1
situation where some of the significant facts occurred in two or more states; and (2) to what extent
FIRST DIVISION
[G.R. No. 122191. October 8, 1998.]
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS,
MILAGROS P. MORADA and HON. RODOLFO A. ORTIZ, in his
capacity as Presiding Judge of Branch 89, Regional Trial Court of
Quezon City, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; VENUE; CONVENIENCE OF THE LITIGANTS IS OF
PRAGMATIC CONSIDERATIONS. — Pragmatic considerations, including the convenience of the
parties, also weigh heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is
the private interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious.
Relative advantages and obstacles to a fair trial are equally important. Plaintiff may not, by choice
of an inconvenient forum, 'vex', 'harass', or 'oppress' the defendant, e.g., by inflicting upon him
needless expense of disturbance. But unless the balance is strongly in favor of the defendant, the
plaintiff's choice of forum should rarely be disturbed. Weighing the relative claims of the parties,
the court a quo found it best to hear the case in the Philippines. Had it refused to take cognizance
of the case, it would be forcing plaintiff to seek remedial action elsewhere, i.e., in the Kingdom of
Saudi Arabia where she no longer maintains substantial connections. That would have caused a
fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary
difficulties and inconvenience have been shown by either of the parties. The choice of forum of the
plaintiff should be upheld. cdasia
2. ID.; ID.; JURISDICTION; OVER THE PERSONS OF THE LITIGANTS IS OBTAINED IN THE
CASE AT BAR. — Similarly, the trial court also possesses jurisdiction over the persons of the
parties herein. By filing her Complaint and Amended Complaint with the trial court, private
respondent has voluntarily submitted herself to the jurisdiction of the court. The records show
that petitioner SAUDIA has filed several motions praying for the dismissal of Morada's Amended
Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995.
What is very patent and explicit from the motions filed, is that SAUDIA prayed for other reliefs
under the premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial court's
jurisdiction by praying for the dismissal of the Amended Complaint on grounds other than lack of
jurisdiction.
3. CONFLICT OF LAWS; CHOICE OF LAW; CHARACTERIZATION (DOCTRINE OF
QUALIFICATION) DEFINED. — As to the choice of applicable law, we note that choice-of-law
problems seek to answer two important questions: (1) What legal system should control a given
should the chosen legal system regulate the situation. Before a choice can be made, it is necessary
for us to determine under what category a certain set of facts or rules fall. This process is known
as "characterization", or the "doctrine of qualification." It is the "process of deciding whether or
not the facts relate to the kind of question specified in a conflicts rule." The purpose of
"characterization" is to enable the forum to select the proper law.
4. ID.; ID.; ID.; PHILIPPINES IS THE SITUS OF THE TORT. — Considering that the complaint
in the court a quo is one involving torts, the "connecting factor" or "point of contract" could be the
place or places where the tortious conduct or lex loci actus occurred. And applying the torts
principle in a conflicts case, we find that the Philippines could be said as a situs of the tort (the
places where the alleged tortious conduct took place). This is because it is in the Philippines where
petitioner allegedly deceived private respondent, a Filipina residing and working here. According
to her, she had honestly believed that petitioner would, in the exercise of its rights and in the
performance of its duties, "act with justice, give her due and observe honesty and good faith."
Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the injury
allegedly occurred in another country is of no moment. For in our view what is important here is
the place where the over-all harm or the totality of the alleged injury to the person, reputation,
social standing and human rights of complainant, had lodged, according to the plaintiff below
(herein private respondent). All told, it is not without basis to identify the Philippines as the situs
of the alleged tort. IcaHTA
5. ID.; ID.; STATE OF THE MOST SIGNIFICANT RELATIONSHIP RULE APPLIES IN THE CASE
AT BAR. — Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability have been advanced to offer fresh judicial
approaches to arrive at just results. In keeping abreast with the modern theories on tort liability,
we find here an occasion to apply the "State of the most significant relationship" rule, which in our
view should be appropriate to apply now, given the factual context of this case. In applying said
principle to determine the State which has the most significant relationship, the following contacts
are to be taken into account and evaluated according to their relative importance with respect to
the particular issue: (a) the place where the injury occurred; (b) the place where the conduct
causing the injury occurred; (c) the domicile, residence, nationality place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any, between the parties
is centered. As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a resident
Filipina national, working with petitioner, a resident foreign corporation engaged here in the
business of international air carriage. Thus, the "relationship" between the parties was centered
here, although it should be stressed that this suit is not based on mere labor law violations. From
the records, the claim that the Philippines has the most significant contact with the matter in this
dispute, raised by private respondent as plaintiff below against defendant (herein petitioner), in
our view, has been properly established. Prescinding from this premise that the Philippines is the
situs of the tort complained of and the place "having the most interest in the problem." HCaDIS

DECISION
QUISUMBING, J p:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside
the Resolution 1 dated September 27, 1995 and the Decision 2dated April 10, 1996 of the Court of
Appeals 3 in CA-G.R. SP No. 36533, 4 and the Orders 5 dated August 29, 1994 6 and February 2,
1995 7 that were issued by the trial court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the questioned
Decision 9 , are as follows: dctai
"On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant
for its airlines based in Jeddah, Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to
a disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-
Gazzawi, both Saudi nationals. Because it was almost morning when they
returned to their hotels, they agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly
after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and
several security personnel heard her cries for help and rescued her. Later, the
Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter
as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go
back to Jakarta to help arrange the release of Thamer and Allah. In Jakarta,
SAUDIA Legal Officer Sirah Akkad and base manager Baharini negotiated
with the police for the immediate release of the detained crew members but
did not succeed because plaintiff refused to cooperate. She was afraid that she
might be tricked into something she did not want because of her inability to
understand the local dialect. She also declined to sign a blank paper and a
document written in the local dialect. Eventually, SAUDIA allowed plaintiff
to return to Jeddah but barred her from the Jakarta flights. LLphil
Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were again put in service by
defendant SAUDI (sic). In September 1990, defendant SAUDIA transferred
plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors requested her to see Mr. Ali Miniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the
2
police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of Jeddah.
One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed
to board the plane and instead ordered to take a later flight to Jeddah to see
Mr. Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain
Khalid of the SAUDIA office brought her to a Saudi court where she was asked
to sign a document written in Arabic. They told her that this was necessary to
close the case against Thamer and Allah. As it turned out, plaintiff signed a
notice to her to appear before the court on June 27, 1993. Plaintiff then
returned to Manila. Cdpr
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to
Jeddah once again and see Miniewy on June 27, 1993 for further investigation.
Plaintiff did so after receiving assurance from SAUDIA's Manila manager,
Aslam Saleemi, that the investigation was routinary and that it posed no
danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court
on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After
one hour of interrogation, they let her go. At the airport, however, just as her
plane was about to take off, a SAUDIA officer told her that the airline had
forbidden her to take flight. At the Inflight Service Office where she was told
to go, the secretary of Mr. Yahya Saddick took away her passport and told her
to remain in Jeddah, at the crew quarters, until further orders. LLpr
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and
to 286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court
found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening
to the music in violation of Islamic laws; and (3) socializing with the male
crew, in contravention of Islamic tradition." 10
Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA.
Unfortunately, she was denied any assistance. She then asked the Philippine Embassy in Jeddah
to help her while her case is on appeal. Meanwhile, to pay for her upkeep, she worked on the
domestic flight of SAUDIA, while Thamer and Allah continued to serve in the international
flights. 11

Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her and
allowed her to leave Saudi Arabia. Shortly before her return to Manila, 12 she was terminated from
the service by SAUDIA, without her being informed of the cause. LLpr
On November 23, 1993, Morada filed a Complaint 13 for damages against SAUDIA, and Khaled
Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which raised the following
grounds, to wit: (1) that the Complaint states no cause of action against Saudia; (2) that defendant
Al-Balawi is not a real party in interest; (3) that the claim or demand set forth in the Complaint
has been waived, abandoned or otherwise extinguished; and (4) that the trial court has no
jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15 . Saudia filed a
reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was dropped as
party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion to Dismiss
Amended Complaint 18 .
The trial court issued an Order 19 dated August 29, 1994 denying the Motion to Dismiss Amended
Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA filed on
September 20, 1994, its Motion for Reconsideration 21 of the Order dated August 29, 1994. It
alleged that the trial court has no jurisdiction to hear and try the case on the basis of Article 21 of
the Civil Code, since the proper law applicable is the law of the Kingdom of Saudi Arabia. On
October 14, 1994, Morada filed her Opposition 22 (To Defendant's Motion for
Reconsideration). cdrep
In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that since its Motion
for Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule
does not apply, even if that ground is raised for the first time on appeal. Additionally, SAUDIA
alleged that the Philippines does not have any substantial interest in the prosecution of the instant
case, and hence, without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated February 2, 1995, denying
SAUDIA's Motion for Reconsideration. The pertinent portion of the assailed Order reads as follows:
"Acting on the Motion for Reconsideration of defendant Saudi Arabian
Airlines filed, thru counsel, on September 20, 1994, and the Opposition
thereto of the plaintiff filed, thru counsel, on October 14, 1994, as well as the
Reply therewith of defendant Saudi Arabian Airlines filed, thru counsel, on
October 24, 1994, considering that a perusal of the plaintiff's Amended
Complaint, which is one for the recovery of actual, moral and exemplary
damages plus attorney's fees, upon the basis of the applicable Philippine law,
Article 21 of the New Civil Code of the Philippines, is, clearly, within the
3
jurisdiction of this Court as regards the subject matter, and there being
nothing new of substance which might cause the reversal or modification of
the order sought to be reconsidered, the motion for reconsideration of the
defendant, is DENIED. prLL
SO ORDERED." 25
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and Prohibition with
Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary Restraining
Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
Order 27 dated February 23, 1995, prohibiting the respondent Judge from further conducting any
proceeding, unless otherwise directed, in the interim.
In another Resolution 28 promulgated on September 27, 1995, now assailed, the appellate court
denied SAUDIA's Petition for the Issuance of a Writ of Preliminary Injunction dated February 18,
1995, to wit:
"The Petition for the Issuance of a Writ of Preliminary Injunction is hereby
DENIED, after considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing
that herein petitioner is not clearly entitled thereto (Unciano Paramedical
College, et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second
Division). cdphil
SO ORDERED."
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition 29 for Review
with Prayer for Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals rendered the
Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an appropriate
forum considering that the Amended Complaint's basis for recovery of damages is Article 21 of the
Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held that
certiorari is not the proper remedy in a denial of a Motion to Dismiss, inasmuch as the petitioner
should have proceeded to trial, and in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for Temporary
Restraining Order 31 dated April 30, 1996, given due course by this Court. After both parties
submitted their Memoranda, 32 the instant case is now deemed submitted for decision. LLjur
Petitioner SAUDIA raised the following issues:
"I
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394
based on Article 21 of the New Civil Code since the proper law applicable is

the law of the Kingdom of Saudi Arabia inasmuch as this case involves what
is known in private international law as a 'conflicts problem'. Otherwise, the
Republic of the Philippines will sit in judgment of the acts done by another
sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a jurisdictional
requirement. Besides, the matter as to absence of leave of court is now moot
and academic when this Honorable Court required the respondents to
comment on petitioner's April 30, 1996 Supplemental Petition For Review
With Prayer For A Temporary Restraining Order Within Ten (10) Days From
Notice Thereof. Further, the Revised Rules of Court should be construed with
liberality pursuant to Section 2, Rule 1 thereof. prcd
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R.
SP NO. 36533 entitled 'Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al.'
and filed its April 30, 1996 Supplemental Petition For Review With Prayer
For A Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within
the 15-day reglementary period as provided for under Section 1, Rule 45 of the
Revised Rules of Court. Therefore, the decision in CA-G.R. SP No. 36533 has
not yet become final and executory and this Honorable Court can take
cognizance of this case." 33
From the foregoing factual and procedural antecedents, the following issues emerge for our
resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT THE REGIONAL TRIAL COURT OF QUEZON CITY HAS
JURISDICTION TO HEAR AND TRY CIVIL CASE NO. Q-93-18394
ENTITLED "MILAGROS P. MORADA V. SAUDI ARABIAN
AIRLINES". cdrep
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT
IN THIS CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It
maintains that private respondent's claim for alleged abuse of rights occurred in the Kingdom of
Saudi Arabia. It alleges that the existence of a foreign element qualifies the instant case for the
application of the law of the Kingdom of Saudi Arabia, by virtue of the lex loci delicti
commissi rule. 34
4
On the other hand, private respondent contends that since her Amended Complaint is based
on Articles 19 35 and 21 36 of the Civil Code, then the instant case is properly a matter of domestic
law. 37
Under the factual antecedents obtaining in this case, there is no dispute that the interplay of events
occurred in two states, the Philippines and Saudi Arabia. prcd
As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:
"2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines
corporation doing business in the Philippines. It may be served with
summons and other court processes at Travel Wide Associated Sales (Phils.),
Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati,
Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah
after two weeks of detention. Eventually, they were again put in service by
defendant SAUDIA. In September 1990, defendant SAUDIA transferred
plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta incident
was already behind her, her superiors requested her to see MR. Ali Meniewy,
Chief Legal Officer of SAUDIA. in Jeddah, Saudi Arabia. When she saw him,
he brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of Jeddah. Cdpr
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a
few minutes before the departure of her flight to Manila, plaintiff was not
allowed to board the plane and instead ordered to take a later flight to Jeddah
to see Mr. Meniewy, the Chief Legal Officer of SAUDIA. When she did, a
certain Khalid of the SAUDIA office brought her to a Saudi court where she
was asked to sigh a document written in Arabic. They told her that this was
necessary to close the case against Thamer and Allah. As it turned out,
plaintiff signed a notice to her to appear before the court on June 27,
1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to
Jeddah once again and see Miniewy on June 27, 1993 for further
investigation.Plaintiff did so after receiving assurance from SAUDIA's

