Cadalin Case
NLRC, denying the motion for reconsideration of its
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v.
Philippine Overseas Employment Administration's Administrator, et. al.,"
was filed under Rule 65 of the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of
the National Labor Relations Commission (NLRC) in
POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-
460; (2) to render a new decision: (i) declaring private
respondents as in default; (ii) declaring the said labor
cases as a class suit; (iii) ordering Asia International
Builders Corporation (AIBC) and Brown and Root
International Inc. (BRII) to pay the claims of the 1,767
claimants in said labor cases; (iv) declaring Atty. Florante
M. de Castro guilty of forum-shopping; and (v)
dismissing POEA Case No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of
NLRC, denying the motion for reconsideration of its
Resolution dated September 2, 1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et.
al., v. Hon. National Labor Relations Commission, et. al.," was filed under
Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of
NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777,
L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year
prescriptive period under the Labor Code of the
Philippines instead of the ten-year prescriptive period
under the Civil Code of the Philippines; and (ii) denied
the
"three-hour daily average" formula in the computation of
petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of
Resolution dated September 2, 1991 (Rollo, pp. 8-25; 26-
220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders
Corporation, et. al., v. National Labor Relations Commission, et. al." was
filed under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of
NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777,
L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149
claimants; and
(2) to reverse the Resolution dated March 21, 1992 of
NLRC insofar as it denied the motions for reconsideration
of AIBC and BRII (Rollo, pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the
decision of POEA in four labor cases: (1) awarded monetary benefits only
to 149 claimants and (2) directed Labor Arbiter Fatima J. Franco to conduct
hearings and to receive evidence on the claims dismissed by the POEA for
lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third
Division while G.R. Nos. 104911-14 were raffled to the Second Division. In
the Resolution dated July 26, 1993, the Second Division referred G.R. Nos.
104911-14 to the Third Division (G.R. Nos. 104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the
motion filed in G.R. Nos. 104911-14 for the consolidation of said cases
with G.R. Nos. 104776 and 105029-32, which were assigned to the First
Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos. 105029-
30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993,
the First Division granted the motion to consolidate G.R. Nos. 104911-14
with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos.
105029-32, Rollo, p. 1562).
I answers and to attend the pre-trial conference on July 25, 1984. The
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
claimants alleged that AIBC and BRII had waived their right to present
evidence and had defaulted by failing to file their answers and to attend the
pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike
Out of the Records" filed by AIBC but required the claimants to correct the
deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with
the Order of October 2, 1984 and filed an "Urgent Manifestation," praying
that the POEA Administrator direct the parties to submit simultaneously
their position papers, after which the case should be deemed submitted for
decision. On the same day, Atty. Florante de Castro filed another complaint
for the same money claims and benefits in behalf of several claimants, some
of whom were also claimants in POEA Case No. L-84-06-555 (POEA Case
No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order
dated October 2, 1984 and an "Urgent Manifestation," praying that the
POEA direct the parties to submit simultaneously their position papers after
which the case would be deemed submitted for decision. On the same day,
AIBC asked for time to file its comment on the "Compliance" and "Urgent
Manifestation" of claimants. On November 6, 1984, it filed a second motion
for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its
motion for extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for
extension of time and asked that AIBC and BRII be declared in default for
failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among
other reliefs, that claimants should be ordered to amend their complaint.
On December 27, 1984, the POEA Administrator issued an order directing
AIBC and BRII to file their answers within ten days from receipt of the
order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the
reversal of the said order of the POEA Administrator. Claimants opposed
the appeal, claiming that it was dilatory and praying that AIBC and BRII be
declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint
and/or Position Paper" dated March 24, 1985, adding new demands:
namely, the payment of overtime pay, extra night work pay, annual leave
differential pay, leave indemnity pay, retirement and savings benefits and
their share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15,
1985, the POEA Administrator directed AIBC to file its answer to the
amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary
Judgment." On the same day, the POEA issued an order directing AIBC and
BRII to file their answers to the "Amended Complaint," otherwise, they
would be deemed to have waived their right to present evidence and the
case would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper
Class Suit and Motion for Bill of Particulars Re: Amended Complaint dated
March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to
AIBC and BRII to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC,
together with a petition for the issuance of a writ of injunction. On
September 19, 1985, NLRC enjoined the POEA Administrator from hearing
the labor cases and suspended the period for the filing of the answers of
AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to
include additional claimants in the case and to investigate alleged
wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint
(POEA Case No. L-85-10-777) against AIBC and BRII with the POEA,
demanding monetary claims similar to those subject of POEA Case No. L-
84-06-555. In the same month, Solomon Reyes also filed his own complaint
(POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates
asked for the substitution of the original counsel of record and the
cancellation of the special powers of attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the
claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims
(POEA Case No. 86-05-460) in behalf of 11 claimants including
Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on
February 27, 1985 and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA
Administrator, it is not amiss to mention that two cases were filed in the
Supreme Court by the claimants, namely — G.R. No. 72132 on September
26, 1985 and Administrative Case No. 2858 on March 18, 1986. On May
13, 1987, the Supreme Court issued a resolution in Administrative Case No.
2858 directing the POEA Administrator to resolve the issues raised in the
motions and oppositions filed in POEA Cases Nos. L-84-06-555 and L-86-
05-460 and to decide the labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489),
questioning the Order dated September 4, 1985 of the POEA Administrator.
Said order required BRII and AIBC to answer the amended complaint in
POEA Case No. L-84-06-555. In a resolution dated November 9, 1987, we
dismissed the petition by informing AIBC that all its technical objections
may properly be resolved in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on
September 22, 1988 by claimant Hermie Arguelles and 18 co-claimants
against the POEA Administrator and several NLRC Commissioners. The
Ombudsman merely referred the complaint to the Secretary of Labor and
Employment with a request for the early disposition of POEA Case No. L-
84-06-555. The second was filed on April 28, 1989 by claimants Emigdio P.
Bautista and Rolando R. Lobeta charging AIBC and BRII for violation of
labor and social legislations. The third was filed by Jose R. Santos,
Maximino N. Talibsao and Amado B. Bruce denouncing AIBC and BRII of
violations of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC
Resolution dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator its
motion for suspension of the period for filing an answer or motion for
extension of time to file the same until the resolution of its motion for
reconsideration of the order of the NLRC dismissing the two appeals. On
April 28, 1987, NLRC en banc denied the motion for reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the
complaint. At the same hearing, the parties were given a period of 15 days
from said date within which to submit their respective position papers. On
June 24, 1987 claimants filed their "Urgent Motion to Strike Out Answer,"
alleging that the answer was filed out of time. On June 29, 1987, claimants
filed their "Supplement to Urgent Manifestational Motion" to comply with
the POEA Order of June 19, 1987. On February 24, 1988, AIBC and BRII
submitted their position paper. On March 4, 1988, claimants filed their "Ex-
Parte Motion to Expunge from the Records" the position paper of AIBC
and BRII, claiming that it was filed out of time.
On September 1, 1988, the claimants represented by Atty. De Castro filed
their memorandum in POEA Case No. L-86-05-460. On September 6, 1988,
AIBC and BRII submitted their Supplemental Memorandum. On September
12, 1988, BRII filed its "Reply to Complainant's Memorandum." On
October 26, 1988, claimants submitted their "Ex-Parte Manifestational
Motion and Counter-Supplemental Motion," together with 446 individual
contracts of employments and service records. On October 27, 1988, AIBC
and BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in
POEA Case No. L-84-06-555 and the other consolidated cases, which
awarded the amount of $824,652.44 in favor of only 324 complainants.
On February 10, 1989, claimants submitted their "Appeal Memorandum For
Partial Appeal" from the decision of the POEA. On the same day, AIBC
also filed its motion for reconsideration and/or appeal in addition to the
"Notice of Appeal" filed earlier on February 6, 1989 by another counsel for
AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal," praying
for the dismissal of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to Complainants'
Appeal Memorandum," together with their "newly discovered evidence"
consisting of payroll records.
On April 5, 1989, AIBC and BRII submitted to NLRC their
"Manifestation," stating among other matters that there were only 728
named claimants. On April 20, 1989, the claimants filed their "Counter-
Manifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of
the Decision dated January 30, 1989 on the grounds that BRII had failed to
appeal on time and AIBC had not posted the supersedeas bond in the
amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor
cases.
On August 21, 1990, claimants filed their "Manifestational Motion,"
praying that all the 1,767 claimants be awarded their monetary claims for
failure of private respondents to file their answers within the reglamentary
period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as
follows:
WHEREFORE, premises considered, the Decision of the
POEA in these consolidated cases is modified to the
extent and in accordance with the following dispositions:
1. The claims of the 94 complainants
identified and listed in Annex "A"
hereof are dismissed for having
prescribed;
2. Respondents AIBC and Brown &
Root are hereby ordered, jointly and
severally, to pay the 149 complainants,
identified and listed in Annex "B"
hereof, the peso equivalent, at the time
of payment, of the total amount in US
dollars indicated opposite their
respective names;
3. The awards given by the POEA to the
19 complainants classified and listed in
Annex "C" hereof, who appear to have
worked elsewhere than in Bahrain are
hereby set aside.
4. All claims other than those indicated
in Annex "B", including those for
overtime work and favorably granted by
the POEA, are hereby dismissed for
lack of substantial evidence in support
thereof or are beyond the competence of
this Commission to pass upon.
In addition, this Commission, in the exercise of its powers
and authority under Article 218(c) of the Labor Code, as
amended by R.A. 6715, hereby directs Labor Arbiter
Fatima J. Franco of this Commission to summon parties,
conduct hearings and receive evidence, as expeditiously
as possible, and thereafter submit a written report to this
Commission (First Division) of the proceedings taken,
regarding the claims of the following:
(a) complainants identified and listed in
Annex "D" attached and made an
integral part of this Resolution, whose
claims were dismissed by the POEA for
lack of proof of employment in Bahrain
(these complainants numbering 683, are
listed in pages 13 to 23 of the decision
of POEA, subject of the appeals) and,
(b) complainants identified and listed in
Annex "E" attached and made an
integral part of this Resolution, whose
awards decreed by the POEA, to Our
mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp.
113-115; G.R. Nos. 104911-14, pp. 85-
87; G.R. Nos. 105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12
co-claimants, who were former clients of Atty. Del Mundo, filed a petition
for certiorari with the Supreme Court (G.R. Nos. 120741-44). The petition
was dismissed in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991 Resolution of
the NLRC were filed. The first, by the claimants represented by Atty. Del
Mundo; the second, by the claimants represented by Atty. De Castro; and
the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for
reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del
Mundo (G.R. No. 104776), the claimants represented by Atty. De Castro
(G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and AIBC
and BRII have submitted, from time to time, compromise agreements for
our approval and jointly moved for the dismissal of their respective
petitions insofar as the claimants-parties to the compromise agreements
were concerned (See Annex A for list of claimants who signed quitclaims).
Thus the following manifestations that the parties had arrived at a
compromise agreement and the corresponding motions for the approval of
the agreements were filed by the parties and approved by the Court:
1) Joint Manifestation and Motion involving claimant
Emigdio Abarquez and 47 co-claimants dated September
2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263-406; G.R.
Nos. 105029-32, Rollo, pp.
470-615);
2) Joint Manifestation and Motion involving petitioner
Bienvenido Cadalin and 82 co-petitioners dated
September 3, 1992 (G.R. No. 104776, Rollo, pp. 364-
507);
3) Joint Manifestation and Motion involving claimant
Jose
M. Aban and 36 co-claimants dated September 17, 1992
(G.R. Nos. 105029-32, Rollo, pp. 613-722; G.R. No.
104776, Rollo, pp. 518-626; G.R. Nos. 104911-14, Rollo,
pp. 407-516);
4) Joint Manifestation and Motion involving claimant
Antonio T. Anglo and 17 co-claimants dated October 14,
1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo,
pp. 650-713; G.R. Nos. 104911-14, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant
Dionisio Bobongo and 6 co-claimants dated January 15,
1993 (G.R. No. 104776, Rollo, pp. 813-836; G.R. Nos.
104911-14, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant
Valerio A. Evangelista and 4 co-claimants dated March
10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746; G.R.
No. 104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants
Palconeri Banaag and 5 co-claimants dated March 17,
1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R. Nos.
104911-14, Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant
Benjamin Ambrosio and 15 other co-claimants dated May
4, 1993 (G.R. Nos. 105029-32, Rollo, pp. 906-956; G.R.
Nos. 104911-14, Rollo, pp. 679-729; G.R. No. 104776,
Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio
Evangelista and 3 co-claimants dated May 10, 1993 (G.R.
No. 104776, Rollo, pp. 1815-1829);
10) Joint Manifestation and Motion involving petitioner
Quiterio R. Agudo and 36 co-claimants dated June 14,
1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R.
Nos. 104911-14, Rollo, pp. 748-864; G.R. No. 104776,
Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant
Arnaldo J. Alonzo and 19 co-claimants dated July 22,
1993 (G.R. No. 104776, Rollo, pp. 1173-1235; G.R. Nos.
105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-14,
Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant
Ricardo C. Dayrit and 2 co-claimants dated September 7,
1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776,
 Rollo, pp. 1243-1254; G.R. Nos. 104911-14, Rollo, pp.
972-984);
13) Joint Manifestation and Motion involving claimant
Dante C. Aceres and 37 co-claimants dated September 8,
1993 (G.R. No. 104776, Rollo, pp. 1257-1375; G.R. Nos.
104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32,
Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio
V. Abella and 27 co-claimants dated January 10, 1994
(G.R. Nos. 105029-32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo
B. Solano and six co-claimants dated August 25, 1994
(G.R. Nos. 105029-32; G.R. No. 104776; G.R. Nos.
104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more
than fifty volumes now comprising the records of these
cases. From the records, it appears that the complainants-
appellants allege that they were recruited by respondent-
appellant AIBC for its accredited foreign principal,
Brown & Root, on various dates from 1975 to 1983. They
were all deployed at various projects undertaken by
Brown & Root in several countries in the Middle East,
such as Saudi Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in Indonesia and
Malaysia.
Having been officially processed as overseas contract
workers by the Philippine Government, all the individual
complainants signed standard overseas employment
contracts (Records, Vols. 25-32. Hereafter, reference to
the records would be sparingly made, considering their
chaotic arrangement) with AIBC before their departure
from the Philippines. These overseas employment
contracts invariably contained the following relevant
terms and conditions.
PART B —
(1) Employment Position Classification :———————
——
(Code) :—————————
(2) Company Employment Status :—————————
(3) Date of Employment to Commence on :——————
———
(4) Basic Working Hours Per Week :————————
—
(5) Basic Working Hours Per Month :————————
—
(6) Basic Hourly Rate :—————————
(7) Overtime Rate Per Hour :—————————
(8) Projected Period of Service
(Subject to C(1) of this [sic]) :—————————
Months and/or
Job Completion
xxx xxx xxx
3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and
overtime rate as set out in Part B of this Document.
b) The hours of work shall be those set forth by the
Employer, and Employer may, at his sole option, change
or adjust such hours as maybe deemed necessary from
time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this
agreement, the Employer may, at his sole discretion,
terminate employee's service with cause, under this
agreement at any time. If the Employer terminates the
services of the Employee under this Agreement because
of the completion or termination, or suspension of the
work on which the Employee's services were being
utilized, or because of a reduction in force due to a
decrease in scope of such work, or by change in the type
of construction of such work. The Employer will be
responsible for his return transportation to his country of
origin. Normally on the most expeditious air route,
economy class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or
satisfactory completion of contract, employee shall be
entitled to 12-days vacation leave with pay. This shall be
computed at the basic wage rate. Fractions of a year's
service will be computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the employee
for every year of service for non-work connected injuries
or illness. If the employee failed to avail of such leave
benefits, the same shall be forfeited at the end of the year
in which said sick leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will
be accrued and payable only upon satisfactory completion
of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of
rest with 8 hours regular pay. If work is performed on this
day, all hours work shall be paid at the premium rate.
However, this offday pay provision is applicable only
when the laws of the Host Country require payments for
rest day.
In the State of Bahrain, where some of the individual
complainants were deployed, His Majesty Isa Bin Salman
Al Kaifa, Amir of Bahrain, issued his Amiri Decree No.
23 on June 16, 1976, otherwise known as the Labour Law
for the Private Sector (Records, Vol. 18). This decree took
effect on August 16, 1976. Some of the provisions of
Amiri Decree No. 23 that are relevant to the claims of the
complainants-appellants are as follows (italics supplied
only for emphasis):
Art. 79: . . . A worker shall receive
payment for each extra hour equivalent
to his wage entitlement increased by a
minimum of twenty-five per centum
thereof for hours worked during the
day; and by a minimum of fifty per
centum thereof for hours worked during
the night which shall be deemed to
being from seven o'clock in the evening
until seven o'clock in the morning. . . .
Art. 80: Friday shall be deemed to be a
weekly day of rest on full pay.
. . . an employer may require a worker,
with his consent, to work on his weekly
day of 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;
(b) Whether or not the admission of
evidence by the POEA after these cases
were submitted for decision was valid;
(c) Whether or not the POEA acquired
jurisdiction over Brown & Root
International, Inc.;
(d) Whether or not the judgment awards
are supported by substantial evidence;
(e) Whether or not the awards based on
the averages and formula presented by
the complainants-appellants are
supported by substantial evidence;
(f) Whether or not the POEA awarded
sums beyond what the complainants-
appellants prayed for; and, if so,
whether or not these awards are valid.
Fifth: — Whether or not the POEA erred in holding
respondents AIBC and Brown & Root jointly are
severally liable for the judgment awards despite the
alleged finding that the former was the employer of the
complainants;
(a) Whether or not the POEA has
acquired jurisdiction over Brown &
Root;
(b) Whether or not the undisputed fact
that AIBC was a licensed construction
contractor precludes a finding that
Brown & Root is liable for
complainants claims.
Sixth: — Whether or not the POEA Administrator's
failure to hold respondents in default constitutes a
reversible error.
Seventh: — Whether or not the POEA Administrator
erred in dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and
Reserve Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of
at least 100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid
benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted
to SSS;
 j. Refund of withholding tax not
remitted to BIR;
k. Fringe benefits under B & R's "A
Summary of Employee Benefits"
(Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent
of the judgment award;
n. Other reliefs, like suspending and/or
cancelling the license to recruit of AIBC
and the accreditation of B & R issued
by POEA;
o. Penalty for violations of Article 34
(prohibited practices), not excluding
reportorial requirements thereof.
Eighth: — Whether or not the POEA Administrator erred
in not dismissing POEA Case No. (L) 86-65-460 on the
ground of multiplicity of suits (G.R. Nos. 104911-14,
Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989
Revised Rules on Evidence governing the pleading and proof of a foreign
law and admitted in evidence a simple copy of the Bahrain's Amiri Decree
No. 23 of 1976 (Labour Law for the Private Sector). NLRC invoked Article
221 of the Labor Code of the Philippines, vesting on the Commission ample
discretion to use every and all reasonable means to ascertain the facts in
each case without regard to the technicalities of law or procedure. NLRC
agreed with the POEA Administrator that the Amiri Decree No. 23, being
more favorable and beneficial to the workers, should form part of the
overseas employment contract of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the
claimants, who worked in Bahrain, and set aside awards of the POEA
Administrator in favor of the claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing
of the claims of the complainants was three years, as provided in Article
291 of the Labor Code of the Philippines, and not ten years as provided in
