incompetent,
insubordinate, or disobedient. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly
dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient knowledge in programming and zero knowledge of the
ACAD system" based only on the above mentioned letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be shown by weighing it against a
standard, benchmark, or criterion. However, EDI failed to establish any such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful disobedience to prosper were not present.

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In Micro Sales Operation Network v. NLRC, we held that:


For willful disobedience to be a valid cause for dismissal, the following twin elements must concur: (1) the employee's assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. 47
EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. As indicated by the second requirement
provided for in Micro Sales Operation Network, in order to justify willful disobedience, we must determine whether the order violated by the
employee is reasonable, lawful, made known to the employee, and pertains to the duties which he had been engaged to discharge. In the
case at bar, petitioner failed to show that the order of the company which was violated the submission of "Daily Activity Reports" was
part of Gran's duties as a Computer Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company policy,
Gran's job description, or any other document that would show that the "Daily Activity Reports" were required for submission by
the employees, more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies and not the foreign employer, they should have
adduced additional evidence to convincingly show that Gran's employment was validly and legally terminated. The burden devolves not only
upon the foreign-based employer but also on the employment or recruitment agency for the latter is not only an agent of the former, but is
also solidarily liable with the foreign principal for any claims or liabilities arising from the dismissal of the worker. 48 aTADCE
Thus, petitioner failed to prove that Gran was justifiably dismissed due to incompetence, insubordination, or willful
disobedience.
Petitioner also raised the issue that Prieto v. NLRC, 49 as used by the CA in its Decision, is not applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the petitioners were subjected to trade tests required by law
to be conducted by the recruiting agency to insure employment of only technically qualified workers for the foreign principal." 50 The CA,
using the ruling in the said case, ruled that Gran must have passed the test; otherwise, he would not have been hired. Therefore, EDI was
at fault when it deployed Gran who was allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran misrepresented himself in hiscurriculum vitae as
a Computer Specialist; thus, he was not qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out incompetent applicants from the pool of available
workers. It is supposed to reveal applicants with false educational backgrounds, and expose bogus qualifications. Since EDI deployed Gran
to Riyadh, it can be presumed that Gran had passed the required trade test and that Gran is qualified for the job. Even if there was no
objective trade test done by EDI, it was still EDI's responsibility to subject Gran to a trade test; and its failure to do so only weakened its
position but should not in any way prejudice Gran. In any case, the issue is rendered moot and academic because Gran's incompetency is
unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and regulations shall govern the relationship between Gran
and EDI. Thus, our laws and rules on the requisites of due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was allowed to work and improve his capabilities for
five months prior to his termination. 51 EDI also claims that the requirements of due process, as enunciated inSantos Jr. v.
NLRC, 52 and Malaya Shipping Services, Inc. v. NLRC, 53 cited by the CA in its Decision, were properly observed in the present case.
This position is untenable.
In Agabon v. NLRC, 54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for
which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to
dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. EAHcCT
Under the twin notice requirement, the employees must be given two (2) notices before their employment could be terminated: (1) a first
notice to apprise the employees of their fault, and (2) a second notice to communicate to the employees that their employment is being
terminated. In between the first and second notice, the employees should be given a hearing or opportunity to defend themselves
personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing Gran fell short of the two notice requirement. While
it furnished Gran the written notice informing him of his dismissal, it failed to furnish Gran the written notice apprising him of the charges
against him, as prescribed by the Labor Code. 56 Consequently, he was denied the opportunity to respond to said notice. In addition, OAB
did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of his defenses. Moreover, the July 9,
1994 termination letter was effective on the same day. This shows that OAB had already condemned Gran to dismissal, even before Gran
was furnished the termination letter. It should also be pointed out that OAB failed to give Gran the chance to be heard and to defend himself
with the assistance of a representative in accordance with Article 277 of the Labor Code. Clearly, there was no intention to provide Gran
with due process. Summing up, Gran was notified and his employment arbitrarily terminated on the same day, through the same letter, and
for unjustified grounds. Obviously, Gran was not afforded due process.
Pursuant to the doctrine laid down in Agabon, 57 an employer is liable to pay nominal damages as indemnity for violating the employee's
right to statutory due process. Since OAB was in breach of the due process requirements under the Labor Code and its regulations, OAB,
ESI, and EDI, jointly and solidarily, are liable to Gran in the amount of PhP30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of employment, in cases arising before the effectivity of R.A. No.
8042 58 (Migrant Workers and Overseas Filipinos Act) on August 25, 1995, that when the contract is for a fixed term and the employees are
dismissed without just cause, they are entitled to the payment of their salaries corresponding to the unexpired portion of their
contract. 59 On the other hand, for cases arising after the effectivity of R.A. No. 8042, when the termination of employment is without just,
valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with