Manila manager, Aslam Saleemi, that the investigation was routinary and
that it posed no danger to her. Cdpr
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi
court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi
judge interrogated plaintiff through an interpreter about the Jakarta incident.
After one hour of interrogation, they let her go. At the airport, however, just
as her plane was about to take off, a SAUDIA officer told her that the airline
had forbidden her to take that flight. At the Inflight Service Office where she
was told to go, the secretary of Mr. Yahya Saddick took away her passport and
told her to remain in Jeddah, at the crew quarters, until further orders. prLL
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and
to 286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court
found plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and
listening to the music in violation of Islamic laws; (3) socializing with the male
crew, in contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought
the help of the Philippine Embassy in Jeddah. The latter helped her pursue
an appeal from the decision of the court. To pay for her upkeep, she worked
on the domestic flights of defendant SAUDIA while, ironically, Thamer and
Allah freely served the international flights." 39
Where the factual antecedents satisfactorily establish the existence of a foreign element, we agree
with petitioner that the problem herein could present a "conflicts" case.
A factual situation that cuts across territorial lines and is affected by the diverse laws of two or
more states is said to contain a "foreign element". The presence of a foreign element is inevitable
since social and economic affairs of individuals and associations are rarely confined to the
geographic limits of their birth or conception. 40
The forms in which this foreign element may appear are many. 41 The foreign element may simply
consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that
a contract between nationals of one State involves properties situated in another State. In other
cases, the foreign element may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that private respondent Morada is a
resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also,
by virtue of the employment of Morada with the petitioner Saudia as a flight stewardess, events
did transpire during her many occasions of travel across national borders, particularly from
Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a "conflicts" situation to
arise. llcd
5
We thus find private respondent's assertion that the case is purely domestic, imprecise.
A conflicts problem presents itself here, and the question of jurisdiction43 confronts the court a
quo.
After a careful study of the private respondent's Amended Complaint, 44 and the Comment
thereon, we note that she aptly predicated her cause of action on Articles 19 and 21 of the New
Civil Code.
On one hand, Article 19 of the New Civil Code provides;
"Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice give everyone his due and observe
honesty and good faith."
On the other hand, Article 21 of the New Civil Code provides:
"Art. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages." cdtai
Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held that:
"The aforecited provisions on human relations were intended to expand the
concept of torts in this jurisdiction by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes."
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus,
we agree with private respondent's assertion that violations of Articles 19 and 21 are actionable,
with judicially enforceable remedies in the municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the light of the Rules of Court on
jurisdiction 47 we find that the Regional Trial Court (RTC) of Quezon City possesses jurisdiction
over the subject matter of the suit. 48 Its authority to try and hear the case is provided for
under Section 1 of Republic Act No. 7691, to wit:
"Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980", is hereby amended to read as
follows: cda
SEC. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise
exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and cost or the value of
the property in controversy exceeds One hundred thousand pesos

(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds Two hundred Thousand
pesos (P200,000.00). (Emphasis ours)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court — the venue, Quezon City, is
appropriate:
"SEC. 2. Venue in Courts of First Instance. — [Now Regional Trial Court]
(a) . . .
(b) Personal actions. — All other actions may be commenced and tried where
the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiff resides, at the election of the plaintiff." llcd
Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of
the RTC Quezon City assuming jurisdiction. Paramount is the private interest of the litigant.
Enforceability of a judgment if one is obtained is quite obvious. Relative advantages and obstacles
to a fair trial are equally important. Plaintiff may not, by choice of an inconvenient forum, 'vex',
'harass', or 'oppress' the defendant, e.g. by inflicting upon him needless expense or disturbance.
But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should
rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance of the case, it would be forcing plaintiff (private
respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of Saudi Arabia where she
no longer maintains substantial connections. That would have caused a fundamental unfairness
to her. Cdpr
Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience
have been shown by either of the parties. The choice of forum of the plaintiff (now private
respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties herein. By filing
her Complaint and Amended Complaint with the trial court, private respondent has voluntary
submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for the dismissal
of Morada's Amended Complaint. SAUDIA also filed an Answer InEx Abundante Cautelam dated
February 20, 1995. What is very patent and explicit from the motions filed, is that SAUDIA prayed
for other reliefs under the premises. Undeniably, petitioner SAUDIA has effectively submitted to
the trial court's jurisdiction by praying for the dismissal of the Amended Complaint on grounds
other than lack of jurisdiction. LLpr
6
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
"We observe that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower court's jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that plaintiff's cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker
and Co., Ltd. availed of an affirmative defense on the basis of which it prayed
the court to resolve controversy in its favor. For the court to validly decide the
said plea of defendant Ker & Co., Ltd., it necessarily had to acquire
jurisdiction upon the latter's person, who, being the proponent of the
affirmative defense, should be deemed to have abandoned its special
appearance and voluntarily submitted itself to the jurisdiction of the court."
Similarly, the case of De Midgely vs. Ferandos, held that:
"When the appearance is by motion for the purpose of objecting to the
jurisdiction of the court over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If his motion is for any
other purpose than to object to the jurisdiction of the court over his person,
he thereby submits himself to the jurisdiction of the court. A special
appearance by motion made for the purpose of objecting to the jurisdiction of
the court over the person will be held to be a general appearance, if the party
in said motion should, for example, ask for a dismissal of the action upon the
further ground that the court had no jurisdiction over the subject matter." 52
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of Quezon City.
Thus, we find that the trial court has jurisdiction over the case and that its exercise thereof,
justified. LibLex
As to the choice of applicable law, we note that choice-of-law problems seek to answer two
important questions: (1) What legal system should control a given situation where some of the
significant facts occurred in two or more states; and (2) to what extent should the chosen legal
system regulate the situation. 53
Several theories have been propounded in order to identify the legal system that should ultimately
control. Although ideally, all choice-of-law theories should intrinsically advance both notions of
justice and predictability, they do not always do so. The forum is then faced with the problem of
deciding which of these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what category a certain set
of facts or rules fall. This process is known as "characterization", or the "doctrine of qualification".
It is the "process of deciding whether or not the facts relate to the kind of question specified in a
conflicts rule." 55 The purpose of "characterization" is to enable the forum to select the proper
law. 56
Our starting point of analysis here is not a legal relation, but a factual situation, event, or operative
fact. 57 An essential element of conflict rules is the indication of a "test" or "connecting factor" or

"point of contact". Choice-of-law rules invariably consist of a factual relationship (such as property
right, contract claim) and a connecting factor or point of contact, such as the situs of the res, the
place of celebration, the place of performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test for the
determination of the applicable law. 59 These "test factors" or "points of contact" or "connecting
factors" could be any of the following:
"(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his
origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In
particular, the lex situs is decisive when real rights are involved; prcd
(4) the place where an act has been done, the locus actus, such as the place where a
contract has been made, a marriage celebrated, a will signed or a tort committed. The
lex loci actus is particularly important in contracts and torts:
(5) the place where an act is intended to come into effect, e.g., the place of performance of
contractual duties, or the place where a power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should govern their agreement,
the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done. The lex
fori — the law of the forum — is particularly important because, as we have seen earlier,
matters of 'procedure' not going to the substance of the claim involved are governed by it;
and because the lex fori applies whenever the content of the otherwise applicable foreign
law is excluded from application in a given case for the reason that it falls under one of the
exceptions to the applications of foreign law, and cdll
(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers contractual
relationships particularly contracts of affreightment." 60 (Emphasis ours.)
After a careful study of the pleadings on record, including allegations in the Amended Complaint
deemed admitted for purposes of the motion to dismiss, we are convinced that there is reasonable
basis for private respondent's assertion that although she was already working in Manila,
petitioner brought her to Jeddah on the pretense that she would merely testify in an investigation
of the charges she made against the two SAUDIA crew members for the attack on her person while
they were in Jakarta. As it turned out, she was the one made to face trial for very serious charges,
including adultery and violation of Islamic laws and tradition. cdtai
There is likewise logical basis on record for the claim that the "handing over" or "turning over" of
the person of private respondent to Jeddah officials, petitioner may have acted beyond its duties
as employer. Petitioner's purported act contributed to and amplified or even proximately caused
7
additional humiliation, misery and suffering of private respondent. Petitioner thereby allegedly
facilitated the arrest, detention and prosecution of private respondent under the guise of
petitioner's authority as employer, taking advantage of the trust, confidence and faith she reposed
upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment
of private respondent was wrongful. But these capped the injury or harm allegedly inflicted upon
her person and reputation, for which petitioner could be liable as claimed, to provide
compensation or redress for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the "connecting factor" or
"point of contact" could be the place or places where the tortious conduct or lex loci actus occurred.
And applying the torts principle in a conflicts case, we find that the Philippines could be said as a
situs of the tort (the place where the alleged tortious conduct took place). This is because it is in
the Philippines where petitioner allegedly deceived private respondent, a Filipina residing and
working here. According to her, she had honestly believed that petitioner would, in the exercise of
its rights and in the performance of its duties, "act with justice, give her her due and observe
honesty and good faith." Instead, petitioner failed to protect her, she claimed. That certain acts or
parts of the injury allegedly occurred in another country is of no moment. For in our view what is
important here is the place where the over-all harm or the totality of the alleged injury to the
person, reputation, social standing and human rights of complainant, had lodged, according to the
plaintiff below (herein private respondent). All told, it is not without basis to identify the
Philippines as the situs of the alleged tort. LibLex
Moreover, with the widespread criticism of the traditional rule of lex loci delicti commisi, modem
theories and rules on tort liability 61 have been advanced to offer fresh judicial approaches to
arrive at just results. In keeping abreast with the modern theories on tort liability, we find here an
occasion to apply the "State of the most significant relationship" rule, which in our view should be
appropriate to apply now, given the factual context of this case.
In applying said principle to determine the State which has the most significant relationship, the
following contacts are to be taken into account and evaluated according to their relative
importance with respect to the particular issue: (a) the place where the injury occurred; (b) the
place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place
of incorporation and place of business of the parties, and (d) the place where the relationship, if
any, between the parties is centered. 62
As already discussed, there is basis for the claim that over-all injury occurred and lodged in the
Philippines. There is likewise no question that private respondent is a resident Filipina national,
working with petitioner, a resident foreign corporation engaged here in the business of
international air carriage. Thus, the "relationship" between the parties was centered here,
although it should be stressed that this suit is not based on mere labor law violations. From the
record, the claim that the Philippines has the most significant contact with the matter in this
dispute, 63 raised by private respondent as plaintiff below against defendant (herein petitioner),
in our view, has been properly established. cdll
Prescinding from this premise that the Philippines is the situs of the tort complained of and the
place "having the most interest in the problem", we find, by way of recapitulation, that the
 8