Article 1144 of the Civil Code of the Philippines nor one year as provided
in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the
labor cases cannot be treated as a class suit for the simple reason that not all
the complainants worked in Bahrain and therefore, the subject matter of the
action, the claims arising from the Bahrain law, is not of common or general
interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal
rules of administrative due process: namely, (1) the failure of the POEA
Administrator to consider the evidence presented by AIBC and BRII; (2)
some findings of fact were not supported by substantial evidence; and (3)
some of the evidence upon which the decision was based were not disclosed
to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator
that BRII and AIBC are solidarily liable for the claims of the complainants
and held that BRII was the actual employer of the complainants, or at the
very least, the indirect employer, with AIBC as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA
Administrator through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in
denying the Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the
Amiri Decree No. 23, NLRC ruled:
 (1) that the POEA Administrator has no jurisdiction over
the claims for refund of the SSS premiums and refund of
withholding taxes and the claimants should file their
claims for said refund with the appropriate government
agencies;
(2) the claimants failed to establish that they are entitled
to the claims which are not based on the overseas
employment contracts nor the Amiri Decree No. 23 of
1976;
(3) that the POEA Administrator has no jurisdiction over
claims for moral and exemplary damages and nonetheless,
the basis for granting said damages was not established;
(4) that the claims for salaries corresponding to the
unexpired portion of their contract may be allowed if filed
within the three-year prescriptive period;
(5) that the allegation that complainants were prematurely
repatriated prior to the expiration of their overseas
contract was not established; and
(6) that the POEA Administrator has no jurisdiction over
the complaint for the suspension or cancellation of the
AIBC's recruitment license and the cancellation of the
accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L)
86-65-460 should have been dismissed on the ground that the claimants in
said case were also claimants in POEA Case No. (L) 84-06-555. Instead of
dismissing POEA Case No. (L) 86-65-460, the POEA just resolved the
corresponding claims in POEA Case No. (L) 84-06-555. In other words, the
POEA did not pass upon the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the
following grounds:
(1) that they were deprived by NLRC and the POEA of
their right to a speedy disposition of their cases as
guaranteed by Section 16, Article III of the 1987
Constitution. The POEA Administrator allowed private
respondents to file their answers in two years (on June 19,
1987) after the filing of the original complaint (on April 2,
1985) and NLRC, in total disregard of its own rules,
affirmed the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have
declared AIBC and BRII in default and should have
rendered summary judgment on the basis of the pleadings
and evidence submitted by claimants;
(3) the NLRC and POEA Administrator erred in not
holding that the labor cases filed by AIBC and BRII
cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims
is ten years; and
(5) that NLRC and the POEA Administrator should have
dismissed POEA Case No. L-86-05-460, the case filed by
Atty. Florante de Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the
disposition of the labor cases, considering the great
difficulty of getting all the records of the more than 1,500
claimants, the piece-meal filing of the complaints and the
addition of hundreds of new claimants by petitioners;
(2) that considering the number of complaints and
claimants, it was impossible to prepare the answers within
 the ten-day period provided in the NLRC Rules, that
when the motion to declare AIBC in default was filed on
July 19, 1987, said party had already filed its answer, and
that considering the staggering amount of the claims
(more than US$50,000,000.00) and the complicated issues
raised by the parties, the ten-day rule to answer was not
fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject
matter of the controversy — which was the applicability
of the Amiri Decree No. 23. Likewise, the nature of the
claims varied, some being based on salaries pertaining to
the unexpired portion of the contracts while others being
for pure money claims. Each claimant demanded separate
claims peculiar only to himself and depending upon the
particular circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that
prescribed by Article 291 of the Labor Code of the
Philippines (three years) and not the one prescribed by
Article 1144 of the Civil Code of the Philippines (ten
years); and
(5) that they are not concerned with the issue of whether
POEA Case No. L-86-05-460 should be dismissed, this
being a private quarrel between the two labor lawyers
(Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out
the joint manifestations and motions of AIBC and BRII dated September 2
and 11, 1992, claiming that all the claimants who entered into the
compromise agreements subject of said manifestations and motions were
his clients and that Atty. Florante M. de Castro had no right to represent
them in said agreements. He also claimed that the claimants were paid less
than the award given them by NLRC; that Atty. De Castro collected
additional attorney's fees on top of the 25% which he was entitled to
receive; and that the consent of the claimants to the compromise agreements
and quitclaims were procured by fraud (G.R. No. 104776, Rollo, pp. 838-
810). In the Resolution dated November 23, 1992, the Court denied the
motion to strike out the Joint Manifestations and Motions dated September
2 and 11, 1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to
Enforce Attorney's Lien," alleging that the claimants who entered into
compromise agreements with AIBC and BRII with the assistance of Atty.
De Castro, had all signed a retainer agreement with his law firm (G.R. No.
104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to
cite Atty. De Castro and Atty. Katz Tierra for contempt of court and for
violation of Canons 1, 15 and 16 of the Code of Professional Responsibility.
The said lawyers allegedly misled this Court, by making it appear that the
claimants who entered into the compromise agreements were represented by
Atty. De Castro, when in fact they were represented by Atty. Del Mundo
(G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against
Atty. De Castro for unethical practices and moved for the voiding of the
quitclaims submitted by some of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on
the grounds that NLRC gravely abused its discretion when it: (1) applied the
three-year prescriptive period under the Labor Code of the Philippines; and
(2) it denied the claimant's formula based on an average overtime pay of
three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during
the negotiation for an amicable settlement of their money claims in Bahrain
as shown in the Memorandum dated April 16, 1983 of the Ministry of Labor
of Bahrain (Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No.
104776 that the prescriptive period in the Labor Code of the Philippines, a
special law, prevails over that provided in the Civil Code of the Philippines,
a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method
of computing the overtime pay, BRII and AIBC claimed that they were not
bound by what appeared therein, because such memorandum was proposed
by a subordinate Bahrain official and there was no showing that it was
approved by the Bahrain Minister of Labor. Likewise, they claimed that the
averaging method was discussed in the course of the negotiation for the
amicable settlement of the dispute and any offer made by a party therein
could not be used as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused
its discretion when it: (1) enforced the provisions of the Amiri Decree No.
23 of 1976 and not the terms of the employment contracts; (2) granted
claims for holiday, overtime and leave indemnity pay and other benefits, on
evidence admitted in contravention of petitioner's constitutional right to due
process; and (3) ordered the POEA Administrator to hold new hearings for
the 683 claimants whose claims had been dismissed for lack of proof by the
POEA Administrator or NLRC itself. Lastly, they allege that assuming that
the Amiri Decree No. 23 of 1976 was applicable, NLRC erred when it did
not apply the one-year prescription provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they
disagreed as to the time that should be embraced within the prescriptive
period.
To the POEA Administrator, the prescriptive period was ten years, applying
Article 1144 of the Civil Code of the Philippines. NLRC believed
otherwise, fixing the prescriptive period at three years as provided in Article
291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking
different grounds, insisted that NLRC erred in ruling that the prescriptive
period applicable to the claims was three years, instead of ten years, as
found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive
period was one year as prescribed by the Amiri Decree No. 23 of 1976 but
he deferred to the ruling of NLRC that Article 291 of the Labor Code of the
Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor
Code) refer to those arising from the employer's violation
of the employee's right as provided by the Labor Code.
In the instant case, what the respondents violated are not
the rights of the workers as provided by the Labor Code,
but the provisions of the Amiri Decree No. 23 issued in
Bahrain, which ipso facto amended the worker's contracts
of employment. Respondents consciously failed to
conform to these provisions which specifically provide for
the increase of the worker's rate. It was only after June 30,
1983, four months after the brown builders brought a suit
against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments
in Bahrain for the new hires/renewals (Respondent's
Exhibit 7).
Hence, premises considered, the applicable law of
prescription to this instant case is Article 1144 of the Civil
Code of the Philippines, which provides:
Art. 1144. The following actions may
be brought within ten years from the
time the cause of action accrues:
(1) Upon a written contract;
 (2) Upon an obligation created by law;
Thus, herein money claims of the complainants against
the respondents shall prescribe in ten years from August
16, 1976. Inasmuch as all claims were filed within the
ten-year prescriptive period, no claim suffered the
infirmity of being prescribed (G.R. No. 104776, Rollo,
89-90).
In overruling the POEA Administrator, and holding that the prescriptive
period is three years as provided in Article 291 of the Labor Code of the
Philippines, the NLRC argued as follows:
The Labor Code provides that "all money claims arising
from employer-employee relations . . . shall be filed
within three years from the time the cause of action
accrued; otherwise they shall be forever barred" (Art. 291,
Labor Code, as amended). This three-year prescriptive
period shall be the one applied here and which should be
reckoned from the date of repatriation of each individual
complainant, considering the fact that the case is having
(sic) filed in this country. We do not agree with the POEA
Administrator that this three-year prescriptive period
applies only to money claims specifically recoverable
under the Philippine Labor Code. Article 291 gives no
such indication. Likewise, We can not consider
complainants' cause/s of action to have accrued from a
violation of their employment contracts. There was no
violation; the claims arise from the benefits of the law of
the country where they worked. (G.R. No. 104776, Rollo,
pp.
90-91).
Anent the applicability of the one-year prescriptive period as provided by
the Amiri Decree No. 23 of 1976, NLRC opined that the applicability of
said law was one of characterization, i.e., whether to characterize the
foreign law on prescription or statute of limitation as "substantive" or
"procedural." NLRC cited the decision in Bournias v. Atlantic Maritime
Company (220 F. 2d. 152, 2d Cir. [1955], where the issue was the
applicability of the Panama Labor Code in a case filed in the State of New
York for claims arising from said Code. In said case, the claims would have
prescribed under the Panamanian Law but not under the Statute of
Limitations of New York. The U.S. Circuit Court of Appeals held that the
Panamanian Law was procedural as it was not "specifically intended to be
substantive," hence, the prescriptive period provided in the law of the forum
should apply. The Court observed:
. . . And where, as here, we are dealing with a statute of
limitations of a foreign country, and it is not clear on the
face of the statute that its purpose was to limit the
enforceability, outside as well as within the foreign
country concerned, of the substantive rights to which the
statute pertains, we think that as a yardstick for
determining whether that was the purpose this test is the
most satisfactory one. It does not lead American courts
into the necessity of examining into the unfamiliar
peculiarities and refinements of different foreign legal
systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the libelant is
entitled to succeed, for the respondents have failed to
satisfy us that the Panamanian period of limitation in
question was specifically aimed against the particular
rights which the libelant seeks to enforce. The Panama
Labor Code is a statute having broad objectives, viz: "The
present Code regulates the relations between capital and
labor, placing them on a basis of social justice, so that,
without injuring any of the parties, there may be
guaranteed for labor the necessary conditions for a normal
life and to capital an equitable return to its investment." In
pursuance of these objectives the Code gives laborers
various rights against their employers. Article 623
establishes the period of limitation for all such rights,
except certain ones which are enumerated in Article 621.
 And there is nothing in the record to indicate that the
Panamanian legislature gave special consideration to the
impact of Article 623 upon the particular rights sought to
be enforced here, as distinguished from the other rights to
which that Article is also applicable. Were we confronted
with the question of whether the limitation period of
Article 621 (which carves out particular rights to be
governed by a shorter limitation period) is to be regarded
as "substantive" or "procedural" under the rule of
"specifity" we might have a different case; but here on the
surface of things we appear to be dealing with a "broad,"
and not a "specific," statute of limitations (G.R. No.
104776, Rollo, pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the
Labor Code of the Philippines, which was applied by NLRC, refers only to
claims "arising from the employer's violation of the employee's right as
provided by the Labor Code." They assert that their claims are based on the
violation of their employment contracts, as amended by the Amiri Decree
No. 23 of 1976 and therefore the claims may be brought within ten years as
provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R.
Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines,
Inc., 70 SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed
under the Amiri Decree No. 23 of 1976, argue that there is in force in the
Philippines a "borrowing law," which is Section 48 of the Code of Civil
Procedure and that where such kind of law exists, it takes precedence over
the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of
action based on the Amiri Decree No. 23 of 1976 or a Philippine law on
prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not
be actionable after the lapse of one year from the date of
the expiry of the contract. (G.R. Nos. 105029-31, Rollo, p.
226).
As a general rule, a foreign procedural law will not be applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum.
This is true even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private
International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the
sense that it may be viewed either as procedural or substantive, depending
on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court
applied the statute of limitations of New York, instead of the Panamanian
law, after finding that there was no showing that the Panamanian law on
prescription was intended to be substantive. Being considered merely a
procedural law even in Panama, it has to give way to the law of the forum
on prescription of actions.
However, the characterization of a statute into a procedural or substantive
law becomes irrelevant when the country of the forum has a "borrowing
statute." Said statute has the practical effect of treating the foreign statute of
limitation as one of substance (Goodrich, Conflict of Laws 152-153 [1938]).
A "borrowing statute" directs the state of the forum to apply the foreign
statute of limitations to the pending claims based on a foreign law (Siegel,
Conflicts, 183 [1975]). While there are several kinds of "borrowing
statutes," one form provides that an action barred by the laws of the place
where it accrued, will not be enforced in the forum even though the local
statute has not run against it (Goodrich and Scoles, Conflict of Laws, 152-
153 [1938]). Section 48 of our Code of Civil Procedure is of this kind. Said
Section provides:
If by the laws of the state or country where the cause of
action arose, the action is barred, it is also barred in the
Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions of the
Code of Civil Procedures as to which were inconsistent with it. There is no
provision in the Civil Code of the Philippines, which is inconsistent with or
contradictory to Section 48 of the Code of Civil Procedure (Paras,
Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be
enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the
forum's public policy (Canadian Northern Railway Co. v. Eggen, 252 U.S.
553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the one-year
prescriptive period of the Amiri Decree No. 23 of 1976 as regards the
claims in question would contravene the public policy on the protection to
labor.
In the Declaration of Principles and State Policies, the 1987 Constitution
emphasized that:
The state shall promote social justice in all phases of
national development. (Sec. 10).
The state affirms labor as a primary social economic
force. It shall protect the rights of workers and promote
their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987 Constitution
provides:
Sec. 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote
full employment and equality of employment
opportunities for all.
Having determined that the applicable law on prescription is the Philippine
law, the next question is whether the prescriptive period governing the filing
of the claims is three years, as provided by the Labor Code or ten years, as
provided by the Civil Code of the Philippines.
The claimants are of the view that the applicable provision is Article 1144
of the Civil Code of the Philippines, which provides:
The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is Article
291 of the Labor Code of the Philippines, which in pertinent part provides:
Money claims-all money claims arising from employer-
employee relations accruing during the effectivity of this
Code shall be filed within three (3) years from the time
the cause of action accrued, otherwise they shall be
forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine Air
Lines, Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R. Nos.
104911-14 is inapplicable to the cases at bench (Rollo, p. 21). The said case
involved the correct computation of overtime pay as provided in the
collective bargaining agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any
reference as to the computation for overtime work under the Eight-Hour
Labor Law (Secs. 3 and 4, CA No. 494) and instead insisted that work
computation provided in the collective bargaining agreements between the
parties be observed. Since the claim for pay differentials is primarily
anchored on the written contracts between the litigants, the ten-year
prescriptive period provided by Art. 1144(1) of the New Civil Code should
govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A.
No. 19933) provides:
Any action to enforce any cause of action under this Act
shall be commenced within three years after the cause of
action accrued otherwise such action shall be forever
barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour
Labor Law (CA No. 444 as amended) will apply, if the
claim for differentials for overtime work is solely based
on said law, and not on a collective bargaining agreement
or any other contract. In the instant case, the claim for
overtime compensation is not so much because of
Commonwealth Act No. 444, as amended but because the
claim is demandable right of the employees, by reason of
the above-mentioned collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period
for filing "actions to enforce any cause of action under said law." On the
other hand, Article 291 of the Labor Code of the Philippines provides the
prescriptive period for filing "money claims arising from employer-
employee relations." The claims in the cases at bench all arose from the
employer-employee relations, which is broader in scope than claims arising
from a specific law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive
period under Article 291 of the Labor Code of the Philippines applies only
to money claims specifically recoverable under said Code, does not find
support in the plain language of the provision. Neither is the contention of
the claimants in G.R. Nos. 104911-14 that said Article refers only to claims
"arising from the employer's violation of the employee's right," as provided
by the Labor Code supported by the facial reading of the provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants
aver: (1) that while their complaints were filed on June 6, 1984 with POEA,
the case was decided only on January 30, 1989, a clear denial of their right
to a speedy disposition of the case; and (2) that NLRC and the POEA
Administrator should have declared AIBC and BRII in default (Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution,
which provides:
Sec. 16. All persons shall have the right to a speedy
disposition of their cases before all judicial, quasi-judicial,
or administrative bodies.
It is true that the constitutional right to "a speedy disposition of cases" is not
limited to the accused in criminal proceedings but extends to all parties in
all cases, including civil and administrative cases, and in all proceedings,
including judicial and quasi-judicial hearings. Hence, under the
Constitution, any party to a case may demand expeditious action on all
officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987),
"speedy disposition of cases" is a relative term. Just like the constitutional
guarantee of "speedy trial" accorded to the accused in all criminal
proceedings, "speedy disposition of cases" is a flexible concept. It is
consistent with delays and depends upon the circumstances of each case.
What the Constitution prohibits are unreasonable, arbitrary and oppressive
delays which render rights nugatory.
Caballero laid down the factors that may be taken into consideration in
determining whether or not the right to a "speedy disposition of cases" has
been violated, thus:
 In the determination of whether or not the right to a
"speedy trial" has been violated, certain factors may be
considered and balanced against each other. These are
length of delay, reason for the delay, assertion of the right
or failure to assert it, and prejudice caused by the delay.
The same factors may also be considered in answering
judicial inquiry whether or not a person officially charged
with the administration of justice has violated the speedy
disposition of cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
It must be here emphasized that the right to a speedy
disposition of a case, like the right to speedy trial, is
deemed violated only when the proceeding is attended by
vexatious, capricious, and oppressive delays; or when
unjustified postponements of the trial are asked for and
secured, or when without cause or justified motive a long
period of time is allowed to elapse without the party
having his case tried.
The claimants were hired on various dates from 1975 to 1983. They were
deployed in different areas, one group in and the other groups outside of,
Bahrain. The monetary claims totalling more than US$65 million according
to Atty. Del Mundo, included:
1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of
basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;