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interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months
for every year of the unexpired term whichever is less. 60
In the present case, the employment contract provides that the employment contract shall be valid for a period of two (2) years from the
date the employee starts to work with the employer. 61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7,
1994; 62 hence, his employment contract is until February 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity
of R.A. No. 8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which was equivalent to USD
16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the Declaration which is claimed to have been freely
and voluntarily executed by Gran. The relevant portions of the Declaration are as follows: aEDCAH
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT
IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more particularly those executed by employees. This
requirement was clearly articulated by Chief Justice Artemio V. Panganiban in Land and Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect
the weak and the disadvantaged. The waivers should be carefully examined, in regard not only to the words and terms used, but
also the factual circumstances under which they have been executed. 63(Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v. NLRC, 64 the parameters for valid
compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear
proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that
the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is unreasonably low. As correctly pointed out by the court a
quo, the payment of SR 2,948.00 is even lower than his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is also very much less
than the USD 16,150.00 which is the amount Gran is legally entitled to get from petitioner EDI as backwages. AcHCED
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for Gran's salary for the services he rendered to OAB as
Computer Specialist. If the Declaration is a quitclaim, then the consideration should be much much more than the monthly salary of SR
3,190.00 (USD 850.00) although possibly less than the estimated Gran's salaries for the remaining duration of his contract and other
benefits as employee of OAB. A quitclaim will understandably be lower than the sum total of the amounts and benefits that can possibly be
awarded to employees or to be earned for the remainder of the contract period since it is a compromise where the employees will have to
forfeit a certain portion of the amounts they are claiming in exchange for the early payment of a compromise amount. The court may
however step in when such amount is unconscionably low or unreasonable although the employee voluntarily agreed to it. In the case of the
Declaration, the amount is unreasonably small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show that Gran did not voluntarily and freely execute the
document. Consider the following chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to pay his plane ticket; 65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained to receive the amount of SR 2,948.00
even if it was against his will since he was told on July 10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but to sign the
Declaration as he needed the amount of SR 2,948.00 for the payment of his ticket. He could have entertained some apprehensions as to the
status of his stay or safety in Saudi Arabia if he would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion which should be construed against the employer,
OAB. An adhesion contract is contrary to public policy as it leaves the weaker party the employee in a "take-it-or-leave-it" situation.
Certainly, the employer is being unjust to the employee as there is no meaningful choice on the part of the employee while the terms are
unreasonably favorable to the employer. 66

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Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine laws in the absence of proof of the
applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws, said
agreements should contain the following:
1. A fixed amount as full and final compromise settlement; TCHEDA
2. The benefits of the employees if possible with the corresponding amounts, which the employees are giving up in consideration of the
fixed compromise amount;
3. A statement that the employer has clearly explained to the employee in English, Filipino, or in the dialect known to the employees that
by signing the waiver or quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are due them under the law;
and
4. A statement that the employees signed and executed the document voluntarily, and had fully understood the contents of the document
and that their consent was freely given without any threat, violence, duress, intimidation, or undue influence exerted on their person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee. There should be two (2)
witnesses to the execution of the quitclaim who must also sign the quitclaim. The document should be subscribed and sworn to under oath
preferably before any administering official of the Department of Labor and Employment or its regional office, the Bureau of Labor Relations,
the NLRC or a labor attach in a foreign country. Such official shall assist the parties regarding the execution of the quitclaim and
waiver. 67 This compromise settlement becomes final and binding under Article 227 of the Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor Relations or the regional office of the
DOLE, shall be final and binding upon the parties and the NLRC or any court "shall not assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.
It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of OFWs in the absence of proof of the
laws of the foreign country agreed upon to govern said contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The October 18, 2000 Decision in CA-G.R. SP No. 56120 of the Court of Appeals affirming the January
15, 1999 Decision and September 30, 1999 Resolution of the NLRC is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders
International, Inc. shall pay the amount of PhP30,000.00 to respondent Gran as nominal damages for non-compliance with statutory due
process.
No costs.
FIRST DIVISION
[G.R. No. 128803. September 25, 1998.]
27. ASIAVEST LIMITED, petitioner, vs. THE COURT OF APPEALS and ANTONIO HERAS, respondents.
DECISION
DAVIDE, JR, J p:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are summarized in the 24 August 1990 Decision 1 of
Branch 107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus:,
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant Antonio Heras praying that said defendant be
ordered to pay to the ASIAVEST LTD the amounts awarded by the Hong Kong Court Judgment dated December 28, 1984 and
amended on April 13, 1987 to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment with legal interest from December 28, 1984 until fully
paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees, litigation expenses and cost, with interest thereon from the date of the judgment until
fully paid.
On March 3, 1988 the HERAS filed a Motion to Dismiss. However, before the court could resolve the said motion, a fire which partially razed
the Quezon City Hall Building on June 11, 1988 totally destroyed the office of this Court, together with all its records, equipment and
properties. On July 26, 1988, the ASIAVEST LIMITED, through counsel filed a Motion for Reconstitution of Case Records. The Court, after
allowing the HERAS to react thereto, granted the said Motion and admitted the annexes attached thereto as the reconstituted records of this
case per Order dated September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of which had been deferred, was denied by the
Court in its Order of October 4, 1988.
On October 19, 1988 HERAS filed his Answer. The case was then set for pre-trial conference. At the conference, the parties could not arrive
at any settlement. However, they agreed on the following stipulations of facts:
1. The HERAS admits the existence of the judgment dated December 28, 1984 as well as its amendment dated April 13, 1987, but not
necessarily the authenticity or validity thereof;
2. The ASIAVEST LIMITED is not doing business and is not licensed to do business in the Philippines;
3. The residence of HERAS, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong Kong Court has been repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact, such as to overcome the presumption established in
Section 50, Rule 39 of the Rules of Court in favor of foreign judgments.