Philippine law on tort liability should have paramount application to and control in the resolution
of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial
Court has jurisdiction over the parties and the subject matter of the complaint; the appropriate
venue is in Quezon City, which could properly apply Philippine law. Moreover, we find untenable
petitioner's insistence that "[s]ince private respondent instituted this suit, she has the burden of
pleading and proving the applicable Saudi law on the matter." 64 As aptly said by private
respondent, she has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia
since her cause of action is based on Articles 19 and 21" of the Civil Code of the Philippines. In her
Amended Complaint and subsequent pleadings, she never alleged that Saudi Law should govern
this case. 65 And as correctly held by the respondent appellate court, "considering that it was the
petitioner who was invoking the applicability of the law of Saudi Arabia, then the burden was on
it [petitioner] to plead and to establish what the law of Saudi Arabia is". 66

Lastly, no error could be imputed to the respondent appellate court in upholding the trial court's
denial of defendant's (herein petitioner's) motion to dismiss the case; Not only was jurisdiction in
order and venue properly laid, but appeal after trial was obviously available, and expeditious trial
itself indicated by the nature of the case at hand. Indubitably, the Philippines is the state intimately
concerned with the ultimate outcome of the case below, not just for the benefit of all the litigants,
but also for the vindication of the country's system of law and justice in a transnational setting.
With these guidelines in mind, the trial court must proceed to try and adjudge the case in the light
of relevant Philippine law, with due consideration of the foreign element or elements involved.
Nothing said herein, of course, should be construed as prejudging the results of the case in any
manner whatsoever. cdphil
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No. Q-93-
18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby REMANDED to Regional
Trial Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.

EN BANC
[G.R. No. L-16749. January 31, 1963.]
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E.
CHRISTENSEN, DECEASED. ADOLFO C. AZNAR, Executor and
LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-
appellees, vs. HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
SYLLABUS
1. PRIVATE INTERNATIONAL LAW; DETERMINATION OF CITIZENSHIP; U.S. CITIZENSHIP
NOT LOST BY STAY IN PHILIPPINES BEFORE INDEPENDENCE. — The citizenship that the
deceased acquired in California when he resided there from 1904 to 1913 was never lost by his stay
in the Philippines, for the latter was a territory of the United States until 1946, and the deceased
appears to have considered himself as a citizen of California by the fact that when he executed his
will in 1951 he declared that he was a citizen of that State; so that he appears never intended to
abandon his California citizenship by acquiring another.
2. ID.; VALIDITY OF TESTAMENTARY PROVISIONS; MEANING OF "NATIONAL LAW" IN
ARTICLE 16, CIVIL CODE; CONFLICT OF LAW RULES IN CALIFORNIA TO BE APPLIED IN
CASE AT BAR. — The "national law" indicated in Article 16 of the Civil Code cannot possibly apply
to any general American law, because there is no such law governing the validity of testamentary
provisions in the United States, each state of the union having its own private law applicable to its
citizen only and in force only within the state. It can therefore refer to no other than the private
law of the state of which the decedent was a citizen. In the case at bar, the State of California,
prescribes two sets of laws for its citizens, an internal law for its citizens domiciled in other
jurisdiction. Hence, reason demands that the California conflict of law rules should be applied in
this jurisdiction in the case at bar.
3. ID.; ID.; DOMICILE; FACTORS CONSIDERED IN DETERMINING ALIEN'S DOMICILE IN
THE PHILIPPINES. — An American citizen who was born in New York, migrated to California,
resided there for nine years, came to the Philippine in 1913, and very rarely returned to California
and only for short visits, and who appears to have never owned or acquired a home or properties
in that state, shall be considered to have his domicile in the Philippines.
9
4. ID.; ID.; ID.; RULE OF RESORTING TO THE LAW OF THE DOMICILE IN DETERMINING
MATTERS WITH FOREIGN ELEMENT INVOLVED. — The rule laid down of resorting to the law
of the domicile in the determination of matters with foreign element involved is in accord with the
general principle of American law that the domiciliary law should govern in most matters or rights
which follow the person of the owner.
5. ID.; ID.; ID.; ID.; COURT OF DOMICILE BOUND TO APPLY ITS OWN LAW AS DIRECTED
IN THE CONFLICT OF LAW RULE OF DECEDENT'S STATE; APPLICATION OF THE RENVOI
DOCTRINE. — The conflict of law rule in California, Article 946, Civil Code, refers back the case,
when a decedent is not domiciled in California, to the law of his domicile, the Philippines in the
case at bar. The court of domicile can not and should refer the case back to California, as such
action would leave the issue incapable of determination, because the case will then be tossed back
and forth between the two states. If the question has to be decided, the Philippine court must apply
its own law as the Philippines was the domicile of the decedent, as directed in the conflict of law
rule of the state of the decedent, California, and especially because the internal law of California
provides no legitime for natural children, while the Philippine law (Articles 887 (4) and 894, Civil
Code of the Philippines) makes natural children legally acknowledged forced heirs of the parent
recognizing them.
6. ID.; ID.; ID.; ID.; ID.; ID.; PHILIPPINE LAW TO BE APPLIED IN CASE AT BAR. — As the
domicile of the deceased, who was a citizen of California, was the Philippines, the validity of the
provisions of his will depriving his acknowledge natural child of the latter's legacy, should be
governed by the Philippine law, pursuant to Article 946 of the Civil Code of California, not by the
law of California.
DECISION
LABRADOR, J p:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr.,
presiding, in Special Proceeding No. 622 of said court, dated September 14, 1949, approving
among other things the final accounts of the executor, directing the executor to reimburse Maria
Lucy Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy,
and declaring Maria Lucy Christensen entitled to the residue of the property to be enjoyed during
her lifetime, and in case of death without issue, one-half of said residue to be payable to Mrs. Carrie
Louise C. Borton, etc., in accordance with the provisions of the will of the testator Edward E.
Christensen. The will was executed in Manila on March 5, 1951 and contains the following
provisions:
"3. I declare . . . that I have but one (1) child, named Maria Lucy Christensen
(now Mrs. Bernard Daney), who was born in the Philippines about twenty-