Since July 25, 1984 or a month after AIBC and BRII were served with a 8. Wage Differential pay;
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- 9. Refund of SSS premiums not remitted to Social
day period provided in Section 1, Rule III of Book VI of the Rules and Security System;
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
10. Refund of Withholding Tax not remitted to Bureau of
"Compliance" of claimants to the order of the POEA, requiring them to
Internal Revenue (B.I.R.);
submit a bill of particulars.
11. Fringe Benefits under Brown & Root's "A Summary
The cases at bench are not of the run-of-the-mill variety, such that their final
of Employees Benefits consisting of 43 pages (Annex "Q"
disposition in the administrative level after seven years from their inception,
of Amended Complaint);
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. 12. Moral and Exemplary Damages;

The amended complaint filed on June 6, 1984 involved a total of 1,767 13. Attorney's fees of at least ten percent of amounts;
claimants. Said complaint had undergone several amendments, the first
being on April 3, 1985.
 14. Other reliefs, like suspending and/or cancelling the
license to recruit of AIBC and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited
practices) not excluding reportorial requirements thereof
(NLRC Resolution, September 2, 1991, pp. 18-19; G.R.
No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness and
clarity of some facts, the claimants were ordered to comply with the motion
of AIBC for a bill of particulars. When claimants filed their "Compliance
and Manifestation," AIBC moved to strike out the complaint from the
records for failure of claimants to submit a proper bill of particulars. While
the POEA Administrator denied the motion to strike out the complaint, he
ordered the claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the
records of employment of the more than 1,700 claimants had to be retrieved
from various countries in the Middle East. Some of the records dated as far
back as 1975.
The hearings on the merits of the claims before the POEA Administrator
were interrupted several times by the various appeals, first to NLRC and
then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases were filed
against AIBC and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29,
1986 (POEA Case No. L-86-05-460). NLRC, in exasperation, noted that the
exact number of claimants had never been completely established
(Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p. 57). All the three
new cases were consolidated with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the
proceedings, thus:
These cases could have been spared the long and arduous
route towards resolution had the parties and their counsel
been more interested in pursuing the truth and the merits
of the claims rather than exhibiting a fanatical reliance on
technicalities. Parties and counsel have made these cases a
litigation of emotion. The intransigence of parties and
counsel is remarkable. As late as last month, this
Commission made a last and final attempt to bring the
counsel of all the parties (this Commission issued a
special order directing respondent Brown & Root's
resident agent/s to appear) to come to a more conciliatory
stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the
disposition of the cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in
these consolidated cases appear to be not only the
individual complainants, on the one hand, and AIBC and
Brown & Root, on the other hand. The two lawyers for
the complainants, Atty. Gerardo Del Mundo and Atty.
Florante De Castro, have yet to settle the right of
representation, each one persistently claiming to appear in
behalf of most of the complainants. As a result, there are
two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of
their respective authority to represent the complainants
prove futile. The bickerings by these two counsels are
reflected in their pleadings. In the charges and
countercharges of falsification of documents and
signatures, and in the disbarment proceedings by one
against the other. All these have, to a large extent, abetted
in confounding the issues raised in these cases, jumble the
presentation of evidence, and even derailed the prospects
of an amicable settlement. It would not be far-fetched to
imagine that both counsel, unwittingly, perhaps, painted a
rainbow for the complainants, with the proverbial pot of
gold at its end containing more than US$100 million, the
aggregate of the claims in these cases. It is, likewise, not
improbable that their misplaced zeal and exuberance
caused them to throw all caution to the wind in the matter
 of elementary rules of procedure and evidence (Rollo, pp.
58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of
some of the complainants in both petitions filed by the two lawyers. As
noted by NLRC, "the problem created by this situation is that if one of the
two petitions is dismissed, then the parties and the public respondents would
not know which claim of which petitioner was dismissed and which was
not."
B. Claimants insist that all their claims could properly be consolidated in a
"class suit" because "all the named complainants have similar money claims
and similar rights sought irrespective of whether they worked in Bahrain,
United Arab Emirates or in Abu Dhabi, Libya or in any part of the Middle
East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of
common or general interest to many and the parties are so numerous that it
is impracticable to bring them all before the court (Revised Rules of Court,
Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law, many
of the claimants worked outside Bahrain. Some of the claimants were
deployed in Indonesia and Malaysia under different terms and conditions of
employment.
NLRC and the POEA Administrator are correct in their stance that
inasmuch as the first requirement of a class suit is not present (common or
general interest based on the Amiri Decree of the State of Bahrain), it is
only logical that only those who worked in Bahrain shall be entitled to file
their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the
claims is the same (for employee's benefits), there is no common question
of law or fact. While some claims are based on the Amiri Law of Bahrain,
many of the claimants never worked in that country, but were deployed
elsewhere. Thus, each claimant is interested only in his own demand and
not in the claims of the other employees of defendants. The named
claimants have a special or particular interest in specific benefits completely
different from the benefits in which the other named claimants and those
included as members of a "class" are claiming (Berses v. Villanueva, 25
Phil. 473 [1913]). It appears that each claimant is only interested in
collecting his own claims. A claimants has no concern in protecting the
interests of the other claimants as shown by the fact, that hundreds of them
have abandoned their co-claimants and have entered into separate
compromise settlements of their respective claims. A principle basic to the
concept of "class suit" is that plaintiffs brought on the record must fairly
represent and protect the interests of the others (Dimayuga v. Court of
Industrial Relations, 101 Phil. 590 [1957]). For this matter, the claimants
who worked in Bahrain can not be allowed to sue in a class suit in a judicial
proceeding. The most that can be accorded to them under the Rules of Court
is to be allowed to join as plaintiffs in one complaint (Revised Rules of
Court, Rule 3, Sec. 6).
The Court is extra-cautious in allowing class suits because they are the
exceptions to the condition sine qua non, requiring the joinder of all
indispensable parties.
In an improperly instituted class suit, there would be no problem if the
decision secured is favorable to the plaintiffs. The problem arises when the
decision is adverse to them, in which case the others who were impleaded
by their self-appointed representatives, would surely claim denial of due
process.
C. The claimants in G.R. No. 104776 also urged that the POEA
Administrator and NLRC should have declared Atty. Florante De Castro
guilty of "forum shopping, ambulance chasing activities, falsification,
duplicity and other unprofessional activities" and his appearances as counsel
for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to
put a stop to the practice of some parties of filing multiple petitions and
complaints involving the same issues, with the result that the courts or
agencies have to resolve the same issues. Said Rule, however, applies only
to petitions filed with the Supreme Court and the Court of Appeals. It is
entitled "Additional Requirements For Petitions Filed with the Supreme
Court and the Court of Appeals To Prevent Forum Shopping or Multiple
Filing of Petitioners and Complainants." The first sentence of the circular
expressly states that said circular applies to an governs the filing of petitions
in the Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the
anti-forum shopping rule to the lower courts and administrative agencies,
said circular took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical
conduct against Atty. De Castro because NLRC and POEA have no
jurisdiction to investigate charges of unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14,
1992 was filed by Atty. Gerardo A. Del Mundo to protect his claim for
attorney's fees for legal services rendered in favor of the claimants (G.R.
No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or
administrative agency which renders and executes the money judgment
secured by the lawyer for his clients. The lawyer shall cause written notice
thereof to be delivered to his clients and to the adverse party (Revised Rules
of Court, Rule 138, Sec. 37). The statement of the claim for the charging
lien of Atty. Del Mundo should have been filed with the administrative
agency that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De
Castro and Atty. Katz Tierra for violation of the Code of Professional
Responsibility should be filed in a separate and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting
their formula of "Three Hours Average Daily Overtime" in computing the
overtime payments. They claim that it was BRII itself which proposed the
formula during the negotiations for the settlement of their claims in Bahrain
and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain
dated April 16, 1983, which in pertinent part states:
After the perusal of the memorandum of the Vice
President and the Area Manager, Middle East, of Brown
& Root Co. and the Summary of the compensation offered
by the Company to the employees in respect of the
difference of pay of the wages of the overtime and the
difference of vacation leave and the perusal of the
documents attached thereto i.e., minutes of the meetings
between the Representative of the employees and the
management of the Company, the complaint filed by the
employees on 14/2/83 where they have claimed as
hereinabove stated, sample of the Service Contract
executed between one of the employees and the company
through its agent in (sic) Philippines, Asia International
Builders Corporation where it has been provided for 48
hours of work per week and an annual leave of 12 days
and an overtime wage of 1 & 1/4 of the normal hourly
wage.
xxx xxx xxx
The Company in its computation reached the following
averages:
A. 1. The average duration of the actual service of the
employee is 35 months for the Philippino (sic) employees
....
2. The average wage per hour for the Philippino (sic)
employee is US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in
all public holidays and weekends.
 4. Payment of US$8.72 per months (sic) of service as
compensation for the difference of the wages of the
overtime done for each Philippino (sic) employee . . .
(Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by
them but by a subordinate official in the Bahrain Department of Labor; (2)
that there was no showing that the Bahrain Minister of Labor had approved
said memorandum; and (3) that the offer was made in the course of the
negotiation for an amicable settlement of the claims and therefore it was not
admissible in evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing the rule
on presenting official documents of a foreign government as provided in
Section 24, Rule 132 of the 1989 Revised Rules on Evidence, it can be
admitted in evidence in proceedings before an administrative body. The
opposing parties have a copy of the said memorandum, and they could
easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as contained in
the memorandum is another matter. Under Section 27, Rule 130 of the 1989
Revised Rules on Evidence, an offer to settle a claim is not an admission
that anything is due.
Said Rule provides:
Offer of compromise not admissible. — In civil cases, an
offer of compromise is not an admission of any liability,
and is not admissible in evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record
with unwanted evidence but a statement of public policy. There is great
public interest in having the protagonists settle their differences amicable
before these ripen into litigation. Every effort must be taken to encourage
them to arrive at a settlement. The submission of offers and counter-offers
in the negotiation table is a step in the right direction. But to bind a party to
his offers, as what claimants would make this Court do, would defeat the
salutary purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for
greater benefits than those stipulated in the overseas-employment contracts
of the claimants. It was of the belief that "where the laws of the host country
are more favorable and beneficial to the workers, then the laws of the host
country shall form part of the overseas employment contract." It quoted
with approval the observation of the POEA Administrator that ". . . in labor
proceedings, all doubts in the implementation of the provisions of the Labor
Code and its implementing regulations shall be resolved in favor of labor"
(Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when
it refused to enforce the overseas-employment contracts, which became the
law of the parties. They contend that the principle that a law is deemed to be
a part of a contract applies only to provisions of Philippine law in relation to
contracts executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC and
BRII themselves, provided that the laws of the host country became
applicable to said contracts if they offer terms and conditions more
favorable that those stipulated therein. It was stipulated in said contracts
that:
The Employee agrees that while in the employ of the
Employer, he will not engage in any other business or
occupation, nor seek employment with anyone other than
the Employer; that he shall devote his entire time and
attention and his best energies, and abilities to the
performance of such duties as may be assigned to him by
the Employer; that he shall at all times be subject to the
direction and control of the Employer; and that the
benefits provided to Employee hereunder are substituted
for and in lieu of all other benefits provided by any
applicable law, provided of course, that total
remuneration and benefits do not fall below that of the
host country regulation or custom, it being understood
that should applicable laws establish that fringe benefits,
or other such benefits additional to the compensation
 herein agreed cannot be waived, Employee agrees that
such compensation will be adjusted downward so that the
total compensation hereunder, plus the non-waivable
benefits shall be equivalent to the compensation herein
agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more
felicitously. While a part thereof provides that the compensation to the
employee may be "adjusted downward so that the total computation
(thereunder) plus the non-waivable benefits shall be equivalent to the
compensation" therein agreed, another part of the same provision
categorically states "that total remuneration and benefits do not fall below
that of the host country regulation and custom."
Any ambiguity in the overseas-employment contracts should be interpreted
against AIBC and BRII, the parties that drafted it (Eastern Shipping Lines,
Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the
obscurity.
Said rule of interpretation is applicable to contracts of adhesion where there
is already a prepared form containing the stipulations of the employment
contract and the employees merely "take it or leave it." The presumption is
that there was an imposition by one party against the other and that the
employees signed the contracts out of necessity that reduced their
bargaining power (Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70
[1968]).
Applying the said legal precepts, we read the overseas-employment
contracts in question as adopting the provisions of the Amiri Decree No. 23
of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be governed
(Cheshire, Private International Law, 187 [7th ed.]). In such a case, the
foreign law is adopted as a "system" to regulate the relations of the parties,
including questions of their capacity to enter into the contract, the
formalities to be observed by them, matters of performance, and so forth (16
Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may just
agree that specific provisions of a foreign statute shall be deemed
incorporated into their contract "as a set of terms." By such reference to the
provisions of the foreign law, the contract does not become a foreign
contract to be governed by the foreign law. The said law does not operate as
a statute but as a set of contractual terms deemed written in the contract
(Anton, Private International Law, 197 [1967]; Dicey and Morris, The
Conflict of Laws, 702-703, [8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese,
Choice of Law in Torts and Contracts, 16 Columbia Journal of
Transnational Law 1, 21 [1977]). Such party expectation is protected by
giving effect to the parties' own choice of the applicable law (Fricke v.
Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law
must, however, bear some relationship to the parties or their transaction
(Scoles and Hayes, Conflict of Law 644-647 [1982]). There is no question
that the contracts sought to be enforced by claimants have a direct
connection with the Bahrain law because the services were rendered in that
country.
In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA
486 (1982), the "Employment Agreement," between Norse Management
Co. and the late husband of the private respondent, expressly provided that
in the event of illness or injury to the employee arising out of and in the
course of his employment and not due to his own misconduct,
"compensation shall be paid to employee in accordance with and subject to
the limitation of the Workmen's Compensation Act of the Republic of the
Philippines or the Worker's Insurance Act of registry of the vessel,
whichever is greater." Since the laws of Singapore, the place of registry of
the vessel in which the late husband of private respondent served at the time
of his death, granted a better compensation package, we applied said foreign
law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor
Relations Commission, 135 SCRA 278 (1985), relied upon by AIBC and
BRII is inapposite to the facts of the cases at bench. The issue in that case
was whether the amount of the death compensation of a Filipino seaman
should be determined under the shipboard employment contract executed in
the Philippines or the Hongkong law. Holding that the shipboard
employment contract was controlling, the court differentiated said case from
Norse Management Co. in that in the latter case there was an express
stipulation in the employment contract that the foreign law would be
applicable if it afforded greater compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right to
due process when said administrative agency granted Friday-pay
differential, holiday-pay differential, annual-leave differential and leave
indemnity pay to the claimants listed in Annex B of the Resolution. At first,
NLRC reversed the resolution of the POEA Administrator granting these
benefits on a finding that the POEA Administrator failed to consider the
evidence presented by AIBC and BRII, that some findings of fact of the
POEA Administrator were not supported by the evidence, and that some of
the evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-
107). But instead of remanding the case to the POEA Administrator for a
new hearing, which means further delay in the termination of the case,
NLRC decided to pass upon the validity of the claims itself. It is this
procedure that AIBC and BRII complain of as being irregular and a
"reversible error."
They pointed out that NLRC took into consideration evidence submitted on
appeal, the same evidence which NLRC found to have been "unilaterally
submitted by the claimants and not disclosed to the adverse parties" (Rollo,
pp. 37-39).
NLRC noted that so many pieces of evidentiary matters were submitted to
the POEA administrator by the claimants after the cases were deemed
submitted for resolution and which were taken cognizance of by the POEA
Administrator in resolving the cases. While AIBC and BRII had no
opportunity to refute said evidence of the claimants before the POEA
Administrator, they had all the opportunity to rebut said evidence and to
present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII
themselves were able to present before NLRC additional evidence which
they failed to present before the POEA Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined
to "use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process."
In deciding to resolve the validity of certain claims on the basis of the
evidence of both parties submitted before the POEA Administrator and
NLRC, the latter considered that it was not expedient to remand the cases to
the POEA Administrator for that would only prolong the already protracted
legal controversies.
Even the Supreme Court has decided appealed cases on the merits instead of
remanding them to the trial court for the reception of evidence, where the
same can be readily determined from the uncontroverted facts on record
(Development Bank of the Philippines v. Intermediate Appellate Court, 190
SCRA 653 [1990]; Pagdonsalan v. National Labor Relations Commission,
127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it
ordered the POEA Administrator to hold new hearings for 683 claimants
listed in Annex D of the Resolution dated September 2, 1991 whose claims
had been denied by the POEA Administrator "for lack of proof" and for 69
claimants listed in Annex E of the same Resolution, whose claims had been
found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the
Philippines, which empowers it "[to] conduct investigation for the
determination of a question, matter or controversy, within its jurisdiction, . .
. ."
It is the posture of AIBC and BRII that NLRC has no authority under
Article 218(c) to remand a case involving claims which had already been
dismissed because such provision contemplates only situations where there
is still a question or controversy to be resolved (Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules
of procedure and evidence do not apply to the proceedings conducted by
administrative agencies (First Asian Transport & Shipping Agency, Inc. v.
Ople, 142 SCRA 542 [1986]; Asiaworld Publishing House, Inc. v. Ople,
152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the
Labor Code of the Philippines and is now the bedrock of proceedings before
NLRC.
Notwithstanding the non-applicability of technical rules of procedure and
evidence in administrative proceedings, there are cardinal rules which must
be observed by the hearing officers in order to comply with the due process
requirements of the Constitution. These cardinal rules are collated in Ang
Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court
on the grounds that NLRC had committed grave abuse of discretion
amounting to lack of jurisdiction in issuing the questioned orders. We find
no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED
G.R. No. 133876 December 29, 1999
BANK OF AMERICA, NT and SA, petitioner,
vs.
AMERICAN REALTY CORPORATION and COURT OF APPEALS,
respondents.
BUENA, J.:
Does a mortgage-creditor waive its remedy to foreclose the real estate
mortgage constituted over a third party mortgagor's property situated in the
Philippines by filing an action for the collection of the principal loan before
foreign courts?
Sought to be reversed in the instant petition for review on certiorari under
Rule 45 of the Rules of Court are the decision 1 of public respondent Court
of Appeals in CA G.R. CV No. 51094, promulgated on 30 September 1997
and its resolution, 2 dated 22 May 1998, denying petitioner's motion for
reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international
banking and financing institution duly licensed to do business in the
Philippines, organized and existing under and by virtue of the laws of the
State of California, United States of America while private respondent
American Realty Corporation (ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a
limited liability company organized and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted
three major multi-million United States (US) Dollar loans to the following
corporate borrowers: (1) Liberian Transport Navigation, S.A.; (2) El
Challenger S.A. and (3) Eshley Compania Naviera S.A. (hereinafter
collectively referred to as "borrowers"), all of which are existing under and
by virtue of the laws of the Republic of Panama and are foreign affiliates of
private
respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and
the corporate borrowers signed and entered into restructuring agreements.
As additional security for the restructured loans, private respondent ARC as
third party mortgagor executed two real estate mortgages, 4 dated 17
February 1983 and 20 July 1984, over its parcels of land including
improvements thereon, located at Barrio Sto. Cristo, San Jose Del Monte,
Bulacan, and which are covered by Transfer Certificate of Title Nos. T-
78759, T-78760, T-78761, T-78762 and T-78763.
Eventually, the corporate borrowers defaulted in the payment of the
restructured loans prompting petitioner BANTSA to file civil actions 5
before foreign courts for the collection of the principal loan, to wit:
a) In England, in its High Court of
Justice, Queen's Bench Division,
Commercial Court (1992-Folio No
2098) against Liberian Transport
Navigation S.A., Eshley Compania
Naviera S.A., El Challenger S.A.,
Espriona Shipping Company S.A.,
Eddie Navigation Corp., S.A., Eduardo
Katipunan Litonjua and Aurelio
Katipunan Litonjua on June 17, 1992.
b) In England, in its High Court of
Justice, Queen's Bench Division,
Commercial Court (1992-Folio No.
2245) against El Challenger S.A.,
Espriona Shipping Company S.A.,
Eduardo Katipuan Litonjua & Aurelio
Katipunan Litonjua on July 2, 1992;
c) In Hongkong, in the Supreme Court
of Hongkong High Court (Action No.
4039 of 1992) against Eshley Compania
Naviera S.A., El Challenger S.A.,
Espriona Shipping Company S.A.
Pacific Navigators Corporation, Eddie
Navigation Corporation S.A., Litonjua
Chartering (Edyship) Co., Inc., Aurelio
Katipunan Litonjua, Jr. and Eduardo
Katipunan Litonjua on November 19,
1992; and
d) In Hongkong, in the Supreme Court
of Hongkong High Court (Action No.
4040 of 1992) against Eshley Compania
Naviera S.A., El Challenger S.A.,
Espriona Shipping Company, S.A.,
Pacific Navigators Corporation, Eddie
Navigation Corporation S.A., Litonjua
Chartering (Edyship) Co., Jr. and
Eduardo Katipunan Litonjua on
November 21, 1992.
In the civil suits instituted before the foreign courts, private respondent
ARC, being a third party mortgagor, was private not impleaded as party-
defendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the
Provincial Sheriff of Bulacan, Philippines an application for extrajudicial
foreclosure 6 of real estate mortgage.
On 22 January 1993, after due publication and notice, the mortgaged real
properties were sold at public auction in an extrajudicial foreclosure sale,
with Integrated Credit and Corporation Services Co (ICCS) as the highest
bidder for the sum of Twenty four Million Pesos (P24,000.000.00). 7
On 12 February 1993, private respondent filed before the Pasig Regional
Trial Court, Branch 159, an action for damages 8 against the petitioner, for
the latter's act of foreclosing extrajudicially the real estate mortgages despite
the pendency of civil suits before foreign courts for the collection of the
principal loan.
In its answer 9 petitioner alleged that the rule prohibiting the mortgagee
from foreclosing the mortgage after an ordinary suit for collection has been
filed, is not applicable in the present case, claiming that:
a) The plaintiff, being a mere third party mortgagor and
not a party to the principal restructuring agreements, was
never made a party defendant in the civil cases filed in
Hongkong and England;
b) There is actually no civil suit for sum of money filed in
the Philippines since the civil actions were filed in
Hongkong and England. As such, any decisions (sic)
which may be rendered in the abovementioned courts are
not (sic) enforceable in the Philippines unless a separate
action to enforce the foreign judgments is first filed in the
Philippines, pursuant to Rule 39, Section 50 of the
Revised Rules of Court.
 c) Under English Law, which is the governing law under
the principal agreements, the mortgagee does not lose its
security interest by filing civil actions for sums of money.
On 14 December 1993, private respondent filed a motion for
suspension 10 of the redemption period on the ground that "it cannot
exercise said right of redemption without at the same time waiving or
contradicting its contentions in the case that the foreclosure of the mortgage
on its properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private
respondent's motion for suspension after which a copy of said order was
duly received by the Register of Deeds of Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at
the foreclosure sale, consolidated its ownership over the real properties,
resulting to the issuance of Transfer Certificate of Title Nos. T-18627, T-
186272, T-186273, T-16471 and T-16472 in its name.
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.