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In view of the admission by the HERAS of the existence of the aforementioned judgment (Pls. See Stipulations of Facts in the Order dated
January 5, 1989 as amended by the Order of January 18, 1989) as well as the legal presumption in favor of the ASIAVEST LIMITED as
provided for in paragraph (b), Sec. 50, (Ibid.), the ASIAVEST LIMITED presented only documentary evidence to show rendition, existence,
and authentication of such judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B", with their submarkings). In addition,
the ASIAVEST LIMITED presented testimonial and documentary evidence to show its entitlement to attorney's fees and other expenses of
litigation . . .
On the other hand, the HERAS presented two witnesses, namely, Fortunata dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a statement of claim of Asiavest Limited was ever
served in the office of the Navegante Shipping Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was
either served on the HERAS at his residence in New Manila, Quezon City. Her knowledge is based on the fact that she was the personal
secretary of Mr. Heras during his JD Transit days up to the latter part of 1972 when he shifted or diversified to shipping business in Hong
Kong; that she was in-charge of all his letters and correspondence, business commitments, undertakings, conferences and appointments,
until October 1984 when Mr. Heras left Hong Kong for good; that she was also the Officer-in-Charge or Office Manager of Navegante
Shipping Agency LTD, a Hong Kong registered and based company acting as ships agent, up to and until the company closed shop sometime
in the first quarter of 1985 when shipping business collapsed worldwide; that the said Company held office at 34-35 Connaught Road,
Central Hong Kong and later transferred to Caxton House at Duddel Street, Hong Kong, until the company closed shop in 1985; and that she
was certain of such facts because she held office at Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of the law office of the HERAS's
counsel who made a verification of the record of the case filed by the ASIAVEST LIMITED in Hong Kong against the HERAS as well as the
procedure in serving Court processes in Hong Kong.
In his affidavit (Exh. "2") which constitutes his direct testimony the said witness stated that:
The HERAS was sued on the basis of his personal guarantee of the obligations of Compania Hermanos de Navegacion S.A. There
is no record that a writ of summons was served on the person of the HERAS in Hong Kong, or that any such attempt at service
was made. Likewise, there is no record that a copy of the judgment of the High Court was furnished or served on the HERAS;
anyway, it is not a legal requirement to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor (lawyer) of the claimant or ASIAVEST LIMITED. In Hong Kong there are no
Court personnel who serve writs of summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not contested, the claimant or the ASIAVEST LIMITED is not required to present proof of
his claim or complaint nor present evidence under oath of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision rendered by the Court in Hong Kong [to] make a recitation of the facts or
the law upon which the claim is based.
d) There is no necessity to furnish the HERAS with a copy of the Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no established legal requirement or obligation under Hong Kong laws that the
creditor must first bring proceedings against the principal debtor. The creditor can immediately go against the guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned by the law firm of the HERAS's counsel as an expert witness
and to verify the records of the Hong Kong case he had been acting as counsel for the HERAS in a number of commercial matters; that
there was an application for service of summons upon the HERAS outside the jurisdiction of Hong Kong; that there was an order of the
Court authorizing service upon Heras outside of Hong Kong, particularly in Manila or any other place in the Philippines (p. 9, TSN, 2/14/90);
that there must be adequate proof of service of summons otherwise the Hong Kong Court will refuse to render judgment (p. 10, ibid); that
the mere fact that the Hong Kong Court rendered judgment, it can be presumed that there was service of summons; that in this case, it is
not just a presumption because there was an affidavit stating that service was effected in [sic] a particular man here in Manila; that such
affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December 1984 and stated in essence that "on Friday
the 23rd of November 1984 he served the 4th HERAS at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio Lopez,
the son-in-law of the 4th HERAS the copy of the writ and Mr. Lopez informed me and I barely believed that he would bring the said writ to
the attention of the 4th "HERAS" (pp. 11-12, ibid.); that upon filing of that affidavit the Court was asked and granted judgment against the
4th HERAS; and that if the summons or claim is not contested, the claimant of the ASIAVEST LIMITED is not required to present proof of his
claim or complaint or present evidence under oath of the claim in order to obtain judgment; and that such judgment can be enforced in the
same manner as a judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive evidence of a right as between the
parties; hence, the party impugning it had the burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden.
He did not testify to state categorically and under oath that he never received summons. Even his own witness Lousich admitted that HERAS
was served with summons in his Quezon City residence. As to De la Vega's testimony regarding non-service of summons, the same was
hearsay and had no probative value. prLL
As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the procedural laws of the Philippines because it
contained no statements of the facts and the law on which it was based, the trial court ruled that since the issue related to procedural
matters, the law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such legalities were
not required under Hong Kong laws. The trial court also debunked HERAS' contention that the principle of excussion under Article 2058 of
the Civil Code of the Philippines was violated. It declared that matters of substance are subject to the law of the place where the
transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given effect in this jurisdiction for failure of HERAS
to overcome the legal presumption in favor of the foreign judgment It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering HERAS to pay to the ASIAVEST LIMITED the following sums or their equivalents in
Philippine currency at the time of payment: US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum from
October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate amount from December 28, 1984,
and to pay attorneys fees in the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and an increase in attorney's fees in the
amount of US$19,346.45 with interest until full payment of the said obligations. On the other hand, HERAS no longer opposed the motion
and instead appealed the decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 29513.
In its order 2 of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration by increasing the award of attorney's fees
to "US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST would