eight years ago, and who is now residing at No. 665 Rodger Young Village,
Los Angeles, California, U.S.A.
"4. I further declare that I now have no living ascendants, and no descendents
except my above named daughter, Maria Lucy Christensen Daney.
xxx xxx xxx
"7. I give, devise and bequeath unto Maria Helen Christensen, now married
to Eduardo Garcia, about eighteen years of age and who, notwithstanding the
fact that she was baptized Christensen, is not in any way related to me, nor
has she been at any time adopted by me, and who, from all information I have
now resides in Egpit, Digos, Davao, Philippines, the sum of Three Thousand
Six Hundred Pesos (P3,600.00), Philippine Currency, the same to be
deposited in trust for the said Maria Helen Christensen with the Davao
Branch of the Philippine National Bank, and paid to her at the rate of One
Hundred Pesos (P100.00), Philippine Currency per month until the principal
thereof as well as any interest which may have accrued thereon, is exhausted.
xxx xxx xxx
"12. I hereby give devise and bequeath unto my well-beloved daughter, the
said Maris Lucy Christensen Daney (Mrs. Bernard Daney), now residing as
aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A., all
the income from the rest, remainder, and residue of my property and estate,
real, personal and/or mixed, of whatsoever kind or character, and
wheresoever situated, of which I may be possessed at my death and which
may have come to me from any source whatsoever, during her lifetime: . . ."
It is in accordance with the above-quoted provisions that the executor in his final account and
project partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed
that the residue of the estate be transferred to his daughter, Maria Lucy Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen Garcia,
insofar as it deprives her (Helen) of her legitime as an acknowledged natural child, she having
been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased
Edward E. Christensen. The legal grounds of opposition are (a) that the distribution should be
governed by the laws of the Philippines, and (b) that said order of distribution is contrary thereto
insofar as it denies to Helen Christensen, one of two acknowledged natural children, one-half of
the estate in full ownership. In amplification of the above grounds it was alleged that the law that
should govern the estate of the deceased Christensen should not be the internal law of California
alone, but the entire law thereof because several foreign elements are involved, that the forum is
the Philippines and even if the case were decided in California, Section 946 of the California Civil
Code, which requires that the domicile of the decedent apply, should be applicable. It was also
alleged that Maria Helen Christensen having been declared an acknowledged natural child of the
decedent, she is deemed for all purposes legitimate from the time of her birth.
10
The court below ruled that as Edward E. Christensen was a citizen of the United States and of the
State of California at the time of his death, the successional rights and intrinsic validity of the
provisions in his will are to be governed by the law of California, in accordance with which a
testator has the right to dispose of his property in the way he desires, because the right of absolute
dominion over his property is sacred and inviolable (In re McDaniel's Estate, 77 Cal. Appl. 2d 877,
176 P. 2d 952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal).
Oppositor Maria Helen Christensen, through counsel, filed various motions for reconsideration,
but these were denied. Hence this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE
ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN
AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN
THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING
TO RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS
AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF
INTERNATIONAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI
DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OR THE DISTRIBUTION OF THE ESTATE OF THE
DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY
THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE
OF DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO
THE PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE
PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO
ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP.

There is no question that Edward E. Christensen was a citizen of the United States and of the State
of California at the time of his death. But there is also no question that at the time of his death he
was domiciled in the Philippines, as witness the following facts admitted by the executor himself
in appellee's brief:
"In the proceedings for admission of the will to probate, the facts of record
show that the deceased Edward E. Christensen was born on November 29,
1875, in New York City, N. Y., U.S.A.; his first arrival in the Philippines, as an
appointed school teacher, was on July 1, 1901, on board the U.S. Army
Transport 'Sheridan' with Port of Embarkation as the City of San Francisco,
in the State of California, U.S.A. He stayed in the Philippines until 1904.
"In December, 1904, Mr. Christensen returned to the United States and
stayed there for the following nine years until 1913, during which time he
resided in, and was teaching school in Sacramento, California.
"Mr. Christensen's next arrival in the Philippines was in July of the year 1913.
However, in 1928, he again departed the Philippines for the United States and
came back here the following year, 1929. Some nine years later, in 1938, he
again returned to his own country, and came back to the Philippines the
following year, 1939.
"Being an American citizen, Mr. Christensen was interned by the Japanese
Military Forces in the Philippines during World War II. Upon liberation, in
April 1945, he left for the United States but returned to the Philippines in
December, 1945. Appellees' Collective Exhibits '6', CFI Davao, Sp. Proc. 622.
as Exhibits 'AA', 'BB' and 'CC-Daney'; Exhs. 'MM', 'MM-1', 'MM-2-Daney', and
p. 473, t.s.n., July 21, 1953.
"In April, 1951, Edward E. Christensen returned once more to California
shortly after the making of his last will and testament (now in question herein)
which he executed at his lawyers' offices in Manila on March 5, 1951. He died
at the St. Luke's Hospital in the City of Manila on April 30, 1953." (Pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are persuaded
by the fact that he was born in New York, migrated to California and resided there for nine years,
and since he came to the Philippines in 1913 he returned to California very rarely and only for short
visits (perhaps to relatives), and considering that he appears never to have owned or acquired a
home or properties in that state, which would indicate that he would ultimately abandon the
Philippines and make home in the State of California.
"Sec. 16. Residence is a term used with many shades of meaning from mere
temporary presence to the most permanent abode. Generally, however, it is
used to denote something more than mere physical presence." (Goodrich on
Conflict of Laws, p. 29)
11
As to his citizenship, however, we find that the citizenship that he acquired in California when he
resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines,
for the latter was a territory of the United States (not a state) until 1946 and the deceased appears
to have considered himself as a citizen of California by the fact that when he executed his will in
1951 he declared that he was a citizen of that State; so that he appears never to have intended to
abandon his California citizenship by acquiring another. This conclusion is in accordance with the
following principle expounded by Goodrich in his Conflict of Laws.
"The terms 'residence' and 'domicile' might well be taken to mean the same
thing, a place of permanent abode. But domicile, as has been shown, has
acquired a technical meaning. Thus one may be domiciled in a place where he
has never been. And he may reside in a place where he has no domicile. The
man with two homes, between which he divides his time, certainly resides in
each one, while living in it. But if he went on business which would require
his presence for several weeks or months, he might properly be said to have
sufficient connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular business
in hand, not giving up his former "home," he could not be a domiciled New
Yorker. Acquisition of a domicile of choice requires the exercise of intention
as well as physical presence. Residence simply requires bodily presence as an
inhabitant in a given place, while domicile requires bodily presence in that
place and also an intention to make it one's domicile.' Residence, however, is
a term used with many shades of meaning, from the merest temporary
presence to the most permanent abode, and it is not safe to insist that any one
use is the only proper one." (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16 of the
Civil Code of the Philippines, which is as follows:
"ART. 16. Real property as well as personal property is subject to the law of
the country where it is situated.
"However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the national
law of the person whose succession is under consideration, whatever may be
the nature of the property and regardless of the country wherein said property
may be found."
The application of this article in the case at bar requires the determination of the meaning of the
term "national law" as used therein.
There is no single American law governing the validity of testamentary provisions in the United
States, each state of the Union having its own private law applicable to its citizens only and in force
only within the state. The "national law" indicated in Article 16 of the Civil Code above quoted can
not, therefore, possibly mean or apply to any general American law. So it can refer to no other than