On 18 March 1994, after the consolidation of ownership in its favor, ICCS

sold the real properties to Stateland Investment Corporation for the amount
of Thirty Nine Million Pesos (P39,000,000.00). 12 Accordingly, Transfer
Certificate of Title Nos. T-187781(m), T-187782(m), T-187783(m), T-
16653P(m) and T-16652P(m) were issued in the latter's name.
After trial, the lower court rendered a decision 13 in favor of private
respondent ARC dated 12 May 1993, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered declaring
that the filing in foreign courts by the defendant of
collection suits against the principal debtors operated as a
waiver of the security of the mortgages. Consequently, the
plaintiff's rights as owner and possessor of the properties
then covered by Transfer Certificates of Title Nos. T-
78759, T-78762, T-78763, T-78760 and T-78761, all of
the Register of Deeds of Meycauayan, Bulacan,
Philippines, were violated when the defendant caused the
extrajudicial foreclosure of the mortgages constituted
thereon.
Hence, the instant petition for review 14 on certiorari where herein
petitioner BANTSA ascribes to the Court of Appeals the following
assignment of errors:
1. The Honorable Court of Appeals
disregarded the doctrines laid down by
this Hon. Supreme Court in the cases of
Caltex Philippines, Inc. vs. Intermediate
Appellate Court docketed as G.R. No.
74730 promulgated on August 25, 1989
and Philippine Commercial
International Bank vs. IAC, 196 SCRA
29 (1991 case), although said cases
were duly cited, extensively discussed
and specifically mentioned, as one of
the issues in the assignment of errors
found on page 5 of the decision dated
September 30, 1997.
 2. The Hon. Court of Appeals acted
with grave abuse of discretion when it
awarded the private respondent actual
and exemplary damages totalling
P171,600,000.00, as of July 12, 1998
although such huge amount was not
asked nor prayed for in private
respondent's complaint, is contrary to
law and is totally unsupported by
evidence (sic).
In fine, this Court is called upon to resolve two main issues:
1. Whether or not the petitioner's act of
filing a collection suit against the
principal debtors for the recovery of the
loan before foreign courts constituted a
waiver of the remedy of foreclosure.
2. Whether or not the award by the
lower court of actual and exemplary
damages in favor of private respondent
ARC, as third-party mortgagor, is
proper.
The petition is bereft of merit.
First, as to the issue of availability of remedies, petitioner submits that a
waiver of the remedy of foreclosure requires the concurrence of two
requisites: an ordinary civil action for collection should be filed and
subsequently a final judgment be correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect the
principal loan does not suffice; a final judgment must be secured and
obtained in the personal action so that waiver of the remedy of foreclosure
may be appreciated. To put it differently, absent any of the two requisites,
the mortgagee-creditor is deemed not to have waived the remedy of
foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the
jurisprudence laid down in Bachrach 15 and similar cases adjudicated
thereafter, thus:
In the absence of express statutory provisions, a mortgage
creditor may institute against the mortgage debtor either a
personal action or debt or a real action to foreclose the
mortgage. In other words, he may he may pursue either of
the two remedies, but not both. By such election, his
cause of action can by no means be impaired, for each of
the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the
properties of the debtor for attachment and execution,
even including the mortgaged property itself. And, if he
waives such personal action and pursues his remedy
against the mortgaged property, an unsatisfied judgment
thereon would still give him the right to sue for a
deficiency judgment, in which case, all the properties of
the defendant, other than the mortgaged property, are
again open to him for the satisfaction of the deficiency. In
either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit
of one or the other remedy are purely accidental and are
all under his right of election. On the other hand, a rule
that would authorize the plaintiff to bring a personal
action against the debtor and simultaneously or
successively another action against the mortgaged
property, would result not only in multiplicity of suits so
offensive to justice (Soriano vs. Enriques, 24 Phil. 584)
and obnoxious to law and equity (Osorio vs. San Agustin,
25 Phil., 404), but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of
the residence of the plaintiff, and then again in the place
where the property lies.
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence
enunciated in Manila Trading and Supply Co vs. Co Kim 17 and Movido vs.
RFC, 18 invariably held:
 . . . The rule is now settled that a mortgage creditor may
elect to waive his security and bring, instead, an ordinary
action to recover the indebtedness with the right to
execute a judgment thereon on all the properties of the
debtor, including the subject matter of the mortgage . . . ,
subject to the qualification that if he fails in the remedy by
him elected, he cannot pursue further the remedy he has
waived. (Emphasis Ours)
Anent real properties in particular, the Court has laid down the rule that a
mortgage creditor may institute against the mortgage debtor either a
personal action for debt or a real action to foreclose the mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are
deemed alternative and not cumulative. Notably, an election of one remedy
operates as a waiver of the other. For this purpose, a remedy is deemed
chosen upon the filing of the suit for collection or upon the filing of the
complaint in an action for foreclosure of mortgage, pursuant to the
provision of Rule 68 of the of the 1997 Rules of Civil Procedure. As to
extrajudicial foreclosure, such remedy is deemed elected by the mortgage
creditor upon filing of the petition not with any court of justice but with the
Office of the Sheriff of the province where the sale is to be made, in
accordance with the provisions of Act No. 3135, as amended by Act No.
4118.
In the case at bench, private respondent ARC constituted real estate
mortgages over its properties as security for the debt of the principal
debtors. By doing so, private respondent subjected itself to the liabilities of
a third party mortgagor. Under the law, third persons who are not parties to
a loan may secure the latter by pledging or mortgaging their own property.
20
Notwithstanding, there is no legal provision nor jurisprudence in our
jurisdiction which makes a third person who secures the fulfillment of
another's obligation by mortgaging his own property, to be solidarily bound
with the principal obligor. The signatory to the principal contract—loan—
remains to be primarily bound. It is only upon default of the latter that the
creditor may have recourse on the mortgagors by foreclosing the mortgaged
properties in lieu of an action for the recovery of the amount of the loan. 21
In the instant case, petitioner's contention that the requisites of filing the
action for collection and rendition of final judgment therein should concur,
is untenable.
Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in
said case, that the filing of a collection suit barred the foreclosure of the
mortgage:
A mortgagee who files a suit for collection abandons the
remedy of foreclosure of the chattel mortgage constituted
over the personal property as security for the debt or value
of the promissory note when he seeks to recover in the
said collection suit.
. . . When the mortgagee elects to file a suit for collection,
not foreclosure, thereby abandoning the chattel mortgage
as basis for relief, he clearly manifests his lack of desire
and interest to go after the mortgaged property as security
for the promissory note . . . .
Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity
and emphasis, that the mere act of filing of an ordinary action for collection
operates as a waiver of the mortgage-creditor's remedy to foreclose the
mortgage. By the mere filing of the ordinary action for collection against the
principal debtors, the petitioner in the present case is deemed to have
elected a remedy, as a result of which a waiver of the other necessarily must
arise. Corollarily, no final judgment in the collection suit is required for the
rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate-Appellate Court, 23 a
case relied upon by petitioner, supposedly to buttress its contention, this
Court had occasion to rule that the mere act of filing a collection suit for the
recovery of a debt secured by a mortgage constitutes waiver of the other
remedy of foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is
non-payment of the debt. Nevertheless, alternative remedies are available
for its enjoyment and exercise. Petitioner then may opt to exercise only one
of two remedies so as not to violate the rule against splitting a cause of
action.
As elucidated by this Court in the landmark case of Bachrach Motor Co.,
Inc, vs. Icarangal. 24
For non-payment of a note secured by mortgage, the
creditor has a single cause of action against the debtor.
This single cause of action consists in the recovery of the
credit with execution of the security. In other words, the
creditor in his action may make two demands, the
payment of the debt and the foreclosure of his mortgage.
But both demands arise from the same cause, the non-
payment of the debt, and for that reason, they constitute a
single cause of action. Though the debt and the mortgage
constitute separate agreements, the latter is subsidiary to
the former, and both refer to one and the same obligation.
Consequently, there exists only one cause of action for a
single breach of that obligation. Plaintiff, then, by
applying the rules above stated, cannot split up his single
cause of action by filing a complaint for payment of the
debt, and thereafter another complaint for foreclosure of
the mortgage. If he does so, the filing of the first
complaint will bar the subsequent complaint. By allowing
the creditor to file two separate complaints simultaneously
or successively, one to recover his credit and another to
foreclose his mortgage, we will, in effect, be authorizing
him plural redress for a single breach of contract at so
much cost to the courts and with so much vexation and
oppression to the debtor.
Petitioner further faults the Court of Appeals for allegedly disregarding the
doctrine enunciated in Caltex wherein this High Court relaxed the
application of the general rules to wit:
In the present case, however, we shall not follow this rule
to the letter but declare that it is the collection suit which
was waived and/or abandoned. This ruling is more in
harmony with the principles underlying our judicial
system. It is of no moment that the collection suit was
filed ahead, what is determinative is the fact that the
foreclosure proceedings ended even before the decision in
the collection suit was rendered. . . .
Notably, though, petitioner took the Caltex ruling out of context. We must
stress that the Caltex case was never intended to overrule the well-
entrenched doctrine enunciated Bachrach, which to our mind still finds
applicability in cases of this sort. To reiterate, Bachrach is still good law.
We then quote the decision 25 of the trial court, in the present case, thus:
The aforequoted ruling in Caltex is the exception rather
than the rule, dictated by the peculiar circumstances
obtaining therein. In the said case, the Supreme Court
chastised Caltex for making ". . . a mockery of our
judicial system when it initially filed a collection suit
then, during the pendency thereof, foreclosed
extrajudicially the mortgaged property which secured the
indebtedness, and still pursued the collection suit to the
end." Thus, to prevent a mockery of our judicial system",
the collection suit had to be nullified because the
foreclosure proceedings have already been pursued to
their end and can no longer be undone.
xxx xxx xxx
In the case at bar, it has not been shown whether the
defendant pursued to the end or are still pursuing the
collection suits filed in foreign courts. There is no
occasion, therefore, for this court to apply the exception
laid down by the Supreme Court in Caltex by nullifying
the collection suits. Quite obviously, too, the aforesaid
collection suits are beyond the reach of this Court. Thus
the only way the court may prevent the spector of a
creditor having "plural redress for a single breach of
contract" is by holding, as the Court hereby holds, that the
defendant has waived the right to foreclose the mortgages
constituted by the plaintiff on its properties originally
 covered by Transfer Certificates of Title Nos. T-78759, T-
78762, T-78760 and T-78761. (RTC Decision pp., 10-11)
In this light, the actuations of Caltex are deserving of severe criticism, to
say the least. 26
Moreover, petitioner attempts to mislead this Court by citing the case of
PCIB vs. IAC. 27 Again, petitioner tried to fit a square peg in a round hole.
It must be stressed that far from overturning the doctrine laid down in
Bachrach, this Court in PCIB buttressed its firm stand on this issue by
declaring:
While the law allows a mortgage creditor to either
institute a personal action for the debt or a real action to
foreclosure the mortgage, he cannot pursue both remedies
simultaneously or successively as was done by PCIB in
this case.
xxx xxx xxx
Thus, when the PCIB filed Civil Case No. 29392 to
enforce payment of the 1.3 million promissory note
secured by real estate mortgages and subsequently filed a
petition for extrajudicial foreclosure, it violates the rule
against splitting a cause of action.
Accordingly, applying the foregoing rules, we hold that petitioner, by the
expediency of filing four civil suits before foreign courts, necessarily
abandoned the remedy to foreclose the real estate mortgages constituted
over the properties of third-party mortgagor and herein private respondent
ARC. Moreover, by filing the four civil actions and by eventually
foreclosing extrajudicially the mortgages, petitioner in effect transgressed
the rules against splitting a cause of action well-enshrined in jurisprudence
and our statute books.
In Bachrach, this Court resolved to deny the creditor the remedy of
foreclosure after the collection suit was filed, considering that the creditor
should not be afforded "plural redress for a single breach of contract." For
cause of action should not be confused with the remedy created for its
enforcement. 28
Notably, it is not the nature of the redress which is crucial but the efficacy
of the remedy chosen in addressing the creditor's cause. Hence, a suit
brought before a foreign court having competence and jurisdiction to
entertain the action is deemed, for this purpose, to be within the
contemplation of the remedy available to the mortgagee-creditor. This
pronouncement would best serve the interest of justice and fair play and
further discourage the noxious practice of splitting up a lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to
petitioner is the governing law with regard to the principal agreements, the
mortgagee does not lose its security interest by simply filing civil actions
for sums of money. 29
We rule in the negative.
This argument shows desperation on the part of petitioner to rivet its
crumbling cause. In the case at bench, Philippine law shall apply
notwithstanding the evidence presented by petitioner to prove the English
law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle
in our jurisdiction that there is no judicial notice of any foreign law. A
foreign law must be properly pleaded and proved as a fact. 30 Thus, if the
foreign law involved is not properly pleaded and proved, our courts will
presume that the foreign law is the same as our local or domestic or internal
law. 31 This is what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter
were properly pleaded and proved in accordance with Section 24, Rule 132
of the Rules of Court and the jurisprudence laid down in Yao Kee, et al. vs.
Sy-Gonzales, 32 said foreign law would still not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and
established public policy of the forum, the said foreign law, judgment or
order shall not be applied. 33
Additionally, prohibitive laws concerning persons, their acts or property,
and those which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a foreign
country. 34
The public policy sought to be protected in the instant case is the principle
imbedded in our jurisdiction proscribing the splitting up of a single cause of
action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent —
If two or more suits are instituted on the basis of the same
cause of action, the filing of one or a judgment upon the
merits in any one is available as a ground for the dismissal
of the others.
Moreover, foreign law should not be applied when its application would
work undeniable injustice to the citizens or residents of the forum. To give
justice is the most important function of law; hence, a law, or judgment or
contract that is obviously unjust negates the fundamental principles of
Conflict of Laws. 35
Clearly then, English Law is not applicable.
As to the second pivotal issue, we hold that the private respondent is
entitled to the award of actual or compensatory damages inasmuch as the
act of petitioner BANTSA in extrajudicially foreclosing the real estate
mortgages constituted a clear violation of the rights of herein private
respondent ARC, as third-party mortgagor.
Actual or compensatory damages are those recoverable because of
pecuniary loss in business, trade, property, profession, job or occupation
and the same must be proved, otherwise if the proof is flimsy and non-
substantial, no damages will be given. 36 Indeed, the question of the value
of property is always a difficult one to settle as valuation of real property is
an imprecise process since real estate has no inherent value readily
ascertainable by an appraiser or by the court. 37 The opinions of men vary
so much concerning the real value of property that the best the courts can do
is hear all of the witnesses which the respective parties desire to present,
and then, by carefully weighing that testimony, arrive at a conclusion which
is just and equitable. 38
In the instant case, petitioner assails the Court of Appeals for relying
heavily on the valuation made by Philippine Appraisal Company. In effect,
BANTSA questions the act of the appellate court in giving due weight to
the appraisal report composed of twenty three pages, signed by Mr. Lauro
Marquez and submitted as evidence by private respondent. The appraisal
report, as the records would readily show, was corroborated by the
testimony of Mr. Reynaldo Flores, witness for private respondent.
On this matter, the trial court observed:
The record herein reveals that plaintiff-appellee formally
offered as evidence the appraisal report dated March 29,
1993 (Exhibit J, Records, p. 409), consisting of twenty
three (23) pages which set out in detail the valuation of
the property to determine its fair market value (TSN,
April 22, 1994, p. 4), in the amount of P99,986,592.00
(TSN, ibid., p. 5), together with the corroborative
testimony of one Mr. Reynaldo F. Flores, an appraiser and
director of Philippine Appraisal Company, Inc. (TSN,
ibid., p. 3). The latter's testimony was subjected to
extensive cross-examination by counsel for defendant-
appellant (TSN, April 22, 1994, pp. 6-22). 39
In the matter of credibility of witnesses, the Court reiterates the familiar and
well-entrenched rule that the factual findings of the trial court should be
respected. 40 The time-tested jurisprudence is that the findings and
conclusions of the trial court on the credibility of witnesses enjoy a badge of
respect for the reason that trial courts have the advantage of observing the
demeanor of witnesses as they testify. 41
This Court will not alter the findings of the trial court on the credibility of
witnesses, principally because they are in a better position to assess the
same than the appellate court. 42 Besides, trial courts are in a better position
to examine real evidence as well as observe the demeanor of witnesses. 43
Similarly, the appreciation of evidence and the assessment of the credibility
of witnesses rest primarily with the trial court. 44 In the case at bar, we see
no reason that would justify this Court to disturb the factual findings of the
trial court, as affirmed by the Court of Appeals, with regard to the award of
actual damages.
In arriving at the amount of actual damages, the trial court justified the
award by presenting the following ratiocination in its assailed decision 45,
to wit:
Indeed, the Court has its own mind in the matter of
valuation. The size of the subject real properties are (sic)
set forth in their individuals titles, and the Court itself has
seen the character and nature of said properties during the
ocular inspection it conducted. Based principally on the
foregoing, the Court makes the following observations:
1. The properties consist of about 39 hectares in Bo. Sto.
Cristo, San Jose del Monte, Bulacan, which is (sic) not
distant from Metro Manila — the biggest urban center in
the Philippines — and are easily accessible through well-
paved roads;
2. The properties are suitable for development into a
subdivision for low cost housing, as admitted by
defendant's own appraiser (TSN, May 30, 1994, p. 31);
3. The pigpens which used to exist in the property have
already been demolished. Houses of strong materials are
found in the vicinity of the property (Exhs. 2, 2-1 to 2-7),
and the vicinity is a growing community. It has even been
shown that the house of the Barangay Chairman is located
adjacent to the property in question (Exh. 27), and the
only remaining piggery (named Cherry Farm) in the
vicinity is about 2 kilometers away from the western
boundary of the property in question (TSN, November 19,
p. 3);
4. It will not be hard to find interested buyers of the
property, as indubitably shown by the fact that on March
18, 1994, ICCS (the buyer during the foreclosure sale)
sold the consolidated real estate properties to Stateland
Investment Corporation, in whose favor new titles were
issued, i.e., TCT Nos. T-187781(m); T-187782(m), T-
187783(m); T-16653P(m) and T-166521(m) by the
Register of Deeds of Meycauayan (sic), Bulacan;
5. The fact that ICCS was able to sell the subject
properties to Stateland Investment Corporation for Thirty
Nine Million (P39,000,000.00) Pesos, which is more than
triple defendant's appraisal (Exh. 2) clearly shows that the
Court cannot rely on defendant's aforesaid estimate
(Decision, Records, p. 603).
It is a fundamental legal aphorism that the conclusions of the trial judge on
the credibility of witnesses command great respect and consideration
especially when the conclusions are supported by the evidence on record. 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.
Based on these considerations and the evidence submitted, we affirm the
ruling of the trial court as regards the valuation of the property —
. . . a valuation of Ninety Nine Million Pesos
(P99,000,000.00) for the 39-hectare properties (sic)
 translates to just about Two Hundred Fifty Four Pesos
(P254.00) per square meter. This appears to be, as the
court so holds, a better approximation of the fair market
value of the subject properties. This is the amount which
should be restituted by the defendant to the plaintiff by
way of actual or compensatory damages . . . . 48
Further, petitioner ascribes error to the lower court awarding an amount
allegedly not asked nor prayed for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory
damages by the lower court exceeded that prayed for in the complaint, the
same is nonetheless valid, subject to certain qualifications.
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
Sec. 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by
the pleadings are tried with the express or implied consent
of the parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform
to the evidence and to raise these issues may be made
upon motion of any party at any time, even after
judgement; but failure to amend does not affect the result
of the trial of these issues. If evidence is objected to at the
trial on the ground that it is not within the issues made by
the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation
of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made.
The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs.
Asociacion de Agricultures de Talisay-Silay, Inc. 49 citing Northern
Cement Corporation vs. Intermediate Appellate Court 50 is enlightening:
There have been instances where the Court has held that
even without the necessary amendment, the amount
proved at the trial may be validly awarded, as in Tuazon v.
Bolanos (95 Phil. 106), where we said that if the facts
shown entitled plaintiff to relief other than that asked for,
no amendment to the complaint was necessary, especially
where defendant had himself raised the point on which