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pay the corresponding filing fees for the increase. ASIAVEST appealed the order requiring prior payment of filing fees. However, it later
withdrew its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial court and dismissing ASIAVEST's complaint
without prejudice. It underscored the fact that a foreign judgment does not of itself have any extraterritorial application. For it to be given
effect, the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If such tribunal has not acquired
jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such as those relating to service of summons upon
the HERAS are governed by the lex fori, which was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousich's
testimony that under the Hong Kong law, the substituted service of summons upon HERAS effected the Philippines by the clerk of Sycip
Salazar Hernandez & Gatmaitan firm would be valid provided that it was done in accordance with Philippine laws. It then stressed that
where the action is in personam and the HERAS is in the Philippines, the summons should be personally served on the HERAS pursuant
to Section 7, Rule 14 of the Rules of Court. 4Substituted service may only be availed of where the HERAS cannot be promptly served in
person, the fact of impossibility of personal service should be explained in the proof of service. It also found as persuasive HERAS' argument
that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the
court issuing the summons, ASIAVEST should have asked for leave of the local courts to have the foreign summons served by the sheriff or
other court officer of the place where service was to be made, or for special reasons by any person authorized by the judge. cdasia
The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is unavailing to give jurisdictionin an action
against him personally for money recovery." Summons should have been personally served on HERAS in Hong Kong, for, as claimed by
ASIAVEST, HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an attempt to serve summons on
HERAS in Hong Kong, the Hong Kong Supreme Court did not acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the
claim of ASIAVEST; thus:
While we are not fully convinced that [HERAS] has a meritorious defense against [ASIAVEST's] claims or that [HERAS] ought to be absolved
of any liability, nevertheless, in view of the foregoing discussion, there is a need to deviate from the findings of the lower court in the
interest of justice and fair play This, however, is without prejudice to whatever action [ASIAVEST] might deem proper in order to enforce its
claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence supporting the validity of the foreign judgment be
submitted and that our courts are not bound to give effect to foreign judgments which contravene our laws and the principle of sound
morality and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling that
I.. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE 'SUPPORTING THE VALIDITY OF THE JUDGMENT';
II.. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINE LAW;
III.. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;
IV.. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF PHILIPPINE COURTS;
V.. . . THE FOREIGN JUDGMENT 'CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF
THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing law at the time this case was decided by the
trial court and respondent Court of Appeals, a foreign judgment against a person rendered by a court having jurisdiction to pronounce the
judgment is presumptive evidence of a right as between the parties and their successors in interest by the subsequent title. However, the
judgment may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a court, or judge acting as
such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds provided for in paragraph (b) of
Section 50, Rule 39 of the Rules of Court is on the party challenging the foreign judgment HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the other hand, ASIAVEST presented evidence to
prove rendition, existence, and authentication of the judgment by the proper officials. The judgment is thus presumed to be valid and
binding in the country from which it comes, until the contrary is shown. 6 Consequently, the first ground relied upon by ASIAVEST has
merit. The presumption of validity accorded foreign judgment would be rendered meaningless were the party seeking to
enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court did not acquire jurisdiction over the
person of HERAS. This involves the issue of whether summons was properly and validly served on HERAS. It is settled that matters of
remedy and procedure such as those relating to the service of process upon the HERAS are governed by the lex fori or the law of the
forum, 7 i.e., the law of Hong Kong in this case. HERAS insisted that according to his witness Mr. Lousich, who was presented as an
expert on Hong Kong laws, there was no valid service of summons on him.
In his counter-affidavit, 8 which served as his direct testimony per agreement of the parties, 9 Lousich declared that the record of the Hong
Kong case failed to show that a writ of summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither did the
record show that a copy of the judgment of the court was served on HERAS. He stated further that under Hong Kong laws (a) a writ of
summons could be served by the solicitor of the claimant or ASIAVEST LIMITED; and (b) where the said writ or claim was not contested, the
claimant or ASIAVEST LIMITED was not required to present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court authorized service of summons on HERAS
outside of its jurisdiction, particularly in the Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip
Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS on 13 November 1984 at No. 6, 1st St.,
Quezon City, by leaving a copy with HERAS's son-in-law Dionisio Lopez. 10 On redirect examination, Lousich declared that such
service of summons would be valid under Hong Kong laws provided that it was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich as an expert on the Hong Kong
law. Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of public documents of a sovereign authority, tribunal,