the private law of the state of which the decedent is a citizen, in the case at bar, the private law of
the State of California.
The next question is: What is the law in California governing the disposition of personal property?
The decision of the court below, sustains the contention of the executor-appellee that under the
California Probate Code, a testator may dispose of his property by will in the form and manner he
desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant
invokes the provisions of Article 946 of the Civil Code of California, which is as follows:
"If there is no law to the contrary, in the place where personal property is
situated, it is deemed to follow the person of its owner, and is governed by the
law of his domicile."
The existence of this provision is alleged in appellant's opposition and is not denied. We have
checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on
the case cited in the decision and testified to by a witness. (Only the case Kaufman is correctly
cited.) It is argued on executor's behalf that as the deceased Christensen was a citizen of the
State of California, the internal law thereof, which is that given in the above-cited case, should
govern the determination of the validity of the testamentary provisions of Christensen's will,
such law being in force in the State of California of which Christensen was a citizen. Appellant,
on the other hand, insists that Article 946 should be applicable, and in accordance therewith
and following the doctrine of renvoi, the question of the validity of the testamentary provision
in question should be referred back to the law of the decedent's domicile, which is the
Philippines.
The theory or doctrine of renvoi has been defined by various authors, thus:
"The problem has been stated in this way: 'When the Conflict of Laws rule of
the forum refers a jural matter to a foreign law for decision, is the reference
to the corresponding rule of the Conflict of Law of that foreign law, or is the
reference to the purely internal rules of law of the foreign system; i.e., to the
totality of the foreign law, minus its Conflict of Laws rules?
"On logic, the solution is not an easy one. The Michigan court chose to accept
the renvoi, that is, applied the Conflict of Laws rule of Illinois which referred
the matter back to Michigan law. But once having determined that the
Conflict of Laws principle is the rule looked to, it is difficult to see why the
reference back should not have been to Michigan Conflict of Laws. This would
have resulted in the 'endless chain of references' which has so often been
criticized by legal writers. The opponents of the renvoi would have looked
merely to the internal law of Illinois, thus rejecting the renvoi or the reference
back. Yet there seems no compelling logical reason why the original reference
should be to the internal law rather than to the Conflict of Laws rule. It is true
that such a solution avoids going on a merry-go-round, but those who have
accepted the renvoi theory avoid this inextricabilis circulas by getting off at
the second reference and at that point applying internal law. Perhaps the
12
opponents of the renvoi are a bit more consistent for they look always to
internal law as the rule of reference.
"Strangely enough, both the advocates for and the objectors to
the renvoi plead that greater uniformity will result from adoption of their
respective views. And still more strange is the fact that the only way to achieve
uniformity in this choice-of-law problem is if in the dispute the two states
whose laws form the legal basis of the litigation disagree as to whether
the renvoi should be accepted. If both reject, or both accept the doctrine, the
result of the litigation will vary with the choice of the forum. In the case stated
above, had the Michigan court rejected the renvoi, judgment would have been
against the woman; if the suit had been brought in the Illinois courts, and they
too rejected the renvoi, judgment would be for the woman. The same result
would happen, though the courts would switch with respect to which would
hold liability, if both courts accepted the renvoi.
"The Restatement accepts the renvoi theory in two instances: where the title
to land is in question, and where the validity of a decree of divorce is
challenged. In these cases, the Conflict of Laws rule of the situs of the land, or
the domicile of the parties in the divorce case, is applied by the forum, but any
further reference goes only to the internal law. Thus, a person's title to land,
recognized by the situs, will be recognized by every court; and every divorce,
valid by the domicile of the parties, will be valid everywhere." (Goodrich,
Conflict of Laws, Sec. 7, pp. 13-14.)
"X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving
movable property in Massachusetts, England, and France. The question
arises as to how this property is to be distributed among X's next of kin.
"Assume (1) that this question arises in a Massachusetts court. There the rule
of the conflict of laws as to intestate succession to movables calls for an
application of the law of the deceased's last domicile. Since by hypothesis X's
last domicile was France, the natural thing for the Massachusetts court to do
would be to turn to French statute of distributions, or whatever corresponds
thereto in French law, and decree a distribution accordingly. An examination
of French law, however, would show that if a French court were called upon
to determine how this property should be distributed, it would refer the
distribution to the national law of the deceased, thus applying the
Massachusetts state of distributions. So on the surface of things the
Massachusetts court has open to it alternative course of action: (a) either to
apply the French laws as to intestate succession, or (b) to resolve itself into a
French court and apply the Massachusetts statute of distributions, on the
assumption that this is what a French court would do. If it accepts the so-

called renvoi doctrine, it will follow the latter course, thus applying its own
law.
"This is one type of renvoi. A jural matter is presented which the conflict-of-
laws rule of the forum refers to a foreign law, the conflict-of-laws rule of which,
in turn refers the matter back again to the law of the forum. This is renvoi in
the narrower sense. The German term for this judicial process is
'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523-571.)
"After a decision has been arrived at that a foreign law is to be resorted to as
governing a particular case, the further question may arise: Are the rules as
to the conflict of laws contained in such foreign law also to be resorted to?
This is a question which, while it has been considered by the courts in but a
few instances, has been the subject of frequent discussion by textwriters and
essayists; and the doctrine involved has been descriptively designated by
them as the 'Renvoyer' to send back, or the Ruchversweisung', or the
'Weiterverweisung', since an affirmative answer to the question postulated
and the operation of the adoption of the foreign law in toto would in many
cases result in returning the main controversy to be decided according to the
law of the forum . . . (15 C.J.S. 872.)
"Another theory, known as the 'doctrine of renvoi', has been advanced. The
theory of the doctrine of renvoi is that the court of the forum, in determining
the question before it, must take into account the whole law of the other
jurisdiction, but also its rules as to conflict of laws, and then apply the law to
the actual question which the rules of the other jurisdiction prescribe. This
may be the law of the forum. The doctrine of the renvoi has generally been
repudiated by the American authorities." (2 Am. Jur. 296.)
The scope of the theory of renvoi has also been defined and the reasons for its application in a
country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp.
509-531. The pertinent parts of the article are quoted herein below:
"The recognition of the renvoi theory implies that the rules of the conflict of
laws are to be understood as incorporating not only the ordinary or internal
law of the foreign state or country, but its rules of the conflict of laws as well.
According to this theory 'the law of a country' means the whole of its law.
xxx xxx xxx
"Von Bar presented his views at the meeting of the institute of International
Law, at Neuchatel, in 1900, in the form of the following theses:
"(1) Every court shall observe the law of its country as regards the application
of foreign laws.
13
"(2) Provided that no express provision to the contrary exists, the court shall
respect:
"(a) The provisions of a foreign law which disclaims the right to bind its
nationals abroad as regards their personal statute, and desires that said
personal statute shall be determined by law of the domicile, or even by the law
of the place where the act in question occurred.
"(b) The decision of two or more foreign systems of law, provided it be certain
that one of them is necessarily competent, which agree in attributing the
determination of a question to the same system of law.
xxx xxx xxx
"If, for example, the English Law directs its judge to distribute the personal
estate of an Englishman who has died domiciled in Belgium in accordance
with the law of his domicile, he must first inquire whether the law of Belgium
would distribute personal property upon death in accordance with the law of
domicile, and if he finds that the Belgian law would make the distribution in
accordance with the law of nationality — that is the English law, — he must
accept this reference back to his own law."
We note that Article 946 of the California Civil Code as its conflict of laws rule, while the rule
applied in In re Kaufman, supra, its internal law. If the law on succession and the conflict of law
rules of California are to be enforced jointly, each in its own intended and appropriate sphere, the
principle cited In re Kaufman should apply to citizens living in the State, but Article 946 should
apply to such of its citizens as are not domiciled in California but in other jurisdictions. The rule
laid down of resorting to the law of the domicile in the determination of matters with foreign
element involved is in accord with the general principle of American law that the domiciliary law
should govern in most matters or rights which follow the person of the owner.
"When a man dies leaving personal property in one or more estates, and
leaves a will directing the manner of distribution of the property, the law of
the state where he was domiciled at the time of his death will be looked to in
deciding legal questions about the will, almost as completely as the law of the
situs is consulted in questions about the devise of land. It is logical that, since
the domiciliary rules control devolution of the personal estate in case of
intestate succession, the same rules should determine the validity of an
attempted testamentary disposition of the property. Here, also, it is not that
the domiciliary has effect beyond the borders of the domiciliary state. The
rules of the domicile are recognized as controlling by the Conflict of Laws
rules at the situs of the property, and the reason for the recognition as in the
case of intestate succession, is the general convenience of the doctrine. The
New York court has said on the point; 'The general principle that a disposition
of personal property valid at the domicile of the owner, is valid everywhere, is
one of universal application. It had its origin in that international comity
which was one of the first fruits of civilization, and in this age, when business
 14