recovery was based. The appellate court could treat the
pleading as amended to conform to the evidence although
the pleadings were actually not amended. Amendment is
also unnecessary when only clerical error or non
substantial matters are involved, as we held in Bank of the
Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco
vs. Diaz (75 Phil. 672), we stressed that the rule on
amendment need not be applied rigidly, particularly
where no surprise or prejudice is caused the objecting
party. And in the recent case of National Power
Corporation vs. Court of Appeals (113 SCRA 556), we
held that where there is a variance in the defendant's
pleadings and the evidence adduced by it at the trial, the
Court may treat the pleading as amended to conform with
the evidence.
It is the view of the Court that pursuant to the above-
mentioned rule and in light of the decisions cited, the trial
court should not be precluded from awarding an amount
higher than that claimed in the pleading notwithstanding
the absence of the required amendment. But it is upon the
condition that the evidence of such higher amount has
been presented properly, with full opportunity on the part
of the opposing parties to support their respective
contentions and to refute each other's evidence.
The failure of a party to amend a pleading to conform to
the evidence adduced during trial does not preclude an
adjudication by the court on the basis of such evidence
which may embody new issues not raised in the
pleadings, or serve as a basis for a higher award of
damages. Although the pleading may not have been
amended to conform to the evidence submitted during
trial, judgment may nonetheless be rendered, not simply
on the basis of the issues alleged but also the basis of
 issues discussed and the assertions of fact proved in the
course of trial. The court may treat the pleading as if it
had been amended to conform to the evidence, although it
had not been actually so amended. Former Chief Justice
Moran put the matter in this way:
When evidence is presented by one
party, with the expressed or implied
consent of the adverse party, as to issues
not alleged in the pleadings, judgment
may be rendered validly as regards
those issues, which shall be considered
as if they have been raised in the
pleadings. There is implied consent to
the evidence thus presented when the
adverse party fails to object thereto.
Clearly, a court may rule and render judgment on the
basis of the evidence before it even though the relevant
pleading had not been previously amended, so long as no
surprise or prejudice is thereby caused to the adverse
party. Put a little differently, so long as the basis
requirements of fair play had been met, as where litigants
were given full opportunity to support their respective
contentions and to object to or refute each other's
evidence, the court may validly treat the pleadings as if
they had been amended to conform to the evidence and
proceed to adjudicate on the basis of all the evidence
before it.
In the instant case, inasmuch as the petitioner was afforded the opportunity
to refute and object to the evidence, both documentary and testimonial,
formally offered by private respondent, the rudiments of fair play are
deemed satisfied. In fact, the testimony of Reynaldo Flores was put under
scrutiny during the course of the cross-examination. Under these
circumstances, the court acted within the bounds of its jurisdiction and
committed no reversible error in awarding actual damages the amount of
which is higher than that prayed for. Verily, the lower court's actuations are
sanctioned by the Rules and supported by jurisprudence.
Similarly, we affirm the grant of exemplary damages although the amount
of Five Million Pesos (P5,000,000.00) awarded, being excessive, is subject
to reduction. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages. 51 Considering its
purpose, it must be fair and reasonable in every case and should not be
awarded to unjustly enrich a prevailing party. 52 In our view, an award of
P50,000.00 as exemplary damages in the present case qualifies the test of
reasonableness.
WHEREFORE, premises considered, the instant petition is DENIED for
lack of merit. The decision of the Court of Appeals is hereby AFFIRMED
with MODIFICATION of the amount awarded as exemplary damages.
According, petitioner is hereby ordered to pay private respondent the sum of
P99,000,000.00 as actual or compensatory damages; P50,000.00 as
exemplary damage and the costs of suit.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.
G.R. No. 193707 December 10, 2014
NORMA A. DEL SOCORRO, for and in behalf of her minor child
RODERIGO NORJO VAN WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Orders1 dated February
19, 2010 and September 1, 2010, respectively, of the Regional Trial Court
of Cebu City (RTC-Cebu), which dismissed the criminal case entitled
People of the Philippines v. Ernst Johan Brinkman Van Wilsem, docketed
as Criminal Case No. CBU-85503, for violation of Republic Act (R.A.) No.
9262, otherwise known as the Anti-Violence Against Women and Their
Children Act of 2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman
Van Wilsem contracted marriage in Holland on September 25, 1990.2 On
January 19, 1994, they were blessed with a son named Roderigo Norjo Van
Wilsem, who at the time of the filing of the instant petition was sixteen (16)
years of age.3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a
Divorce Decree issued by the appropriate Court of Holland.4 At that time,
their son was only eighteen (18) months old.5 Thereafter, petitioner and her
son came home to the Philippines.6
According to petitioner, respondent made a promise to provide monthly
support to their son in the amount of Two Hundred Fifty (250) Guildene
(which is equivalent to Php17,500.00 more or less).7 However, since the
arrival of petitioner and her son in the Philippines, respondent never gave
support to the son, Roderigo.8
Not long thereafter, respondent cameto the Philippines and remarried in
Pinamungahan, Cebu, and since then, have been residing thereat.9
Respondent and his new wife established a business known as Paree
Catering, located at Barangay Tajao, Municipality of Pinamungahan, Cebu
City.10 To date, all the parties, including their son, Roderigo, are presently
living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter
demanding for support from respondent. However, respondent refused to
receive the letter.12
Because of the foregoing circumstances, petitioner filed a complaint
affidavit with the Provincial Prosecutor of Cebu City against respondent for
violation of Section 5, paragraph E(2) of R.A. No. 9262 for the latter’s
unjust refusal to support his minor child with petitioner.13 Respondent
submitted his counter-affidavit thereto, to which petitioner also submitted
her reply-affidavit.14 Thereafter, the Provincial Prosecutor of Cebu City
issued a Resolution recommending the filing of an information for the crime
charged against herein respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch
20 thereof, states that:
That sometime in the year 1995 and up to the present, more or less, in the
Municipality of Minglanilla, Province of Cebu, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, did then and
there wilfully, unlawfully and deliberately deprive, refuse and still continue
to deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14)
year old minor, of financial support legally due him, resulting in economic
abuse to the victim. CONTRARY TO LAW.15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold
Departure Order against respondent.16 Consequently, respondent was
arrested and, subsequently, posted bail.17 Petitioner also filed a
Motion/Application of Permanent Protection Order to which respondent
filed his Opposition.18 Pending the resolution thereof, respondent was
arraigned.19 Subsequently, without the RTC-Cebu having resolved the
application of the protection order, respondent filed a Motion to Dismiss on
the ground of: (1) lack of jurisdiction over the offense charged; and (2)
prescription of the crime charged.20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order,21
dismissing the instant criminal case against respondent on the ground that
the facts charged in the information do not constitute an offense with
respect to the respondent who is an alien, the dispositive part of which
states:
WHEREFORE, the Court finds that the facts charged in the information do
not constitute an offense with respect to the accused, he being an alien, and
accordingly, orders this case DISMISSED.
The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his
provisional liberty is hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for Reconsideration thereto
reiterating respondent’s obligation to support their child under Article
19523 of the Family Code, thus, failure to do so makes him liable under
R.A. No. 9262 which "equally applies to all persons in the Philippines who
are obliged to support their minor children regardless of the obligor’s
nationality."24
On September 1, 2010, the lower court issued an Order25 denying
petitioner’s Motion for Reconsideration and reiterating its previous ruling.
Thus:
x x x The arguments therein presented are basically a rehash of those
advanced earlier in the memorandum of the prosecution. Thus, the court
hereby reiterates its ruling that since the accused is a foreign national he is
not subject to our national law (The Family Code) in regard to a parent’s
duty and obligation to givesupport to his child. Consequently, he cannot be
charged of violating R.A. 9262 for his alleged failure to support his child.
Unless it is conclusively established that R.A. 9262 applies to a foreigner
who fails to give support tohis child, notwithstanding that he is not bound
by our domestic law which mandates a parent to give such support, it is the
considered opinion of the court that no prima faciecase exists against the
accused herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack
of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following
issues:
1. Whether or not a foreign national has an obligation to support
his minor child under Philippine law; and
2. Whether or not a foreign national can be held criminally liable
under R.A. No. 9262 for his unjustified failure to support his minor
child.27
At the outset, let it be emphasized that We are taking cognizance of the
instant petition despite the fact that the same was directly lodged with the
Supreme Court, consistent with the ruling in Republic v. Sunvar Realty
Development Corporation,28 which lays down the instances when a ruling
of the trial court may be brought on appeal directly to the Supreme Court
without violating the doctrine of hierarchy of courts, to wit:
x x x Nevertheless, the Rules do not prohibit any of the parties from filing a
Rule 45 Petition with this Court, in case only questions of law are raised or
involved. This latter situation was one that petitioners found themselves in
when they filed the instant Petition to raise only questions of law. In
Republic v. Malabanan, the Court clarified the three modes of appeal from
decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of
error under Rule 41, whereby judgment was rendered in a civil or criminal
action by the RTC in the exercise of its original jurisdiction; (2) by a
petition for review under Rule 42, whereby judgment was rendered by the
RTC in the exercise of its appellate jurisdiction; and (3) by a petition for
review on certiorari before the Supreme Court under Rule 45. "The first
mode of appeal is taken to the [Court of Appeals] on questions of fact or
mixed questions of fact and law. The second mode of appeal is brought to
the CA on questions of fact, of law, or mixed questions of fact and law. The
third mode of appealis elevated to the Supreme Court only on questions of
law." (Emphasis supplied)
There is a question of law when the issue does not call for an examination
of the probative value of the evidence presented or of the truth or falsehood
of the facts being admitted, and the doubt concerns the correct application
of law and jurisprudence on the matter. The resolution of the issue must rest
solely on what the law provides on the given set of circumstances.29
Indeed, the issues submitted to us for resolution involve questions of law –
the response thereto concerns the correct application of law and
jurisprudence on a given set of facts, i.e.,whether or not a foreign national
has an obligation to support his minor child under Philippine law; and
whether or not he can be held criminally liable under R.A. No. 9262 for his
unjustified failure to do so.
It cannot be negated, moreover, that the instant petition highlights a novel
question of law concerning the liability of a foreign national who allegedly
commits acts and omissions punishable under special criminal laws,
specifically in relation to family rights and duties. The inimitability of the
factual milieu of the present case, therefore, deserves a definitive ruling by
this Court, which will eventually serve as a guidepost for future cases.
Furthermore, dismissing the instant petition and remanding the same to the
CA would only waste the time, effort and resources of the courts. Thus, in
the present case, considerations of efficiency and economy in the
administration of justice should prevail over the observance of the hierarchy
of courts.
Now, on the matter of the substantive issues, We find the petition
meritorious. Nonetheless, we do not fully agree with petitioner’s
contentions.
To determine whether or not a person is criminally liable under R.A. No.
9262, it is imperative that the legal obligation to support exists.
Petitioner invokes Article 19530 of the Family Code, which provides the
parent’s obligation to support his child. Petitioner contends that
notwithstanding the existence of a divorce decree issued in relation to
Article 26 of the Family Code,31 respondent is not excused from complying
with his obligation to support his minor child with petitioner.
On the other hand, respondent contends that there is no sufficient and clear
basis presented by petitioner that she, as well as her minor son, are entitled
to financial support.32 Respondent also added that by reason of the Divorce
Decree, he is not obligated topetitioner for any financial support.33
On this point, we agree with respondent that petitioner cannot rely on
Article 19534 of the New Civil Code in demanding support from
respondent, who is a foreign citizen, since Article 1535 of the New Civil
Code stresses the principle of nationality. In other words, insofar as
Philippine laws are concerned, specifically the provisions of the Family
Code on support, the same only applies to Filipino citizens. By analogy, the
same principle applies to foreigners such that they are governed by their
national law with respect to family rights and duties.36
The obligation to give support to a child is a matter that falls under family
rights and duties. Since the respondent is a citizen of Holland or the
Netherlands, we agree with the RTC-Cebu that he is subject to the laws of
his country, not to Philippinelaw, as to whether he is obliged to give support
to his child, as well as the consequences of his failure to do so.37
In the case of Vivo v. Cloribel,38 the Court held that –
Furthermore, being still aliens, they are not in position to invoke the
provisions of the Civil Code of the Philippines, for that Code cleaves to the
principle that family rights and duties are governed by their personal law,
i.e.,the laws of the nation to which they belong even when staying in a
foreign country (cf. Civil Code, Article 15).39
It cannot be gainsaid, therefore, that the respondent is not obliged to support
petitioner’s son under Article195 of the Family Code as a consequence of
the Divorce Covenant obtained in Holland. This does not, however, mean
that respondent is not obliged to support petitioner’s son altogether.
In international law, the party who wants to have a foreign law applied to a
dispute or case has the burden of proving the foreign law.40 In the present
case, respondent hastily concludes that being a national of the Netherlands,
he is governed by such laws on the matter of provision of and capacity to
support.41 While respondent pleaded the laws of the Netherlands in
advancing his position that he is not obliged to support his son, he never
proved the same.
It is incumbent upon respondent to plead and prove that the national law of
the Netherlands does not impose upon the parents the obligation to support
their child (either before, during or after the issuance of a divorce decree),
because Llorente v. Court of Appeals,42 has already enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our
courts are not authorized to takejudicial notice of them. Like any other fact,
they must be alleged and proved.43
In view of respondent’s failure to prove the national law of the Netherlands The public policy sought to be protected in the instant case is the principle
in his favor, the doctrine of processual presumption shall govern. Under this imbedded in our jurisdiction proscribing the splitting up of a single cause of
doctrine, if the foreign law involved is not properly pleaded and proved, our action.
courts will presume that the foreign law is the same as our local or domestic
or internal law.44 Thus, since the law of the Netherlands as regards the Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
obligation to support has not been properly pleaded and proved in the
instant case, it is presumed to be the same with Philippine law, which
—
enforces the obligation of parents to support their children and penalizing
the non-compliance therewith.
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
Moreover, while in Pilapil v. Ibay-Somera,45 the Court held that a divorce
ground for the dismissal of the others. Moreover, foreign law should not be
obtained in a foreign land as well as its legal effects may be recognized in
applied when its application would work undeniable injustice to the citizens
the Philippines in view of the nationality principle on the matter of status of or residents of the forum. To give justice is the most important function of
persons, the Divorce Covenant presented by respondent does not completely law; hence, a law, or judgment or contract that is obviously unjust negates
show that he is notliable to give support to his son after the divorce decree
the fundamental principles of Conflict of Laws.48
was issued. Emphasis is placed on petitioner’s allegation that under the
second page of the aforesaid covenant, respondent’s obligation to support
his child is specifically stated,46 which was not disputed by respondent. Applying the foregoing, even if the laws of the Netherlands neither enforce
a parent’s obligation to support his child nor penalize the noncompliance
therewith, such obligation is still duly enforceable in the Philippines
We likewise agree with petitioner that notwithstanding that the national law
because it would be of great injustice to the child to be denied of financial
of respondent states that parents have no obligation to support their children
support when the latter is entitled thereto.
or that such obligation is not punishable by law, said law would still not
find applicability,in light of the ruling in Bank of America, NT and SA v.
American Realty Corporation,47 to wit: We emphasize, however, that as to petitioner herself, respondent is no
longer liable to support his former wife, in consonance with the ruling in
San Luis v. San Luis,49 to wit:
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. As to the effect of the divorce on the Filipino wife, the Court ruled that she
Sy-Gonzales, said foreign law would still not find applicability. should no longerbe considered marriedto the alien spouse. Further, she
should not be required to perform her marital duties and obligations. It held:
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 To maintain, as private respondent does, that, under our laws, petitioner has
order shall not be applied. 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
Additionally, prohibitive laws concerning persons, their acts or property,
and fidelity, and render support to private respondent. The latter should not
and those which have for their object public order, public policy and good
continue to be one of her heirs with possible rights to conjugal property. She
customs shall not be rendered ineffective by laws or judgments
should not be discriminated against in her own country if the ends of justice
promulgated, or by determinations or conventions agreed upon in a foreign are to be served. (Emphasis added)50
country.
Based on the foregoing legal precepts, we find that respondent may be made
liable under Section 5(e) and (i) of R.A. No. 9262 for unjustly refusing or
failing to give support topetitioner’s son, to wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The
crime of violence against women and their children is committed through
any of the following acts:
xxxx
(e) Attempting to compel or compelling the woman or her child to engage
in conduct which the woman or her child has the right to desist from or
desist from conduct which the woman or her child has the right to engage
in, or attempting to restrict or restricting the woman's or her child's freedom
of movement or conduct by force or threat of force, physical or other harm
or threat of physical or other harm, or intimidation directed against the
woman or child. This shall include, butnot limited to, the following acts
committed with the purpose or effect of controlling or restricting the
woman's or her child's movement or conduct:
xxxx
(2) Depriving or threatening to deprive the woman or her children of
financial support legally due her or her family, or deliberately providing the
woman's children insufficient financial support; x x x x
(i) Causing mental or emotional anguish, public ridicule or humiliation to
the woman or her child, including, but not limited to, repeated verbal and
emotional abuse, and denial of financial support or custody of minor
childrenof access to the woman's child/children.51
Under the aforesaid special law, the deprivation or denial of financial
support to the child is considered anact of violence against women and
children.
In addition, considering that respondent is currently living in the
Philippines, we find strength in petitioner’s claim that the Territoriality
Principle in criminal law, in relation to Article 14 of the New Civil Code,
applies to the instant case, which provides that: "[p]enal laws and those of
public security and safety shall be obligatory upon all who live and sojourn
in Philippine territory, subject to the principle of public international law
and to treaty stipulations." On this score, it is indisputable that the alleged
continuing acts of respondent in refusing to support his child with petitioner
is committed here in the Philippines as all of the parties herein are residents
of the Province of Cebu City. As such, our courts have territorial
jurisdiction over the offense charged against respondent. It is likewise
irrefutable that jurisdiction over the respondent was acquired upon his
arrest.
Finally, we do not agree with respondent’s argument that granting, but not
admitting, that there is a legal basis for charging violation of R.A. No. 9262
in the instant case, the criminal liability has been extinguished on the
ground of prescription of crime52 under Section 24 of R.A. No. 9262,
which provides that:
SECTION 24. Prescriptive Period. – Acts falling under Sections 5(a) to 5(f)
shall prescribe in twenty (20) years. Acts falling under Sections 5(g) to 5(I)
shall prescribe in ten (10) years.
The act of denying support to a child under Section 5(e)(2) and (i) of R.A.
No. 9262 is a continuing offense,53 which started in 1995 but is still
ongoing at present. Accordingly, the crime charged in the instant case has
clearly not prescribed.
Given, however, that the issue on whether respondent has provided support
to petitioner’s child calls for an examination of the probative value of the
evidence presented, and the truth and falsehood of facts being admitted, we
hereby remand the determination of this issue to the RTC-Cebu which has
jurisdiction over the case.
WHEREFORE, the petition is GRANTED. The Orders dated February 19,
2010 and September 1, 2010, respectively, of the Regional Trial Court of
the City of Cebu are hereby REVERSED and SET ASIDE. The case is
REMANDED to the same court to conduct further proceedings based on the
merits of the case.
SO ORDERED.
DIOSDADO M. PERALTA VELASCO, JR., J.:
Associate Justice
The Case

This Petition for Review on Certiorari1 seeks to set aside the October 18,
2000 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120
which affirmed the January 15, 1999 Decision3 and September 30, 1999
Resolution4 rendered by the National Labor Relations Commission (NLRC)
(Third Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search
International (ESI), EDI-Staffbuilders International, Inc. (EDI), and Omar
Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar S.
Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.