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official body, or public officer may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal
custody thereof, which must be accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody.
The certificate may be issued by the secretary of the embassy or legation, consul general, consul, vice consul, or consular agent, or any
officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of
his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may
be, and must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An authority 12 on private international law thus
noted:
Although it is desirable that foreign law be proved in accordance with the above rule, however, the Supreme Court held in the case
of Willamettee Iron and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does
not exclude the presentation of other competent evidence to prove the existence of a foreign law. In that case, the Supreme
Court considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a section of California
Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court in the Collector of Internal Revenue v. Fisher et al., 14upheld
the Tax Court in considering the pertinent law of California as proved by the respondents' witness. In that case, the counsel for respondent
"testified that as an active member of the California Bar since 1951, he is familiar with the revenue and taxation laws of the State of
California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the
witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derring's California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of the cited section was offered in evidence by
respondents." Likewise, in several naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity
regarding the acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable
action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written proof offered." 15 Thus, in a number
of decisions, mere authentication of the Chinese Naturalization Law by the Chinese Consulate General of Manila was held to be competent
proof of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect of service of
summons either in actions in rem or in personam, and where the HERAS is either a resident or nonresident of Hong Kong . In
view of the absence of proof of the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-called
processual presumption shall come into play. It will thus be presumed that the Hong Kong law on the matter is similar to the Philippine
law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine first whether the action is in personam, in rem, orquasi in
rem because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the
action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem is an action against the thing itself
instead of against the person. 19 An action quasi in rem is one wherein an individual is named as HERAS and the purpose of the proceeding
is to subject his interest therein to the obligation or lien burdening the property. 20
In an action in personam, jurisdiction over the person of the HERAS is necessary for the court to validly try and decide the case. Jurisdiction
over the person of a resident HERAS who does not voluntarily appear in court can be acquired by personal service of summons as
provided under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a reasonable time,
substituted service may be made in accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following
modes of service may he resorted to: (1) substituted service set forth in Section 8; 21 (2) personal service outside the country, with
leave of court; (3) service by publication also with leave of court; 22or (4) any other manner the court may deem sufficient. 23
However, in an action in personam wherein the HERAS is a non-resident who does not voluntarily submit himself to the authority of the
court, personal service of summons within the state is essential to the acquisition of jurisdiction over her person. 24 This method of
service is possible if such HERAS is physically present in the country. If he is not found therein, the court cannot acquire
jurisdiction over his person and therefore cannot validly try and decide the case against him. 25 An exception was laid down
in Gemperle v. Schenker 26 wherein a non-resident was served with summons through his wife, who was a resident of the Philippines and
who was his representative and attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere offshoot of the first
case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the HERAS is not a prerequisite to confer
jurisdiction on the court provided that the court acquires jurisdiction over the res. Nonetheless, summons must be served upon the HERAS
not for the purpose of vesting the court with jurisdiction but merely for satisfying the due process requirements. 27 Thus, where the
HERAS is a non-resident who is not found in the Philippines AND (1) the action affects the personal status of the ASIAVEST LIMITED;
(2) the action relates to, or the subject matter of which is property in the Philippines in which the HERAS has or claims a lien or interest; (3)
the action seeks the exclusion of the HERAS from any interest in the property located in the Philippines; or (4) the property of the HERAS
has been attached in the Philippines service of summons may be effected by (a) personal service out of the country, with leave of court;
(b) publication, also with leave of court; or (c) any other manner the court may deem sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was based on his personal guarantee of the
obligation of the principal debtor. Before we can apply the foregoing rules, we must determine first whether HERAS was a resident of Hong
Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until 1985, 29 testified that HERAS was the President and part
owner of a shipping company in Hong Kong during all those times that she served as his secretary. He had in his employ a staff of
twelve. 30 He had "business commitments, undertakings, conferences, and appointments until October 1984 when [he] left Hong Kong for
good." 31 HERAS's other witness, Russel Warren Lousich, testified that he had acted as counsel for HERAS "for a number of commercial
matters." 32 ASIAVEST then infers that HERAS was a resident of Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his Answer 34 to ASIAVEST's complaint for the enforcement of the Hong
Kong court judgment, HERAS maintained that the Hong Kong court did not have jurisdiction over him because the fundamental rule is
that jurisdiction in personam over non-resident HERASs, so as to sustain a money judgment, must be based upon personal
service of summons within the state which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36 contended: "The question of Hong Kong court's 'want of jurisdiction' is
therefore a triable issue if it is to be pleaded by the HERAS to 'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the
Hong Kong suit was in personam, that HERAS was not a resident of Hong Kong when the suit was filed or that he did not voluntarily submit
to the Hong Kong court's jurisdiction) should be alleged and proved by the HERAS." 37

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In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued that the lack of jurisdiction over his person was corroborated by
ASIAVEST's allegation in the complaint that he "has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines." He then concluded
that such Judicial admission amounted to evidence that he was and is not a resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among which was that "the residence of
HERAS, Antonio Heras, is New Manila, Quezon City." 39
We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court judgment is concerned, was never in
issue. He never challenged the service of summons on him through a security guard in his Quezon City residence and through
a lawyer in his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine court over his person on
the ground of invalid service of summons. What was in issue was his residence as far as the Hong Kong suit was concerned. We therefore
conclude that the stipulated fact that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his residence at the time
jurisdiction over his person was being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS
was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably, one in personam, summons
should have been personally served on him in Hong Kong. The extraterritorial service in the Philippines was therefore invalid and did
not confer on the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court judgment cannot be given force and
effect here in the Philippines for having been rendered without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in November 1984 when the extraterritorial service
of summons was attempted to be made on him. As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left
Hong Kong in October 1984 "for good." 40 His absence in Hong Kong must have been the reason why summons was not served on him
therein; thus, ASIAVEST was constrained to apply for leave to effect service in the Philippines, and upon obtaining a favorable action on the
matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the summons here in the Philippines.
In Brown v. Brown, 41 the HERAS was previously a resident of the Philippines. Several days after a criminal action for concubinage was filed
against him, he abandoned the Philippines. Later, a proceeding quasi in rem was instituted against him. Summons in the latter case was
served on the HERAS's attorney-in-fact at the latter's address. The Court held that under the facts of the case, it could not be said that the
HERAS was "still a resident of the Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the Philippines."
As such, he should have been "summoned in the same manner as one who does not reside and is not found in the Philippines."
Similarly, HERAS, who was also an absentee, should have been served with summons in the same manner as a non-resident not found in
Hong Kong. Section 17, Rule 14 of the Rules of Court providing for extraterritorial service will not apply because the suit against him was in
personam. Neither can we apply Section 18, which allows extraterritorial service on a resident HERAS who is temporarily absent from the
country, because even if HERAS be considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong not only
"temporarily" but "for good."
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this case and AFFIRMING the assailed Judgment of
the Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.