intercourse and the process of accumulating property take but little notice of WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower
boundary lines, the practical wisdom and justice of the rule is more apparent court with instructions that the partition be made as the Philippine law on succession provides.
than ever.'" (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.) Judgment reversed, with costs against appellees.
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
law is the internal law of California. But as above explained the laws of California have prescribed Regala and Makalintal, JJ., concur.
two sets of laws for its citizens, one for residents therein and another for those domiciled in other
jurisdictions. Reason demands that We should enforce the California internal law prescribed for Bengzon, C.J., took no part.
its citizens residing therein, and enforce the conflict of law rules law for the citizens domiciled
||| (Aznar v. Garcia, G.R. No. L-16749, [January 31, 1963], 117 PHIL 96-110)
abroad. If we must enforce the law of California as in comity we are bound to do, as so declared in
Article 16 of our Civil Code, then we must enforce the law of California in accordance with the
express mandate thereof and as above explained, i.e., apply the internal law for residents therein,
and its conflict of laws rule for those domiciled abroad.
It is argued on appellees behalf that the clause "if there is no law to the contrary in the place where
the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil
Code of the Philippines and that the law to the contrary in the Philippines is the provision in said
Article 16 that the nationalof the deceased should govern. This contention can not be sustained.
As explained in the various authorities cited above the national law mentioned in Article 16 of our
Civil Code is the law on conflict of laws in the California Civil Code, i.e., Article 946, which
authorizes the reference or return of the question to the law of the testator's domicile. The conflict
of law rule in California, Article 946, Civil Code, precisely refers back the case, when a decedent is
not domiciled in California, to the law of his domicile, the Philippines in the case at bar. The court
of the domicile can not and should not refer the case back to California; such action would leave
the issue incapable of determination because the case will then be like a football, tossed back and
forth between the two states, between the country of which the decedent was a citizen and the
country of his domicile. The Philippine court must apply its own law as directed in the conflict of
law rule of the state of the decedent, if the question has to be decided, especially as the application
of the internal law of California provides no legitime for children while the Philippine law, Arts.
887 (4) and 894, Civil Code of the Philippines, makes natural children legally acknowledged forced
heirs of the parent recognizing them.

The Philippine cases (In Re Estate of Johnson, 39 Phil., 156; Riera vs. Palmaroli, 40 Phil., 105;
Miciano vs. Brimo, 50 Phil., 867; Babcock Templeton vs. Rider Babcock, 52 Phil., 130; and Gibbs
vs. Government, 59 Phil., 293.) cited by appellees to support the decision can not possibly apply
in the case at bar, for two important reasons, i.e., the subject in each case does not appear to be a
citizen of a state in the United States but with domicile in the Philippines, and it does not appear
in each case that there exists in the state of which the subject is a citizen, a law similar to or
identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the
Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the
appellant, should be governed by the Philippine law, the domicile, pursuant to Art. 946 of the Civil
Code of California, not by the internal law of California.

EN BANC
[G.R. No. 35694. December 23, 1933.]
ALLISON D. GIBBS, petitioner-appellee, vs. THE GOVERNMENT OF
THE PHILIPPINE ISLANDS, oppositor-appellant. THE REGISTER
OF DEEDS OF THE CITY OF MANILA, respondent-appellant.
SYLLABUS
BUTTE, J p:
1. HUSBAND AND WIFE; RIGHT OF A CALIFORNIA MARRIED WOMAN TO
ACQUIRE LANDS IN FOREIGN JURISDICTIONS. — The attention of the court has not been
called to any law of California that incapacitates a married woman from acquiring or holding
land in a foreign jurisdiction in accordance with the lex rei sitæ.
2. ID.; ARTICLE 9, CIVIL CODE, CONSTRUED. — Article 9 of the Civil Code treats
of purely personal relations and status and capacity for juristic acts, the rules relating to
property, both personal and real, being governed by article 10 of the Civil Code. Furthermore,
article 9, by its very terms, is applicable only to "Spaniards" (now, by construction, to citizens
of the Philippine Islands).
3. JONES LAW; PRIVATE INTERNATIONAL LAW. — The Organic Act of the
Philippine Islands (Act of Congress, August 29, 1916, known as the "Jones Law") as regards
the determination of private rights, grants practical autonomy to the Government of the
Philippine Islands. This Government, therefore, may apply the principles and rules of private
international law (conflict of laws) on the same footing as an organized territory or state of
the United States.
4. ARTICLE 10, CIVIL CODE, CONSTRUED. — The second paragraph of article 10,
Civil Code, applies only when a legal or testamentary succession has taken place in the
Philippine in accordance with the law of the Philippine Islands; and the foreign law is
consulted only in regard to the order of succession or the extent of the successional rights; in
other words, the second paragraph of article 10 can be invoked only when the deceased was
vested with a descendible interest in property within the jurisdiction of the Philippine Islands.
5. HUSBAND AND WIFE; CONJUGAL PROPERTY. — Under the provisions of the
Civil Code and the jurisprudence prevailing here, the wife, upon the acquisition of any
conjugal property, becomes immediately vested with an interest and title therein equal to that
of her husband, subject to the power of management and disposition which the law vests in
the husband. Immediately upon her death, if there are no obligations of the decedent, as is
true in the present case, her share in the conjugal property is transmitted to her heirs by
succession. (Articles 657, 659, 661, Civil Code; cf. also Coronel vs. Ona, 33 Phil., 456, 469.)
15
6. ID.; ID. — The wife of the appellee was, by the law of the Philippine Islands, vested
of a descendible interest, equal to that of her husband, in the Philippine lands covered by
certificates of title Nos. 20880, 28336 and 28331, from the date of their acquisition to the date
of her death.
7. ID.; ID.; INHERITANCE TAX. — The descendible interest here in question in the
lands aforesaid was transmitted to her heirs by virtue of inheritance and this transmission
plainly falls within the language of section 1536 of Article XI of Chapter 40 of the
Administrative Code which levies a tax on inheritances.
DECISION
This is an appeal from a final order of the Court of First Instance of Manila, requiring
the register of deeds of the City of Manila to cancel certificates of title Nos. 20880, 28336 and
28331, covering lands located in the City of Manila, Philippine Islands, and issue in lieu
thereof new certificates of transfer of title in favor of Allison D. Gibbs without requiring him
to present any document showing that the succession tax due under Article XI of Chapter 40
of the Administrative Code has been paid.
The said order of court of March 10, 1931, recites that the parcels of land covered by
said certificates of title formerly belonged to the conjugal partnership of Allison D. Gibbs and
Eva Johnson Gibbs; that the latter died intestate in Palo Alto, California, on November 28,
1929; that at the time of her death she and her husband were citizens of the State of California
and domiciled therein.
It appears further from said order that Allison D. Gibbs was appointed administrator
of the estate of his said deceased wife in case No. 36795 in the same court, entitled "In the
Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased"; that in said intestate
proceedings, the said Allison D. Gibbs, on September 22, 1930, filed an ex parte petition in
which he alleged "that the parcels of land hereunder described belong to the conjugal
partnership of your petitioner and his wife, Eva Johnson Gibbs", describing in detail the three
tracts here involved; and further alleging that his said wife, Eva Johnson Gibbs", describing
in detail the three tracts here involved; and further alleging that his said wife, a citizen and
resident of California, died on November 28, 1929; that in accordance with the law of
California, the community property of spouses who are citizens of California, upon the death
of the wife previous to that of the husband, belongs absolutely to the surviving husband
without administration; that the conjugal partnership of Allison D. Gibbs and Eva Johnson
Gibbs, deceased, has no obligations or debts and no one will be prejudiced by adjudicating
said parcels of land (and seventeen others not here involved) to be the absolute property of
the said Allison D. Gibbs as sole owner. The court granted said petition and on September 22,
1930, entered a decree adjudicating the said Allison D. Gibbs to be the sole and absolute owner
of said lands, applying section 1401 of the Civil Code of California. Gibbs presented this decree