The Facts

Petitioner EDI is a corporation engaged in recruitment and placement of

Overseas Filipino Workers (OFWs).5 ESI is another recruitment agency
which collaborated with EDI to process the documentation and deployment
of private respondent to Saudi Arabia.

Private respondent Gran was an OFW recruited by EDI, and deployed by

ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia. 6

It appears that OAB asked EDI through its October 3, 1993 letter for
curricula vitae of qualified applicants for the position of "Computer
Specialist."7 In a facsimile transmission dated November 29, 1993, OAB
informed EDI that, from the applicants' curricula vitae submitted to it for
evaluation, it selected Gran for the position of "Computer Specialist." The
faxed letter also stated that if Gran agrees to the terms and conditions of
employment contained in it, one of which was a monthly salary of SR
(Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's
G.R. No. 145587 October 26, 2007 immediate dispatch.8

EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, After accepting OAB's offer of employment, Gran signed an employment
vs. contract9 that granted him a monthly salary of USD 850.00 for a period of
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. two years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia on
GRAN, respondents. February 7, 1994.

DECISION
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly
salary—his employment contract stated USD 850.00; while his Philippine
Overseas Employment Agency (POEA) Information Sheet indicated USD
600.00 only. However, through the assistance of the EDI office in Riyadh,
OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his
employment was terminated through OAB's July 9, 1994 letter,11 on the
following grounds:
1. Non-compliance to contract requirements by the recruitment
agency primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the
recruitment agency[,] vide OAB letter ref. F-5751-93, dated
October 3, 1993.12
3. Insubordination or disobedience to Top Management Order
and/or instructions (non-submittal of daily activity reports despite
several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR
2,948.00 representing his final pay, and on the same day, he executed a
Declaration13 releasing OAB from any financial obligation or otherwise,
towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21,
1994, against ESI/EDI, OAB, Country Bankers Insurance Corporation, and
Western Guaranty Corporation with the NLRC, National Capital Region,
Quezon City, which was docketed as POEA ADJ (L) 94-06-2194 for
underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
14
In his February 10, 1998 Decision, Labor Arbiter Manuel R. Caday, to
whom Gran's case was assigned, ruled that there was neither underpayment
nor illegal dismissal.
The Labor Arbiter reasoned that there was no underpayment of salaries
since according to the POEA-Overseas Contract Worker (OCW)
Information Sheet, Gran's monthly salary was USD 600.00, and in his
Confirmation of Appointment as Computer Specialist, his monthly basic
salary was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that
Gran had no claim for unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that
Gran failed to refute EDI's allegations; namely, (1) that Gran did not submit
a single activity report of his daily activity as dictated by company policy;
(2) that he was not qualified for the job as computer specialist due to his
insufficient knowledge in programming and lack of knowledge in ACAD
system; (3) that Gran refused to follow management's instruction for him to
gain more knowledge of the job to prove his worth as computer specialist;
(4) that Gran's employment contract had never been substituted; (5) and that
Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly
as food allowance.
Accordingly, the Labor Arbiter decided that Gran was validly dismissed
from his work due to insubordination, disobedience, and his failure to
submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for
lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998 with the NLRC, Third
Division. However, it appears from the records that Gran failed to furnish
EDI with a copy of his Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to
ESI is actually "reprocessing," which is a prohibited transaction under
Article 34 (b) of the Labor Code. This scheme constituted misrepresentation
through the conspiracy between EDI and ESI in misleading Gran and even
POEA of the actual terms and conditions of the OFW's employment. In
addition, it was found that Gran did not commit any act that constituted a
legal ground for dismissal. The alleged non-compliance with contractual
stipulations relating to Gran's salary and contract duration, and the absence
of pre-qualification requirements cannot be attributed to Gran but to EDI,
which dealt directly with OAB. In addition, the charge of insubordination
was not substantiated, and Gran was not even afforded the required notice
and investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new
one, the dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents
Expertise Search International, Inc., EDI Staffbuilders Int'l., Inc.
and Omar Ahmed Ali Bin Bechr Est. (OAB) are hereby ordered
jointly and severally liable to pay the complainant Eleazar Gran the
Philippine peso equivalent at the time of actual payment of
SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for the unexpired portion
of his contract.
SO ORDERED.16
Gran then filed a Motion for Execution of Judgment17 on March 29, 1999
with the NLRC and petitioner receiving a copy of this motion on the same
date.18
To prevent the execution, petitioner filed an Opposition19 to Gran's motion
arguing that the Writ of Execution cannot issue because it was not notified
of the appellate proceedings before the NLRC and was not given a copy of
the memorandum of appeal nor any opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its
Opposition, petitioner filed, on August 26, 1999, a Motion for
Reconsideration of the NLRC Decision after receiving a copy of the
Decision on August 16, 1999.20
21
The NLRC then issued a Resolution denying petitioner's Motion for
Reconsideration, ratiocinating that the issues and arguments raised in the
motion "had already been amply discussed, considered, and ruled upon" in
the Decision, and that there was "no cogent reason or patent or palpable
error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari
before the CA. Petitioner claimed in its petition that the NLRC committed
grave abuse of discretion in giving due course to the appeal despite Gran's
failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of
EDI's petition.
On the procedural issue, the appellate court held that "Gran's failure to
furnish a copy of his appeal memorandum [to EDI was] a mere formal
lapse, an excusable neglect and not a jurisdictional defect which would
justify the dismissal of his appeal."22 The court also held that petitioner EDI
failed to prove that private respondent was terminated for a valid cause and
in accordance with due process; and that Gran's Declaration releasing OAB
from any monetary obligation had no force and effect. The appellate court
ratiocinated that EDI had the burden of proving Gran's incompetence;
however, other than the termination letter, no evidence was presented to
show how and why Gran was considered to be incompetent. The court held
that since the law requires the recruitment agencies to subject OFWs to
trade tests before deployment, Gran must have been competent and
qualified; otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure
to submit a "Daily Activity Report," the appellate court found that EDI
failed to show that the submission of the "Daily Activity Report" was a part
of Gran's duty or the company's policy. The court also held that even if
Gran was guilty of insubordination, he should have just been suspended or
reprimanded, but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB
did not abide by the twin notice requirement. The court found that Gran was
terminated on the same day he received the termination letter, without
having been apprised of the bases of his dismissal or afforded an
opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him
from demanding benefits to which he was entitled. The appellate court
found that the Declaration was in the form of a quitclaim, and as such is
frowned upon as contrary to public policy especially where the monetary
consideration given in the Declaration was very much less than what he was
legally entitled to—his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court
denied the petition to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY
OF HIS APPEAL MEMORANDUM TO PETITIONER EDI
WOULD CONSTITUTE A JURISDICTIONAL DEFECT AND A
DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE
PROCESS AS WOULD JUSTIFY THE DISMISSAL OF
GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY
WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S
TERMINATION WAS JUSTIFIABLE BY REASON OF
INCOMPETENCE. COROLLARY HERETO, WHETHER THE
PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT
OF APPEALS, IS APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY
OF SUBSTANTIAL EVIDENCE THAT GRAN'S
TERMINATION WAS JUSTIFIABLE BY REASON OF
INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS
PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR
THE UNEXPIRED PORTION OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI
with his Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide
Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal
Memorandum constitutes a jurisdictional defect and a deprivation of due
process that would warrant a rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy
of the appeal to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission,24 this Court set aside
the order of the NLRC which dismissed an appeal on the sole ground that
the appellant did not furnish the appellee a memorandum of appeal contrary
to the requirements of Article 223 of the New Labor Code and Section 9,
Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of
dismissal of an appeal to the NLRC based on the ground that "there is no
showing whatsoever that a copy of the appeal was served by the appellant
on the appellee"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:
Section 13. Proof of service.—Proof of personal service shall
consist of a written admission of the party served or the official
return of the server, or the affidavit of the party serving, containing
a full statement of the date, place and manner of service. If the
service is by ordinary mail, proof thereof shall consist of an
affidavit of the person mailing of facts showing compliance with
section 7 of this Rule. If service is made by registered mail,
proof shall be made by such affidavit and registry receipt
issued by the mailing office. The registry return card shall be
filed immediately upon its receipt by the sender, or in lieu
thereof the unclaimed letter together with the certified or
sworn copy of the notice given by the postmaster to the
addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by
Gran is not conclusive proof that he had served a copy of his appeal
memorandum to EDI, nor is it conclusive proof that EDI received its copy
of the Appeal Memorandum. He should have submitted an affidavit proving
that he mailed the Appeal Memorandum together with the registry receipt
issued by the post office; afterwards, Gran should have immediately filed
the registry return card.
Hence, after seeing that Gran failed to attach the proof of service, the NLRC
should not have simply accepted the post office's list of mail and parcels
sent; but it should have required Gran to properly furnish the opposing
parties with copies of his Appeal Memorandum as prescribed in J.D.
Magpayo and the other cases. The NLRC should not have proceeded with
the adjudication of the case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran should have furnished
petitioner EDI a copy of the Appeal Memorandum before rendering
judgment reversing the dismissal of Gran's complaint constitutes an evasion
of the pertinent NLRC Rules and established jurisprudence. Worse, this
failure deprived EDI of procedural due process guaranteed by the
Constitution which can serve as basis for the nullification of proceedings in
the appeal before the NLRC. One can only surmise the shock and dismay
that OAB, EDI, and ESI experienced when they thought that the dismissal
of Gran's complaint became final, only to receive a copy of Gran's Motion
for Execution of Judgment which also informed them that Gran had
obtained a favorable NLRC Decision. This is not level playing field and
absolutely unfair and discriminatory against the employer and the job
recruiters. The rights of the employers to procedural due process cannot be
cavalierly disregarded for they too have rights assured under the
Constitution.
However, instead of annulling the dispositions of the NLRC and remanding
the case for further proceedings we will resolve the petition based on the
records before us to avoid a protracted litigation.33
The second and third issues have a common matter—whether there was just
cause for Gran's dismissal—hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable by
reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the
OFW, the local recruiter/agent, and the foreign employer/principal are
governed by the employment contract. A contract freely entered into is
considered law between the parties; and hence, should be respected. In
formulating the contract, the parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy. 34
In the present case, the employment contract signed by Gran specifically
states that Saudi Labor Laws will govern matters not provided for in the
contract (e.g. specific causes for termination, termination procedures, etc.).
Being the law intended by the parties (lex loci intentiones) to apply to the
contract, Saudi Labor Laws should govern all matters relating to the
termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a
dispute or case has the burden of proving the foreign law. The foreign law is
treated as a question of fact to be properly pleaded and proved as the judge
or labor arbiter cannot take judicial notice of a foreign law. He is presumed
to know only domestic or forum law.35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the
matter; thus, the International Law doctrine of presumed-identity approach
or processual presumption comes into play.36 Where a foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign
law is the same as ours.37 Thus, we apply Philippine labor laws in
determining the issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due
to incompetence and insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and
jurisprudence that the employer should prove that the dismissal of
employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal except for a
just and authorized cause and without prejudice to the requirement
of notice under Article 283 of this Code, the employer shall furnish
the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated
 pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without
prejudice to the right of the workers to contest the validity or
legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden
of proving that the termination was for a valid or authorized
cause shall rest on the employer. x x x
In many cases, it has been held that in termination disputes or illegal
dismissal cases, the employer has the burden of proving that the dismissal is
for just and valid causes; and failure to do so would necessarily mean that
the dismissal was not justified and therefore illegal.40 Taking into account
the character of the charges and the penalty meted to an employee, the
employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal.41 This is consistent
with the principle of security of tenure as guaranteed by the Constitution
and reinforced by Article 277 (b) of the Labor Code of the Philippines. 42
In the instant case, petitioner claims that private respondent Gran was
validly dismissed for just cause, due to incompetence and insubordination
or disobedience. To prove its allegations, EDI submitted two letters as
evidence. The first is the July 9, 1994 termination letter, 43 addressed to
Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is
an unsigned April 11, 1995 letter44 from OAB addressed to EDI and ESI,
which outlined the reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist
position because he had "insufficient knowledge in programming and zero
knowledge of [the] ACAD system."45 Petitioner also claims that Gran was
justifiably dismissed due to insubordination or disobedience because he
continually failed to submit the required "Daily Activity Reports." 46
However, other than the abovementioned letters, no other evidence was
presented to show how and why Gran was considered incompetent,
insubordinate, or disobedient. Petitioner EDI had clearly failed to overcome
the burden of proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his
"insufficient knowledge in programming and zero knowledge of the ACAD
system" based only on the above mentioned letters, without any other
evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation.
Incompetence may be shown by weighing it against a standard, benchmark,
or criterion. However, EDI failed to establish any such bases to show how
petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination
or willful disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the
following twin elements must concur: (1) the employee's assailed
conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to
discharge.47
EDI failed to discharge the burden of proving Gran's insubordination or
willful disobedience. As indicated by the second requirement provided for
in Micro Sales Operation Network, in order to justify willful disobedience,
we must determine whether the order violated by the employee is
reasonable, lawful, made known to the employee, and pertains to the duties
which he had been engaged to discharge. In the case at bar, petitioner failed
to show that the order of the company which was violated—the submission
of "Daily Activity Reports"—was part of Gran's duties as a Computer
Specialist. Before the Labor Arbiter, EDI should have provided a copy of
the company policy, Gran's job description, or any other document that
would show that the "Daily Activity Reports" were required for submission
by the employees, more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or
recruitment agencies and not the foreign employer, they should have
adduced additional evidence to convincingly show that Gran's employment
was validly and legally terminated. The burden devolves not only upon the
foreign-based employer but also on the employment or recruitment agency
for the latter is not only an agent of the former, but is also solidarily liable
with the foreign principal for any claims or liabilities arising from the
dismissal of the worker.48
Thus, petitioner failed to prove that Gran was justifiably dismissed due
to incompetence, insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in
its Decision, is not applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their
deployment, the petitioners were subjected to trade tests required by law to
be conducted by the recruiting agency to insure employment of only
technically qualified workers for the foreign principal." 50 The CA, using the
ruling in the said case, ruled that Gran must have passed the test; otherwise,
he would not have been hired. Therefore, EDI was at fault when it deployed
Gran who was allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not applicable because in the
case at hand, Gran misrepresented himself in his curriculum vitae as a
Computer Specialist; thus, he was not qualified for the job for which he was
hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test
is to weed out incompetent applicants from the pool of available workers. It
is supposed to reveal applicants with false educational backgrounds, and
expose bogus qualifications. Since EDI deployed Gran to Riyadh, it can be
presumed that Gran had passed the required trade test and that Gran is
qualified for the job. Even if there was no objective trade test done by EDI,
it was still EDI's responsibility to subject Gran to a trade test; and its failure
to do so only weakened its position but should not in any way prejudice
Gran. In any case, the issue is rendered moot and academic because Gran's
incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor
laws and regulations shall govern the relationship between Gran and EDI.
Thus, our laws and rules on the requisites of due process relating to
termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due
process, since he was allowed to work and improve his capabilities for five
months prior to his termination.51 EDI also claims that the requirements of
due process, as enunciated in Santos, Jr. v. NLRC,52 and Malaya Shipping
Services, Inc. v. NLRC,53 cited by the CA in its Decision, were properly
observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying
the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is
based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of
his separation.
Under the twin notice requirement, the employees must be given two (2)
notices before their employment could be terminated: (1) a first notice to
apprise the employees of their fault, and (2) a second notice to communicate
to the employees that their employment is being terminated. In between the
first and second notice, the employees should be given a hearing or
opportunity to defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner
of dismissing Gran fell short of the two notice requirement. While it
furnished Gran the written notice informing him of his dismissal, it failed to
furnish Gran the written notice apprising him of the charges against him, as
prescribed by the Labor Code.56 Consequently, he was denied the
opportunity to respond to said notice. In addition, OAB did not schedule a
hearing or conference with Gran to defend himself and adduce evidence in
support of his defenses. Moreover, the July 9, 1994 termination letter was
effective on the same day. This shows that OAB had already condemned
Gran to dismissal, even before Gran was furnished the termination letter. It
should also be pointed out that OAB failed to give Gran the chance to be
heard and to defend himself with the assistance of a representative in
accordance with Article 277 of the Labor Code. Clearly, there was no
intention to provide Gran with due process. Summing up, Gran was notified
and his employment arbitrarily terminated on the same day, through the
same letter, and for unjustified grounds. Obviously, Gran was not afforded
due process.
Pursuant to the doctrine laid down in Agabon,57 an employer is liable to pay
nominal damages as indemnity for violating the employee's right to
statutory due process. Since OAB was in breach of the due process
requirements under the Labor Code and its regulations, OAB, ESI, and EDI,
jointly and solidarily, are liable to Gran in the amount of PhP 30,000.00 as
indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period
of employment, in cases arising before the effectivity of R.A. No. 8042 58
(Migrant Workers and Overseas Filipinos Act) on August 25, 1995, that
when the contract is for a fixed term and the employees are dismissed
without just cause, they are entitled to the payment of their salaries
corresponding to the unexpired portion of their contract.59 On the other
hand, for cases arising after the effectivity of R.A. No. 8042, when the
termination of employment is without just, valid or authorized cause as
defined by law or contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%)
per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term
whichever is less.60
In the present case, the employment contract provides that the employment
contract shall be valid for a period of two (2) years from the date the
employee starts to work with the employer.61 Gran arrived in Riyadh, Saudi
Arabia and started to work on February 7, 1994;62 hence, his employment
contract is until February 7, 1996. Since he was illegally dismissed on July
9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to
backwages corresponding to the unexpired portion of his contract, which
was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly
relies on the Declaration which is claimed to have been freely and
voluntarily executed by Gran. The relevant portions of the Declaration are
as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER
RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE
AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION)
FOR THE SERVICES I RENDERED TO OAB
ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL
OBLIGATION IN MY FAVOUR AFTER RECEIVING THE
ABOVE MENTIONED AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION
TOWARDS ME IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT
BY AFFIXING MY SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or
waivers, more particularly those executed by employees. This requirement
was clearly articulated by Chief Justice Artemio V. Panganiban in Land and
Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws
or contracts in favor of workers should be strictly scrutinized to
protect the weak and the disadvantaged. The waivers should be
carefully examined, in regard not only to the words and terms
used, but also the factual circumstances under which they have
been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development
Corporation, citing Periquet v. NLRC,64 the parameters for valid
compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy.
If the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person
making the waiver did so voluntarily, with full understanding
of what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a
valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following
reasons:
1. The salary paid to Gran upon his termination, in the amount of SR
2,948.00, is unreasonably low. As correctly pointed out by the court a quo,
the payment of SR 2,948.00 is even lower than his monthly salary of SR
3,190.00 (USD 850.00). In addition, it is also very much less than the USD
16,150.00 which is the amount Gran is legally entitled to get from petitioner
EDI as backwages.
2. The Declaration reveals that the payment of SR 2,948.00 is actually the
payment for Gran's salary for the services he rendered to OAB as Computer
Specialist. If the Declaration is a quitclaim, then the consideration should be
much much more than the monthly salary of SR 3,190.00 (USD 850.00)—
although possibly less than the estimated Gran's salaries for the remaining
duration of his contract and other benefits as employee of OAB. A
quitclaim will understandably be lower than the sum total of the amounts
and benefits that can possibly be awarded to employees or to be earned for
the remainder of the contract period since it is a compromise where the
employees will have to forfeit a certain portion of the amounts they are
claiming in exchange for the early payment of a compromise amount. The
court may however step in when such amount is unconscionably low or
unreasonable although the employee voluntarily agreed to it. In the case of
the Declaration, the amount is unreasonably small compared to the future
wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration
would show that Gran did not voluntarily and freely execute the document.
Consider the following chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of
termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia
and required to pay his plane ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia;
and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the
Declaration and constrained to receive the amount of SR 2,948.00 even if it
was against his will—since he was told on July 10, 1994 to leave Riyadh on
July 12, 1994. He had no other choice but to sign the Declaration as he
needed the amount of SR 2,948.00 for the payment of his ticket. He could
have entertained some apprehensions as to the status of his stay or safety in
Saudi Arabia if he would not sign the quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract
of adhesion which should be construed against the employer, OAB. An
adhesion contract is contrary to public policy as it leaves the weaker party—
the employee—in a "take-it-or-leave-it" situation. Certainly, the employer is
being unjust to the employee as there is no meaningful choice on the part of
the employee while the terms are unreasonably favorable to the employer. 66
Thus, the Declaration purporting to be a quitclaim and waiver is
unenforceable under Philippine laws in the absence of proof of the
applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims
and waivers of employees under Philippine laws, said agreements should
contain the following:
1. A fixed amount as full and final compromise settlement;
2. The benefits of the employees if possible with the corresponding
amounts, which the employees are giving up in consideration of the fixed
compromise amount;
3. A statement that the employer has clearly explained to the employee in
English, Filipino, or in the dialect known to the employees—that by signing
the waiver or quitclaim, they are forfeiting or relinquishing their right to
receive the benefits which are due them under the law; and
4. A statement that the employees signed and executed the document
voluntarily, and had fully understood the contents of the document and that
their consent was freely given without any threat, violence, duress,
intimidation, or undue influence exerted on their person.
It is advisable that the stipulations be made in English and Tagalog or in the
dialect known to the employee. There should be two (2) witnesses to the
execution of the quitclaim who must also sign the quitclaim. The document
should be subscribed and sworn to under oath preferably before any
administering official of the Department of Labor and Employment or its
regional office, the Bureau of Labor Relations, the NLRC or a labor attaché
in a foreign country. Such official shall assist the parties regarding the
execution of the quitclaim and waiver.67 This compromise settlement
becomes final and binding under Article 227 of the Labor Code which
provides that:
[A]ny compromise settlement voluntarily agreed upon with the
assistance of the Bureau of Labor Relations or the regional office
of the DOLE, shall be final and binding upon the parties and the
NLRC or any court "shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if
there is prima 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 PhP 30,000.00 to
respondent Gran as nominal damages for non-compliance with statutory due
process.
No costs.
SO ORDERED.
Quisumbing, Carpio, Tinga, Nachura, JJ., concur.