THIRD DIVISION
[G.R. No. 186571. August 11, 2010.]
28. GERBERT R. CORPUZ, petitioner, vs. DAISYLYN TIROL STO. TOMAS and The
SOLICITOR GENERAL, respondents.
DECISION
BRION, J p:
Before the Court is a direct appeal from the decision 1 of the Regional Trial Court (RTC) of Laoag City, Branch 11,
elevated via a petition for review oncertiorari 2 under Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian citizenship through naturalization on
November 29, 2000. 3 On January 18, 2005, Gerbert married respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City. 4 Due to
work and other professional commitments, Gerbert left for Canada soon after the wedding. He returned to the Philippines sometime in
April 2005 to surprise Daisylyn, but was shocked to discover that his wife was having an affair with another man. Hurt and
disappointed, Gerbert returned to Canada and filed a petition for divorce. The Superior Court of Justice, Windsor, Ontario, Canada
granted Gerbert's petition for divorce on December 8, 2005. The divorce decree took effect a month later, on January 8, 2006. 5
Two years after the divorce, Gerbert has moved on and has found another Filipina to love. Desirous of marrying his new
Filipina fiance in the Philippines, Gerbert went to the Pasig City Civil Registry Office and registered the Canadian divorce decree on his
and Daisylyn's marriage certificate. Despite the registration of the divorce decree, an official of the National Statistics
Office (NSO) informed Gerbert that the marriage between him and Daisylyn still subsists under Philippine law; to be enforceable, the
foreign divorce decree must first be judicially recognized by a competent Philippine court, pursuant to NSO Circular No. 4, series of
1982. 6 IHDCcT
Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce and/or declaration of marriage as
dissolved (petition) with the RTC. Although summoned, Daisylyn did not file any responsive pleading but submitted instead a notarized
letter/manifestation to the trial court. She offered no opposition to Gerbert's petition and, in fact, alleged her desire to file a similar

131

case herself but was prevented by financial and personal circumstances. She, thus, requested that she be considered as a party-ininterest with a similar prayer to Gerbert's.
In its October 30, 2008 decision, 7 the RTC denied Gerbert's petition. The RTC concluded that Gerbert was not the proper
party to institute the action for judicial recognition of the foreign divorce decree as he is a naturalized Canadian citizen. It ruled
that only the Filipino spouse can avail of the remedy, under the second paragraph of Article 26 of the Family Code, 8 in order for him or
her to be able to remarry under Philippine law. 9 Article 26 of the Family Code reads:
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.

This conclusion, the RTC stated, is consistent with the legislative intent behind the enactment of the second paragraph of Article 26 of
the Family Code, as determined by the Court in Republic v. Orbecido III; 10 the provision was enacted 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." 11

THE PETITION
From the RTC's ruling, 12 Gerbert filed the present petition. 13
Gerbert asserts that his petition before the RTC is essentially for declaratory relief, similar to that filed in Orbecido; he, thus,
similarly asks for a determination of his rights under the second paragraph of Article 26 of the Family Code. Taking into account the
rationale behind the second paragraph of Article 26 of the Family Code, he contends that the provision applies as well to the benefit of
the alien spouse. He claims that the RTC ruling unduly stretched the doctrine in Orbecido by limiting the standing to file the petition
only to the Filipino spouse an interpretation he claims to be contrary to the essence of the second paragraph of Article 26 of
the Family Code. He considers himself as a proper party, vested with sufficient legal interest, to institute the case, as there is a
possibility that he might be prosecuted for bigamy if he marries his Filipina fiance in the Philippines since two marriage certificates,
involving him, would be on file with the Civil Registry Office. The Office of the Solicitor General and Daisylyn, in their respective
Comments, 14both support Gerbert's position. SAcaDE

Essentially, the petition raises the issue of whether the second paragraph of Article 26 of the Family Code extends to aliens the
right to petition a court of this jurisdiction for the recognition of a foreign divorce decree.

THE COURT'S RULING

The alien spouse can claim no right


under the second paragraph of
Article 26 of the Family Code as the
substantive right it establishes is in
favor of the Filipino spouse
The resolution of the issue requires a review of the legislative history and intent behind the second paragraph of Article 26 of
the Family Code.
The Family Code recognizes only two types of defective marriages void 15 and voidable 16 marriages. In both cases, the
basis for the judicial declaration of absolute nullity or annulment of the marriage exists before orat the time of the marriage. Divorce,
on the other hand, contemplates the dissolution of the lawful union for cause arising after the marriage. 17 Our family laws do not
recognize absolute divorce between Filipino citizens. 18
Recognizing the reality that divorce is a possibility in marriages between a Filipino and an alien, President Corazon C. Aquino,
in the exercise of her legislative powers under the Freedom Constitution, 19 enacted Executive Order No. (EO) 227, amending Article
26 of the Family Code to its present wording, as follows:
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.

132

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.

Through the second paragraph of Article 26 of the Family Code, EO 227 effectively incorporated into the law this Court's holding in Van
Dorn v. Romillo, Jr. 20 and Pilapil v. Ibay-Somera. 21 In both cases, the Court refused to acknowledge the alien spouse's assertion of
marital rights after a foreign court's divorce decree between the alien and the Filipino. The Court, thus, recognized that the foreign
divorce had already severed the marital bond between the spouses. The Court reasoned in Van Dorn v. Romillo that:
To maintain . . . that, under our laws, [the Filipino spouse] has to be considered still married to [the alien
spouse] and still subject to a wife's obligations . . . cannot be just. [The Filipino spouse] should not be obliged to
live together with, observe respect and fidelity, and render support to [the alien spouse]. 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. 22 aCHDST

As the RTC correctly stated, the provision was included in the law "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." 23 The legislative
intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce
decree. Essentially, the second paragraph of Article 26 of theFamily Code provided the Filipino spouse a substantive right
to have his or her marriage to the alien spouse considered as dissolved, capacitating him or her to remarry. 24 Without the
second paragraph of Article 26 of theFamily Code, the judicial recognition of the foreign decree of divorce, whether in a proceeding
instituted precisely for that purpose or as a related issue in another proceeding, would be of no significance to the Filipino spouse since
our laws do not recognize divorce as a mode of severing the marital bond; 25Article 17 of the Civil Code provides that the policy
against absolute divorces cannot be subverted by judgments promulgated in a foreign country. The inclusion of the second paragraph in
Article 26 of the Family Code provides the direct exception to this rule and serves as basis for recognizing the dissolution of the
marriage between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the Family Code is not limited to the recognition of the
foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry, the courts can declare that the Filipino
spouse is likewise capacitated to contract another marriage. No court in this jurisdiction, however, can make a similar declaration for
the alien spouse (other than that already established by the decree), whose status and legal capacity are generally governed by his
national law. 26
Given the rationale and intent behind the enactment, and the purpose of the second paragraph of Article 26 of the Family
Code, the RTC was correct in limiting the applicability of the provision for the benefit of the Filipino spouse. In other words, only the
Filipino spouse can invoke the second paragraph of Article 26 of the Family Code; the alien spouse can claim no right under this
provision.

The foreign divorce decree is


presumptive evidence of a right that
clothes the party with legal interest to
petition for its recognition in this
jurisdiction
We qualify our above conclusion i.e., that the second paragraph of Article 26 of the Family Code bestows no rights in favor
of aliens with the complementary statement that this conclusion is not sufficient basis to dismiss Gerbert's petition before the RTC. In
other words, the unavailability of the second paragraph of Article 26 of the Family Code to aliens does not necessarily strip Gerbert of
legal interest to petition the RTC for the recognition of his foreign divorce decree. The foreign divorce decree itself, after its authenticity
and conformity with the alien's national law have been duly proven according to our rules of evidence, serves as a presumptive
evidence of right in favor of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides for the effect of foreign
judgments. This Section states: aTEScI
SEC. 48. Effect of foreign judgments or final orders. The effect of a judgment or final order of a tribunal of a
foreign country, having jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon
the title of the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is
presumptive evidence of a right as between the parties and their successors in interest by a
subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.

133

To our mind, direct involvement or being the subject of the foreign judgment is sufficient to clothe a party with the requisite interest to
institute an action before our courts for the recognition of the foreign judgment. In a divorce situation, we have declared, no less, that
the divorce obtained by an alien abroad may be recognized in the Philippines, provided the divorce is valid according to his or her
national law. 27
The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts do not take judicial
notice of foreign judgments and laws. Justice Herrera explained that, as a rule, " no sovereign is bound to give effect within its dominion
to a judgment rendered by a tribunal of another country." 28 This means that the foreign judgment and its authenticity must be proven
as facts under our rules on evidence, together with the alien's applicable national law to show the effect of the judgment on the alien
himself or herself. 29 The recognition may be made in an action instituted specifically for the purpose or in another action where a
party invokes the foreign decree as an integral aspect of his claim or defense.
In Gerbert's case, since both the foreign divorce decree and the national law of the alien, recognizing his or her capacity to
obtain a divorce, purport to be official acts of a sovereign authority, Section 24, Rule 132 of the Rules of Court comes into play. This
Section requires proof, either by (1) official publications or (2) copies attested by the officer having legal custody of the documents. If
the copies of official records are not kept in the Philippines, these must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office.
The records show that Gerbert attached to his petition a copy of the divorce decree, as well as the required certificates proving
its authenticity, 30but failed to include a copy of the Canadian law on divorce. 31 Under this situation, we can, at this point, simply
dismiss the petition for insufficiency of supporting evidence, unless we deem it more appropriate to remand the case to the RTC to
determine whether the divorce decree is consistent with the Canadian divorce law. DCASIT
We deem it more appropriate to take this latter course of action, given the Article 26 interests that will be served and the
Filipina wife's (Daisylyn's) obvious conformity with the petition. A remand, at the same time, will allow other interested parties to
oppose the foreign judgment and overcome a petitioner's presumptive evidence of a right by proving want of jurisdiction, want of notice
to a party, collusion, fraud, or clear mistake of law or fact. Needless to state, every precaution must be taken to ensure conformity with
our laws before a recognition is made, as the foreign judgment, once recognized, shall have the effect of res judicata 32 between the
parties, as provided in Section 48, Rule 39 of the Rules of Court. 33
In fact, more than the principle of comity that is served by the practice of reciprocal recognition of foreign judgments between
nations, the res judicata effect of the foreign judgments of divorce serves as the deeper basis for extending judicial recognition and for
considering the alien spouse bound by its terms. This same effect, as discussed above, will not obtain for the Filipino spouse were it not
for the substantive rule that the second paragraph of Article 26 of the Family Code provides.
Considerations beyond the
recognition of the foreign divorce
decree
As a matter of "housekeeping" concern, we note that the Pasig City Civil Registry Office has already recorded the
divorce decree on Gerbert and Daisylyn's marriage certificate based on the mere presentation of the decree. 34 We
consider the recording to be legally improper; hence, the need to draw attention of the bench and the bar to what had been done.
Article 407 of the Civil Code states that "[a]cts, events and judicial decrees concerning the civil status of persons shall be
recorded in the civil register." The law requires the entry in the civil registry of judicial decrees that produce legal consequences
touching upon a person's legal capacity and status, i.e., those affecting "all his personal qualities and relations, more or less permanent
in nature, not ordinarily terminable at his own will, such as his being legitimate or illegitimate, or his being married or not." 35
A judgment of divorce is a judicial decree, although a foreign one, affecting a person's legal capacity and status that must be
recorded. In fact,Act No. 3753 or the Law on Registry of Civil Status specifically requires the registration of divorce decrees in the
civil registry:
Sec. 1. Civil Register. A civil register is established for recording the civil status of persons, in which shall
be entered:
(a) births;
(b) deaths;
(c) marriages;
(d) annulments of marriages;
(e) divorces; EHDCAI
(f) legitimations;
(g) adoptions;
(h) acknowledgment of natural children;