.R. No. 136804 February 19, 2003
MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL
BANK, petitioners,
vs.
RAFAEL MA. GUERRERO, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set aside
the Court of Appeals’1 Decision of August 24, 1998 and Resolution of
December 14, 1998 in CA-G.R. SP No. 423102 affirming the trial court’s
denial of petitioners’ motion for partial summary judgment.
The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero ("Guerrero" for brevity)
filed a complaint for damages against petitioner Manufacturers Hanover
Trust Co. and/or Chemical Bank ("the Bank" for brevity) with the Regional
Trial Court of Manila ("RTC" for brevity). Guerrero sought payment of
damages allegedly for (1) illegally withheld taxes charged against interests
on his checking account with the Bank; (2) a returned check worth
US$18,000.00 due to signature verification problems; and (3) unauthorized
conversion of his account. Guerrero amended his complaint on April 18,
1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that
by stipulation Guerrero’s account is governed by New York law and this
law does not permit any of Guerrero’s claims except actual damages.
Subsequently, the Bank filed a Motion for Partial Summary Judgment
seeking the dismissal of Guerrero’s claims for consequential, nominal,
temperate, moral and exemplary damages as well as attorney’s fees on the
same ground alleged in its Answer. The Bank contended that the trial
should be limited to the issue of actual damages. Guerrero opposed the
motion.
The affidavit of Alyssa Walden, a New York attorney, supported the Bank’s
Motion for Partial Summary Judgment. Alyssa Walden’s affidavit ("Walden
affidavit" for brevity) stated that Guerrero’s New York bank account
stipulated that the governing law is New York law and that this law bars all
of Guerrero’s claims except actual damages. The Philippine Consular Office
in New York authenticated the Walden affidavit.
The RTC denied the Bank’s Motion for Partial Summary Judgment and its
motion for reconsideration on March 6, 1996 and July 17, 1996,
respectively. The Bank filed a petition for certiorari and prohibition with the
Court of Appeals assailing the RTC Orders. In its Decision dated August
24, 1998, the Court of Appeals dismissed the petition. On December 14,
1998, the Court of Appeals denied the Bank’s motion for reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for
partial summary judgment. The Court of Appeals ruled that the Walden
affidavit does not serve as proof of the New York law and jurisprudence
relied on by the Bank to support its motion. The Court of Appeals
considered the New York law and jurisprudence as public documents
defined in Section 19, Rule 132 of the Rules on Evidence, as follows:
"SEC. 19. Classes of Documents. – For the purpose of their presentation in
evidence, documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers, whether of the
Philippines, or of a foreign country;
 x x x."
The Court of Appeals opined that the following procedure outlined in
Section 24, Rule 132 should be followed in proving foreign law:
"SEC. 24. Proof of official record. – The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any purpose,
may be evidenced by an official publication thereof or by a copy attested by
the officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate
that such officer has the custody. If the office in which the record is kept is
in a foreign country, the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice consul, or consular agent
or by any officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and authenticated by the seal of
his office."
The Court of Appeals likewise rejected the Bank’s argument that Section 2,
Rule 34 of the old Rules of Court allows the Bank to move with the
supporting Walden affidavit for partial summary judgment in its favor. The
Court of Appeals clarified that the Walden affidavit is not the supporting
affidavit referred to in Section 2, Rule 34 that would prove the lack of
genuine issue between the parties. The Court of Appeals concluded that
even if the Walden affidavit is used for purposes of summary judgment, the
Bank must still comply with the procedure prescribed by the Rules to prove
the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error in -
"x x x HOLDING THAT [THE BANK’S] PROOF OF FACTS TO
SUPPORT ITS MOTION FOR SUMMARY JUDGMENT MAY NOT BE
GIVEN BY AFFIDAVIT;
x x x HOLDING THAT [THE BANK’S] AFFIDAVIT, WHICH PROVES
FOREIGN LAW AS A FACT, IS "HEARSAY" AND THEREBY
‘CANNOT SERVE AS PROOF OF THE NEW YORK LAW RELIED
UPON BY PETITIONERS IN THEIR MOTION FOR SUMMARY
JUDGMENT x x x’."3
First, the Bank argues that in moving for partial summary
judgment, it was entitled to use the Walden affidavit to prove that
the stipulated foreign law bars the claims for consequential, moral,
temperate, nominal and exemplary damages and attorney’s fees.
Consequently, outright dismissal by summary judgment of these
claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the
requirements of Rule 35 on summary judgments and those of a trial
on the merits in considering the Walden affidavit as "hearsay." The
Bank points out that the Walden affidavit is not hearsay since Rule
35 expressly permits the use of affidavits.
Lastly, the Bank argues that since Guerrero did not submit any
opposing affidavit to refute the facts contained in the Walden
affidavit, he failed to show the need for a trial on his claims for
damages other than actual.
The Court’s Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to Section
2, Rule 34 of the old Rules of Court which reads:
"Section 2. Summary judgment for defending party. – A party against whom
a claim, counterclaim, or cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting affidavits for a summary
judgment in his favor as to all or any part thereof."
A court may grant a summary judgment to settle expeditiously a case if, on
motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved,
except the amount of damages. In such event, the moving party is entitled to
a judgment as a matter of law.4
In a motion for summary judgment, the crucial question is: are the issues
raised in the pleadings genuine, sham or fictitious, as shown by affidavits,
depositions or admissions accompanying the motion?5
A genuine issue means an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious or contrived so as
not to constitute a genuine issue for trial.6
A perusal of the parties’ respective pleadings would show that there are
genuine issues of fact that necessitate formal trial. Guerrero’s complaint
before the RTC contains a statement of the ultimate facts on which he relies
for his claim for damages. He is seeking damages for what he asserts as
"illegally withheld taxes charged against interests on his checking account
with the Bank, a returned check worth US$18,000.00 due to signature
verification problems, and unauthorized conversion of his account." In its
Answer, the Bank set up its defense that the agreed foreign law to govern
their contractual relation bars the recovery of damages other than actual.
Apparently, facts are asserted in Guerrero’s complaint while specific denials
and affirmative defenses are set out in the Bank’s answer.
True, the court can determine whether there are genuine issues in a case
based merely on the affidavits or counter-affidavits submitted by the parties
to the court. However, as correctly ruled by the Court of Appeals, the
Bank’s motion for partial summary judgment as supported by the Walden
affidavit does not demonstrate that Guerrero’s claims are sham, fictitious or
contrived. On the contrary, the Walden affidavit shows that the facts and
material allegations as pleaded by the parties are disputed and there are
substantial triable issues necessitating a formal trial.
There can be no summary judgment where questions of fact are in issue or
where material allegations of the pleadings are in dispute.7 The resolution
of whether a foreign law allows only the recovery of actual damages is a
question of fact as far as the trial court is concerned since foreign laws do
not prove themselves in our courts.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 Appeals10 which held that:
"x x x:
Although it is desirable that foreign law be proved in accordance with the
above rule, however, the Supreme Court held in the case of Willamette Iron
and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132
of the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law of
San Francisco, California, who quoted verbatim a section of California Civil
Code and who stated that the same was in force at the time the obligations
were contracted, as sufficient evidence to establish the existence of said law.
Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al., upheld the Tax Court in considering the
pertinent law of California as proved by the respondents’ witness. In that
case, the counsel for respondent "testified that as an active member of the
California Bar since 1951, he is familiar with the revenue and taxation laws
of the State of California. When asked by the lower court to state the
pertinent California law as regards exemption of intangible personal
properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California
Internal and Revenue Code as published in Derring’s California Code, a
publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a
full quotation of the cited section was offered in evidence by respondents."
Likewise, in several naturalization cases, it was held by the Court that
evidence of the law of a foreign country on reciprocity regarding the
acquisition of citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action, if, in the
light of all the circumstances, the Court is "satisfied of the authenticity of
the written proof offered." Thus, in a number of decisions, mere
authentication of the Chinese Naturalization Law by the Chinese Consulate
General of Manila was held to be competent proof of that law." (Emphasis
supplied)
The Bank, however, cannot rely on Willamette Iron and Steel Works v.
Muzzal or Collector of Internal Revenue v. Fisher to support its cause.
These cases involved attorneys testifying in open court during the trial in
the Philippines and quoting the particular foreign laws sought to be
established. On the other hand, the Walden affidavit was taken abroad ex
parte and the affiant never testified in open court.1a\^/phi1.net 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 869-70.1a\^/phi1.net
9. In cases where the issue is the breach of a contract to purchase
stock, New York courts will not take into consideration the
performance of the stock after the breach. Rather, damages will be
based on the value of the stock at the time of the breach, Aroneck
v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th Dep’t 1982),
app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023
(1983).
10. Under New York law, a party can only get consequential
damages if they were the type that would naturally arise from the
breach and if they were "brought within the contemplation of
parties as the probable result of the breach at the time of or prior to
contracting." Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312,
319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v. Fargo, 223
N.Y. 32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys’
fees unless they are provided by contract or statute. E.g., Geler v.
National Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y.
1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs., Inc.,
179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dep’t 1992); Stanisic v.
Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281
(1st Dep’t 1991). There is no statute that permits attorney’s fees in
a case of this type.
12. Exemplary, or punitive damages are not allowed for a breach of
contract, even where the plaintiff claims the defendant acted with
malice. Geler v. National Westminster Bank, 770 F.Supp. 210, 215
(S.D.N.Y. 1991); Catalogue Service of …chester11 _v. Insurance
Co. of North America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637
(2d Dep’t 1980); Senior v. Manufacturers Hanover Trust Co., 110
A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dep’t 1985).
13. Exemplary or punitive damages may be recovered only where
it is alleged and proven that the wrong supposedly committed by
defendant amounts to a fraud aimed at the public generally and
involves a high moral culpability. Walker v. Sheldon, 10 N.Y.2d
401, 179 N.E.2d 497, 223 N.Y.S.2d 488 (1961).
14. Furthermore, it has been consistently held under New York law
that exemplary damages are not available for a mere breach of
contract for in such a case, as a matter of law, only a private wrong
and not a public right is involved. Thaler v. The North Insurance
Company, 63 A.D.2d 921, 406 N.Y.S.2d 66 (1st Dep’t 1978)."12
The Walden affidavit states conclusions from the affiant’s personal
interpretation and opinion of the facts of the case vis a vis the alleged laws
and jurisprudence without citing any law in particular. The citations in the
Walden affidavit of various U.S. court decisions do not constitute proof of
the official records or decisions of the U.S. courts. While the Bank attached
copies of some of the U.S. court decisions cited in the Walden affidavit,
these copies do not comply with Section 24 of Rule 132 on proof of official
records or decisions of foreign courts.
The Bank’s intention in presenting the Walden affidavit is to prove New
York law and jurisprudence. However, because of the failure to comply
with Section 24 of Rule 132 on how to prove a foreign law and decisions of
foreign courts, the Walden affidavit did not prove the current state of New
York law and jurisprudence. Thus, the Bank has only alleged, but has not
proved, what New York law and jurisprudence are on the matters at issue.
Next, the Bank makes much of Guerrero’s failure to submit an opposing
affidavit to the Walden affidavit. However, the pertinent provision of
Section 3, Rule 35 of the old Rules of Court did not make the submission of
an opposing affidavit mandatory, thus:
"SEC. 3. Motion and proceedings thereon. – The motion shall be served at
least ten (10) days before the time specified for the hearing. The adverse
party prior to the day of hearing may serve opposing affidavits. After the
hearing, the judgment sought shall be rendered forthwith if the pleadings,
depositions and admissions on file, together with the affidavits, show that,
except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter
of law." (Emphasis supplied)
It is axiomatic that the term "may" as used in remedial law, is only
permissive and not mandatory.13
Guerrero cannot be said to have admitted the averments in the Bank’s
motion for partial summary judgment and the Walden affidavit just because
he failed to file an opposing affidavit. Guerrero opposed the motion for
partial summary judgment, although he did not present an opposing
affidavit. Guerrero may not have presented an opposing affidavit, as there
was no need for one, because the Walden affidavit did not establish what
the Bank intended to prove. Certainly, Guerrero did not admit, expressly or
impliedly, the veracity of the statements in the Walden affidavit. The Bank
still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit. As the party moving for
summary judgment, the Bank has the burden of clearly demonstrating the
absence of any genuine issue of fact and that any doubt as to the existence
of such issue is resolved against the movant.14

Moreover, it would have been redundant and pointless for Guerrero to

submit an opposing affidavit considering that what the Bank seeks to be
opposed is the very subject matter of the complaint. Guerrero need not file
an opposing affidavit to the Walden affidavit because his complaint itself
controverts the matters set forth in the Bank’s motion and the Walden
affidavit. A party should not be made to deny matters already averred in his
complaint.

There being substantial triable issues between the parties, the courts a quo
correctly denied the Bank’s motion for partial summary judgment. There is
a need to determine by presentation of evidence in a regular trial if the Bank
is guilty of any wrongdoing and if it is liable for damages under the
applicable laws.

This case has been delayed long enough by the Bank’s resort to a motion for
partial summary judgment. Ironically, the Bank has successfully defeated
the very purpose for which summary judgments were devised in our rules, G.R. No. 128803 September 25, 1998
which is, to aid parties in avoiding the expense and loss of time involved in
a trial. ASIAVEST LIMITED, petitioner,
vs.
WHEREFORE, the petition is DENIED for lack of merit. The Decision THE COURT OF APPEALS and ANTONIO HERAS, respondents.
dated August 24, 1998 and the Resolution dated December 14, 1998 of the
Court of Appeals in CA-G.R. SP No. 42310 is AFFIRMED.