134

(i) naturalization; and


(j) changes of name.
xxx xxx xxx
Sec. 4. Civil Register Books. The local registrars shall keep and preserve in their offices the following books, in which
they shall, respectively make the proper entries concerning the civil status of persons:
(1) Birth and death register.
(2) Marriage register, in which shall be entered not only the marriages solemnized but also divorces and
dissolved marriages.
(3) Legitimation, acknowledgment, adoption, change of name and naturalization register.

But while the law requires the entry of the divorce decree in the civil registry, the law and the submission of the decree by themselves
do not ipso factoauthorize the decree's registration. The law should be read in relation with the requirement of a judicial recognition of
the foreign judgment before it can be given res judicata effect. In the context of the present case, no judicial order as yet exists
recognizing the foreign divorce decree. Thus, the Pasig City Civil Registry Office acted totally out of turn and without authority of law
when it annotated the Canadian divorce decree on Gerbert and Daisylyn's marriage certificate, on the strength alone of the foreign
decree presented by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of a court recognition, as it cited NSO Circular No.
4, series of 1982, 36 and Department of Justice Opinion No. 181, series of 1982 37 both of which required a final order from a
competent Philippine court before a foreign judgment, dissolving a marriage, can be registered in the civil registry, but it, nonetheless,
allowed the registration of the decree. For being contrary to law, the registration of the foreign divorce decree without the requisite
judicial recognition is patently void and cannot produce any legal effect.
Another point we wish to draw attention to is that the recognition that the RTC may extend to the Canadian divorce decree
does not, by itself, authorize the cancellation of the entry in the civil registry. A petition for recognition of a foreign judgment is not
the proper proceeding, contemplated under the Rules of Court, for the cancellation of entries in the civil registry. STHDAc
Article 412 of the Civil Code declares that "no entry in a civil register shall be changed or corrected, without judicial order." The
Rules of Court supplements Article 412 of the Civil Code by specifically providing for a special remedial proceeding by which entries in
the civil registry may be judicially cancelled or corrected. Rule 108 of the Rules of Court sets in detail the jurisdictional and procedural
requirements that must be complied with before a judgment, authorizing the cancellation or correction, may be annotated in the
civil registry. It also requires, among others, that the verified petition must be filed with the RTC of the province where the
corresponding civil registry is located; 38 that the civil registrar and all persons who have or claim any interest must be made parties to
the proceedings; 39 and that the time and place for hearing must be published in a newspaper of general circulation. 40As these basic
jurisdictional requirements have not been met in the present case, we cannot consider the petition Gerbert filed with the RTC as one
filed under Rule 108 of the Rules of Court.
We hasten to point out, however, that this ruling should not be construed as requiring two separate proceedings for the
registration of a foreign divorce decree in the civil registry one for recognition of the foreign decree and another specifically for
cancellation of the entry under Rule 108 of the Rules of Court. The recognition of the foreign divorce decree may be made in a Rule 108
proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to establish the status
or right of a party or a particular fact. Moreover, Rule 108 of the Rules of Court can serve as the appropriate adversarial
proceeding 41 by which the applicability of the foreign judgment can be measured and tested in terms of jurisdictional infirmities, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the October 30, 2008 decision of the Regional
Trial Court of Laoag City, Branch 11, as well as its February 17, 2009 order. We order the REMAND of the case to the trial court for
further proceedings in accordance with our ruling above. Let a copy of this Decision be furnished the Civil RegistrarGeneral. No costs.

SO ORDERED.

135