SO ORDERED. DAVIDE, JR., J.:

Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur. In issue is the enforceability in the Philippines of a foreign judgment. The
antecedents are summarized in the 24 August 1990 Decision1 of Branch
Ynares-Santiago, J., no part. 107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452;
thus:
The plaintiff Asiavest Limited filed a complaint on this Court, together with all its records, equipment and
December 3, 1987 against the defendant Antonio Heras properties. On July 26, 1988, the plaintiff, through
praying that said defendant be ordered to pay to the counsel filed a Motion for Reconstitution of Case
plaintiff the amounts awarded by the Hong Kong Court Records. The Court, after allowing the defendant to react
Judgment dated December 28, 1984 and amended on thereto, granted the said Motion and admitted the annexes
April 13, 1987, to wit: attached thereto as the reconstituted records of this case
per Order dated September 6, 1988. Thereafter, the
1) US$1,810,265.40 Motion to Dismiss, the resolution of which had been
or its equivalent in deferred; was denied by the Court in its Order of October
Hong Kong currency 4, 1988.
at the time of payment
with legal interest On October 19, 1988, defendant filed his Answer. The
from December 28, case was then set for pre-trial conference. At the
1984 until fully paid; conference, the parties could not arrive at any settlement.
However, they agreed on the following stipulations of
2) interest on the sum facts:
of US$1,500.00 at
9.875% per annum 1. The defendant
from October 31, admits the existence
1984 to December 28, of the judgment dated
1984; and December 28, 1984 as
well as its amendment
3) HK$905.00 at dated April 13, 1987,
fixed cost in the but not necessarily the
action; and authenticity or
validity thereof;
4) at least $80,000.00
representing 2. The plaintiff is not
attorney's fees, doing business and is
litigation expenses not licensed to do
and cost, with interest business in the
thereon from the date Philippines;
of the judgment until
fully paid. 3. The residence of
defendant, Antonio
On March 3, 1988, the defendant filed a Motion to Heras, is New Manila,
Dismiss. However, before the court could resolve the said Quezon City.
motion, a fire which partially razed the Quezon City Hall
Building on June 11, 1988 totally destroyed the office of
The only issue for this Court to determine is, whether or
not the judgment of the Hong Kong Court has been
repelled by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud or clear mistake of
law or fact, such as to overcome the presumption
established in Section 50, Rule 39 of the Rules of Court in
favor of foreign judgments.
In view of the admission by the defendant of the existence
of the aforementioned judgment (Pls. See Stipulations of
Facts in the Order dated January 5, 1989 as amended by
the Order of January 18, 1989), as well as the legal
presumption in favor of the plaintiff as provided for in
paragraph (b); Sec. 50, (Ibid.), the plaintiff presented only
documentary evidence to show rendition, existence, and
authentication of such judgment by the proper officials
concerned (Pls. See Exhibits "A" thru "B", with their
submarkings). In addition, the plaintiff presented
testimonial and documentary evidence to show its
entitlement to attorney's fees and other expenses of
litigation. . . . .
On the other hand, the defendant presented two witnesses,
namely. Fortunata dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that
no writ of summons or copy of a statement of claim of
Asiavest Limited was ever served in the office of the
Navegante Shipping Agency Limited and/or for Mr.
Antonio Heras, and that no service of the writ of
summons was either served on the defendant at his
residence in New Manila, Quezon City. Her knowledge is
based on the fact that she was the personal secretary of
Mr. Heras during his JD Transit days up to the latter part
of 1972 when he shifted or diversified to shipping
business in Hong Kong; that she was in-charge of all his
letters and correspondence, business commitments,
undertakings, conferences and appointments, until
October 1984 when Mr. Heras left Hong Kong for good;
that she was also the Officer-in-Charge or Office Manager
of Navegante Shipping Agency LTD, a Hong Kong
registered and based company acting as ships agent, up to
and until the company closed shop sometime in the first
quarter of 1985, when shipping business collapsed
worldwide; that the said company held office at 34-35
Connaught Road, Central Hong Kong and later
transferred to Carton House at Duddel Street, Hong Kong,
until the company closed shop in 1985; and that she was
certain of such facts because she held office at Caxton
House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of
Hong Kong, and as a representative of the law office of
the defendant's counsel who made a verification of the
record of the case filed by the plaintiff in Hong Kong
against the defendant, as well as the procedure in serving
Court processes in Hong Kong.
In his affidavit (Exh. "2") which constitutes his direct
testimony, the said witness stated that:
The defendant was sued on the basis of
his personal guarantee of the obligations
of Compania Hermanos de Navegacion
S.A. There is no record that a writ of
summons was served on the person of
the defendant in Hong Kong, or that any
such attempt at service was made.
Likewise, there is no record that a copy
of the judgment of the High Court was
furnished or served on the defendant;
anyway, it is not a legal requirement to
do so under Hong Kong laws;
a) The writ of
summons or claim can
be served by the
solicitor (lawyer) of
the claimant or
plaintiff. In Hong is no established legal
Kong there are no requirement or
Court personnel who obligation under
serve writs of Hong Kong laws that
summons and/or most the creditor must first
other processes. bring proceedings
against the principal
b) If the writ of debtor. The creditor
summons or claim (or can immediately go
complaint) is not against the guarantor.
contested, the
claimant or the On cross examination, Mr. Lousich stated that before he
plaintiff is not was commissioned by the law firm of the defendant's
required to present counsel as an expert witness and to verify the records of
proof of his claim or the Hong Kong case, he had been acting as counsel for the
complaint nor present defendant in a number of commercial matters; that there
evidence under oath was an application for service of summons upon the
of the claim in order defendant outside the jurisdiction of Hong Kong; that
to obtain a Judgment. there was an order of the Court authorizing service upon
Heras outside of Hong Kong, particularly in Manila or
c) There is no legal any other place in the Philippines (p. 9, TSN, 2/14/90);
requirement that such that there must be adequate proof of service of summons,
a Judgment or otherwise the Hong Kong Court will refuse to render
decision rendered by judgment (p. 10, ibid); that the mere fact that the Hong
the Court in Hong Kong Court rendered judgment, it can be presumed that
Kong [to] make a there was service of summons; that in this case, it is not
recitation of the facts just a presumption because there was an affidavit stating
or the law upon which that service was effected in [sic] a particular man here in
the claim is based. Manila; that such affidavit was filed by one Jose R.
Fernandez of the firm Sycip Salazar on the 21st of
d) There is no December 1984, and stated in essence that "on Friday, the
23rd of November 1984 he served the 4th defendant at
necessity to furnish
No. 6 First Street, Quezon City by leaving it at that
the defendant with a
address with Mr. Dionisio Lopez, the son-in-law of the
copy of the Judgment
4th defendant the copy of the writ and Mr. Lopez
or decision rendered
against him. informed me and I barely believed that he would bring the
said writ to the attention of the 4th defendant" (pp. 11-12,
ibid.); that upon filing of that affidavit, the Court was
e) In an action based asked and granted judgment against the 4th defendant;
on a guarantee, there and that if the summons or claim is not contested, the
 claimant of the plaintiff is not required to present proof of
his claim or complaint or present evidence under oath of
the claim in order to obtain judgment; and that such
judgment can be enforced in the same manner as a
judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly
proved, it is a presumptive evidence of a right as between the parties; hence,
the party impugning it had the burden to prove want of jurisdiction over his
person. HERAS failed to discharge that burden. He did not testify to state
categorically and under oath that he never received summons. Even his own
witness Lousich admitted that HERAS was served with summons in his
Quezon City residence. As to De la Vega's testimony regarding non-service
of summons, the same was hearsay and had no probative value.
As to HERAS' contention that the Hong Kong court judgment violated the
Constitution and the procedural laws of the Philippines because it contained
no statements of the facts and the law on which it was based, the trial court
ruled that since the issue relate to procedural matters, the law of the forum,
i.e., Hong Kong laws, should govern. As testified by the expert witness
Lousich, such legalities were not required under Hong Kong laws. The trial
Court also debunked HERAS' contention that the principle of excussion
under Article 2058 of the Civil Code of the Philippines was violated. It
declared that matters of substance are subject to the law of the place where
the transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be
recognized and given effect in this jurisdiction for failure of HERAS to
overcome the legal presumption in favor of the foreign judgment. It then
decreed; thus:
WHEREFORE, judgment is hereby rendered ordering
defendant to pay to the plaintiff the following sums or
their equivalents in Philippine currency at the time of
payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31,
1984 to December 28, 1984, and HK$905 as fixed cost,
with legal interests on the aggregate amount from
December 28, 1984, and to pay attorney's fees in the sum
of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an
award of judicial costs and an increase in attorney's fees in the amount of
US$19,346.45 with interest until full payment of the said obligations. On
the other hand, HERAS no longer opposed the motion and instead appealed
the decision to the Court of Appeals, which docketed the appeal as CA-G.R.
CV No. 29513.
In its order2 of 2 November 1990, the trial court granted ASIAVEST's
motion for reconsideration by increasing the award of attorney's fees to
"US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY,
AND TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST
would pay the corresponding filing fees for the increase. ASIAVEST
appealed the order requiring prior payment of filing fees. However, it later
withdrew its appeal and paid the additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision3 reversing the
decision of the trial court and dismissing ASIAVEST's complaint without
prejudice. It underscored the fact that a foreign judgment does not of itself
have any extraterritorial application. For it to be given effect, the foreign
tribunal should have acquired jurisdiction over the person and the subject
matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and
procedure, such as those relating to service of summons upon the defendant
are governed by the lex fori, which was, in this case, the law of Hong Kong.
Relative thereto, it gave weight to Lousich's testimony that under the Hong
Kong law, the substituted service of summons upon HERAS effected in the
Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm
would be valid provided that it was done in accordance with Philippine
laws. It then stressed that where the action is in personam and the defendant
is in the Philippines, the summons should be personally served on the
defendant pursuant to Section 7, Rule 14 of the Rules of Court.4 Substituted
service may only be availed of where the defendant cannot be promptly
served in person, the fact of impossibility of personal service should be
explained in the proof of service. It also found as persuasive HERAS'
argument that instead of directly using the clerk of the Sycip Salazar
Hernandez & Gatmaitan law office, who was not authorized by the judge of II.
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 . . . THE SERVICE OF SUMMONS ON [HERAS] WAS
court officer of the place where service was to be made, or for special DEFECTIVE UNDER PHILIPPINES LAW;
reasons by any person authorized by the judge.
III.
The Court of Appeals agreed with HERAS that "notice sent outside the state
to a non-resident is unavailing to give jurisdiction in an action against him . . . SUMMONS SHOULD HAVE BEEN
personally for money recovery." Summons should have been personally
PERSONALLY SERVED ON HERAS IN HONG
served on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS
KONG;
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 IV.
it did not totally foreclose the claim of ASIAVEST; thus:
. . . THE HONG KONG SUMMONS SHOULD HAVE
While We are not fully convinced that [HERAS] has a BEEN SERVED WITH LEAVE OF PHILIPPINE
meritorious defense against [ASIAVEST's] claims or that COURTS;
[HERAS] ought to be absolved of any liability,
nevertheless, in view of the foregoing discussion, there is V.
a need to deviate front the findings of the lower court in
the interest of justice and fair play. This, however, is . . . THE FOREIGN JUDGMENT "CONTRAVENES
without prejudice to whatever action [ASIAVEST] might PHILIPPINE LAWS, THE PRINCIPLES OF SOUND
deem proper in order to enforce its claims against MORALITY, AND THE PUBLIC POLICY OF THE
[HERAS]. PHILIPPINES.

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";
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,5 which
was the governing law at the time this case was decided by the trial court
and respondent Court of Appeals, a foreign judgment against a person
rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors
in interest by the subsequent title. However, the judgment may be repelled
by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that
in the absence of proof to the contrary, a court, or judge acting as such,
whether in the Philippines or elsewhere, is presumed to have acted in the
lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden
to repel it on grounds provided for in paragraph (b) of Section 50, Rule 39
of the Rules of Court is on the party challenging the foreign judgment —
HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong
Kong judgment. On the other hand, ASIAVEST presented evidence to
prove rendition, existence, and authentication of the judgment by the proper
officials. The judgment is thus presumed to be valid and binding in the
country from which it comes, until the contrary is shown. 6 Consequently,
the first ground relied upon by ASIAVEST has merit. The presumption of
validity accorded foreign judgment would be rendered meaningless were the
party seeking to enforce it be required to first establish its validity.
The main argument raised against the Hong Kong judgment is that the Hong
Kong Supreme Court did not acquire jurisdiction over the person of
HERAS. This involves the issue of whether summons was properly and
validly served on HERAS. It is settled that matters of remedy and procedure
such as those relating to the service of process upon the defendant are
governed by the lex fori or the law of the forum, 7 i.e., the law of Hong
Kong in this case. HERAS insisted that according to his witness Mr.
Lousich, who was presented as an expert on Hong Kong laws, there was no
valid service of summons on him.
In his counter-affidavit,8 which served as his direct testimony per
agreement of the parties,9 Lousich declared that the record of the Hong
Kong case failed to show that a writ of summons was served upon HERAS
in Hong Kong or that any such attempt was made. Neither did the record
show that a copy of the judgment of the court was served on HERAS. He
stated further that under Hong Kong laws (a) a writ of summons could be
served by the solicitor of the claimant or plaintiff; and (b) where the said
writ or claim was not contested, the claimant or plaintiff was not required to
present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich' testified that the
Hong Kong court authorized service of summons on HERAS outside of its
jurisdiction, particularly in the Philippines. He admitted also the existence
of an affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez &
Gatmaitan law firm stating that he (Fernandez) served summons on HERAS
on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with
HERAS's son-in-law Dionisio Lopez. 10 On redirect examination, Lousich
declared that such service of summons would be valid under Hong Kong
laws provided that it was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the
qualification of Mr. Lousich as an expert on the Hong Kong law. Under
Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of
public documents of a sovereign authority, tribunal, official body, or public
officer may be proved by (1) an official publication thereof or (2) a copy
attested by the officer having the legal custody thereof, which must be
accompanied, if the record is not kept in the Philippines, with a certificate
that such officer has the custody. The certificate may be issued by a
secretary of the embassy or legation, consul general, consul, vice consul, or
consular agent, or any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and must be under the official seal of the
attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a
foreign law. An authority 12 on private international law thus noted:
Although it is desirable that foreign law be proved in
accordance with the above rule, however, the Supreme
Court held in the case of Willamette Iron and Steel Works
v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule
132 of the Revised Rules of Court) does not exclude the
presentation of other competent evidence to prove the
existence of a foreign law. In that case, the Supreme
Court considered the testimony under oath of an attorney-
at-law of San Francisco, California, who quoted verbatim
a section of California Civil Code and who stated that the
same was in force at the time the obligations were
contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view,
 the Supreme Court in the Collector of Internal Revenue v.
Fisher et al., 14 upheld the Tax Court in considering the
pertinent law of California as proved by the respondents'
witness. In that case, the counsel for respondent "testified
that as an active member of the California Bar since 1951,
he is familiar with the revenue and taxation laws of the
State of California. When asked by the lower court to
state the pertinent California law as regards exemption of
intangible personal properties, the witness cited Article 4,
Sec. 13851 (a) & (b) of the California Internal and
Revenue Code as published in Derring's California Code,
a publication of Bancroft-Whitney Co., Inc. And as part
of his testimony, a full quotation of the cited section was
offered in evidence by respondents." Likewise, in several
naturalization cases, it was held by the Court that
evidence of the law of a foreign country on reciprocity
regarding the acquisition of citizenship, although not
meeting the prescribed rule of practice, may be allowed
and used as basis for favorable action, if, in the light of all
the circumstances, the Court is "satisfied of the
authenticity of the written proof offered." 15 Thus, in, a
number of decisions, mere authentication of the Chinese
Naturalization Law by the Chinese Consulate General of
Manila was held to be competent proof of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on
the specific law of Hong Kong in respect of service of summons either in
actions in rem or in personam, and where the defendant is either a resident
or nonresident of Hong Kong. In view of the absence of proof of the Hong
Kong law on this particular issue, the presumption of identity or similarity
or the so-called processual presumption shall come into play. It will thus be
presumed that the Hong Kong law on the matter is similar to the Philippine
law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to
determine first whether the action is in personam, in rem, or quasi in rem
because the rules on service of summons under Rule 14 of the Rules of
Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his
personal liability. An action in rem is an action against the thing itself
instead of against the person. 19 An action quasi in rem is one wherein an
individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the property.
20
In an action in personam, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. Jurisdiction over
the person of a resident defendant who does not voluntarily appear in court
can be acquired by personal service of summons as provided under Section
7, Rule 14 of the Rules of Court. If he cannot be personally served with
summons within a reasonable time, substituted service may be made in
accordance with Section 8 of said Rule. If he is temporarily out of the
country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; 21 (2) personal service outside the
country, with leave of court; (3) service by publication, also with leave of
court; 22 or (4) any other manner the court may deem sufficient. 23
However, in an action in personam wherein the defendant is a non-resident
who does not voluntarily submit himself to the authority of the court,
personal service of summons within the state is essential to the acquisition
of jurisdiction over her person. 24 This method of service is possible if such
defendant is physically present in the country. If he is not found therein, the
court cannot acquire jurisdiction over his person and therefore cannot
validly try and decide the case against him. 25 An exception was laid down
in Gemperle v. Schenker 26 wherein a non-resident was served with
summons through his wife, who was a resident of the Philippines and who
was his representatives and attorney-in-fact in a prior civil case filed by
him; moreover, the second case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over
the person of the defendant is not a prerequisite to confer jurisdiction on the
court provided that the court acquires jurisdiction over the res. Nonetheless
summons must be served upon the defendant not for the purpose of vesting
the court with jurisdiction but merely for satisfying the due process
requirements. 27 Thus, where the defendant is a non-resident who is not
found in the Philippines and (1) the action affects the personal status of the
plaintiff; (2) the action relates to, or the subject matter of which is property
in the Philippines in which the defendant has or claims a lien or interest; (3)
the action seeks the exclusion of the defendant from any interest in the
property located in the Philippines; or (4) the property of the defendant has
been attached in the Philippines — service of summons may be effected by
(a) personal service out of the country, with leave of court; (b) publication,
also with leave of court, or (c) any other manner the court may deem
sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in
personam, since it was based on his personal guarantee of the obligation of
the principal debtor. Before we can apply the foregoing rules, we must
determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since
1972 until 1985, 29 testified that HERAS was the President and part owner
of a shipping company in Hong Kong during all those times that she served
as his secretary. He had in his employ a staff of twelve. 30 He had "business
commitments, undertakings, conferences, and appointments until October
1984 when [he] left Hong Kong for good," 31 HERAS's other witness,
Russel Warren Lousich, testified that he had acted as counsel for HERAS
"for a number of commercial matters." 32 ASIAVEST then infers that
HERAS was a resident of Hong Kong because he maintained a business
there.
It must be noted that in his Motion to Dismiss, 33 as well as in his
Answer 34 to ASIAVEST's complaint for the enforcement of the Hong
Kong court judgment, HERAS maintained that the Hong Kong court did not
have jurisdiction over him because the fundamental rule is that jurisdiction
in personam over non-resident defendants, so as to sustain a money
judgment, must be based upon personal service of summons within the state
which renders the judgment. 35
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss 36
contended: "The question of Hong Kong court's 'want of jurisdiction' is
therefore a triable issue if it is to be pleaded by the defendant to 'repel' the
foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong
Kong suit was in personam, that defendant was not a resident of Hong Kong
when the suit was filed or that he did not voluntarily submit to the Hong
Kong court's jurisdiction) should be alleged and proved by the defendant."
37
In his Reply (to the Opposition to Motion to Dismiss), 38 HERAS argued
that the lack of jurisdiction over his person was corroborated by
ASIAVEST's allegation in the complaint that he "has his residence at No. 6,
1st St., New Manila, Quezon City, Philippines." He then concluded that
such judicial admission amounted to evidence that he was and is not a
resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with
stipulations of facts, among which was that "the residence of defendant,
Antonio Heras, is New Manila, Quezon City." 39
We note that the residence of HERAS insofar as the action for the
enforcement of the Hong Kong court judgment is concerned, was never in
issue. He never challenged the service of summons on him through a
security guard in his Quezon City residence and through a lawyer in his
office in that city. In his Motion to Dismiss, he did not question the
jurisdiction of the Philippine court over his person on the ground of invalid
service of summons. What was in issue was his residence as far as the Hong
Kong suit was concerned. We therefore conclude that the stipulated fact that
HERAS "is a resident of New Manila, Quezon City, Philippines" refers to
his residence at the time jurisdiction over his person was being sought by
the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now
claim that HERAS was a resident of Hong Kong at the time.
Accordingly, since HERAS was not a resident of Hong Kong and the action
against him was, indisputably, one in personam, summons should have been
personally served on him in Hong Kong. The extraterritorial service in the
Philippines was therefore invalid and did not confer on the Hong Kong
court jurisdiction over his person. It follows that the Hong Kong court
judgment cannot be given force and effect here in the Philippines for having
been rendered without jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was
no longer so in November 1984 when the extraterritorial service of
summons was attempted to be made on him. As declared by his secretary,
which statement was not disputed by ASIAVEST, HERAS left Hong Kong
in October 1984 "for good." 40 His absence in Hong Kong must have been
the reason why summons was not served on him therein; thus, ASIAVEST
was constrained to apply for leave to effect service in the Philippines, and
upon obtaining a favorable action on the matter, it commissioned the Sycip
Salazar Hernandez & Gatmaitan law firm to serve the summons here in the
Philippines.

In Brown v. Brown, 41 the defendant was previously a resident of the

Philippines. Several days after a criminal action for concubinage was filed
against him, he abandoned the Philippines. Later, a proceeding quasi in rem
was instituted against him. Summons in the latter case was served on the
defendant's attorney-in-fact at the latter's address. The Court held that under
the facts of the case, it could not be said that the defendant was "still a
resident of the Philippines because he ha[d] escaped to his country and
[was] therefore an absentee in the Philippines." As such, he should have
been "summoned in the same manner as one who does not reside and is not
found in the Philippines."

Similarly, HERAS, who was also an absentee, should have been served with
summons in the same manner as a non-resident not found in Hong Kong.
Section 17, Rule 14 of the Rules of Court providing for extraterritorial
service will not apply because the suit against him was in personam.
Neither can we apply Section 18, which allows extraterritorial service on a
resident defendant who is temporarily absent from the country, because
even if HERAS be considered as a resident of Hong Kong, the undisputed
fact remains that he left Hong Kong not only "temporarily" but "for good."

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered

DENYING the petition in this case and AFFIRMING the assailed judgment
of the Court of Appeals in CA-G.R. CV No. 29513.