to the register of deeds of Manila and demanded that the latter issue to him a "transfer
certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code provides in part
that:
"Registers of deeds shall not register in the registry of property any
document transferring real property or real rights therein or any chattel
mortgage, by way of gifts mortis causa, legacy or inheritance, unless the
payment of the tax fixed in this article and actually due thereon shall be shown.
And they shall immediately notify the Collector of Internal Revenue or the
corresponding provincial treasurer of the nonpayment of the tax discovered
by them. . . ."
Acting upon the authority of said section, the register of deeds of the City of Manila,
declined to accept as binding said decree of court of September 22, 1930, and refused to
register the transfer of title of the said conjugal property to Allison D. Gibbs, on the ground
that the corresponding inheritance tax had not been paid. Thereupon, under date of
December 26, 1930, Allison D. Gibbs filed in the said court a petition for an order requiring
the said register of deeds "to issue the corresponding titles" to the petitioner without requiring
previous payment of any inheritance tax. After due hearing of the parties, the court reaffirmed
said order of September 22, 1930, and entered the order of March 10, 1931, which is under
review on this appeal.
On January 3, 1933, this court remanded the case to the court of origin for new trial
upon additional evidence in regard to the pertinent law of California in force at the time of the
death of Mrs. Gibbs, also authorizing the introduction of evidence with reference to the dates
of the acquisition of the property involved in this suit and with reference to the California law
in force at the time of such acquisition. The case is now before us with the supplementary
evidence.
For the purposes of this case, we shall consider the following facts as established by
the evidence or the admissions of the parties: Allison D. Gibbs has been continuously, since
the year 1902, a citizen of the State of California and domiciled therein; that he and Eva
Johnson Gibbs were married at Columbus, Ohio, in July, 1906; that there was no antenuptial
marriage contract between the parties; that during the existence of said marriage, the spouses
acquired the following lands, among others, in the Philippine Islands, as conjugal property:
1. A parcel of land in the City of Manila, represented by transfer certificate of title No.
20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs casado con Eva
Johnson Gibbs".
2. A parcel of land in the City of Manila, represented by transfer certificate of title
No. 28336, dated May 14, 1927, in which it is certified "that the spouses Allison D. Gibbs and
Eva Johnson Gibbs are the owners in fee simple" of the land therein described.
3. A parcel of land in the City of Manila, represented by transfer certificate of title
No. 28331, dated April 6, 1927, which states "that Allison D. Gibbs married to Eva Johnson
Gibbs" is the owner of the land described therein; that said Eva Johnson Gibbs died intestate
16
on November 28, 1929, leaving surviving her husband, the appellee, and two sons, Allison D.
Gibbs, now aged 25, and Finley J. Gibbs, now aged 22, as her sole heirs at law.
Article XI of Chapter 40 of the Administrative Code entitled "Tax on inheritances,
legacies, and other acquisitions mortis causa" provides in section 1536 that "Every
transmission by virtue of inheritance . . . of real property . . . shall be subject to the following
tax." It results that the question for determination in this case is as follows: Was Eva Johnson
Gibbs at the time of her death the owner of a descendible interest in the Philippine lands
above-mentioned?
The appellee contends that the law of California should determine the nature and
extend of the title, if any, that vested in Eva Johnson Gibbs under the three certificates of title
Nos. 20880, 28336 and 28331 above referred to, citing article 9 of the Civil Code. But that,
even if the nature and extent of her title under said certificates be governed by the law of the
Philippine Islands, the laws of California govern the succession to such title, citing the second
paragraph of article 10 of the Civil Code.
Article 9 of the Civil Code is as follows:
"The laws relating to family rights and duties, or to the status,
condition, and legal capacity of persons, are binding upon Spaniards even
though they reside in a foreign country." It is argued that the conjugal right of
the California wife in community real estate in the Philippine Islands is a
personal right and must, therefore, be settled by the law governing her
personal status, that is, the law of California. But our attention has not been
called to any law of California that incapacitates a married woman from
acquiring or holding land in a foreign jurisdiction in accordance with
the lex rei sitæ. There is not the slightest doubt that a California married
woman can acquire title to land in a common law jurisdiction like the State of
Illinois or the District of Columbia, subject to the common-law estate by the
courtesy which would vest in her husband. Nor is there any doubt that if a
California husband acquired land in such a jurisdiction his wife would be
vested with the common law right of dower, the prerequisite conditions
obtaining. Article 9 of the Civil Code treats of purely personal relations and
status and capacity for juristic acts, the rules relating to property, both
personal and real, being governed by article 10 of the Civil Code. Furthermore,
article 9, by its very terms, is applicable only to "Spaniards" (now, by
construction, to citizens of the Philippine Islands).
The Organic Act of the Philippine Islands (Act of Congress, August 29, 1916, known
as the "Jones Law") as regards the determination of private rights, grants practical autonomy
to the Government of the Philippine Islands. This Government, therefore, may apply the
principles and rules of private international law (conflict of laws) on the same footing as an
organized territory or state of the United States. We should, therefore, resort to the law of
California, the nationality and domicile of Mrs. Gibbs, to ascertain the norm which would be
applied here as law were there any question as to her status.

But the appellant's chief argument and the sole basis of the lower court's decision
rests upon the second paragraph of article 10 of the Civil Code which is as follows:
"Nevertheless, legal and testamentary successions, in respect to the
order of succession as well as to the amount of the successional rights and the
intrinsic validity of their provisions, shall be regulated by the national law of
the person whose succession is in question, whatever may be the nature of the
property or the country in which it may be situated."
In construing the above language we are met at the outset with some difficulty by the
expression "the national law of the person whose succession is in question", by reason of the
rather anomalous political status of the Philippine Islands. (Cf. Manresa, vol. 1, Codigo
Civil, pp. 103, 104.) We encountered no difficulty in applying article 10 in the case of a citizen
of Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to the practical autonomy of the
Philippine Islands, as above stated, we have concluded that if article 10 is applicable and the
estate in question is that of a deceased American citizen, the succession shall be regulated in
accordance with the norms of the State of his domicile in the United States. (Cf. Babcock
Templeton vs. Rider Babcock, 52 Phil;, 130, 137;In re Estate of Johnson, 39 Phil., 156, 166.)
The trial court found that under the law of California, upon the death of the wife, the
entire community property without administration belongs to the surviving husband; that he
is the absolute owner of all the community property from the moment of the death of his wife,
not by virtue of succession or by virtue of her death, but by virtue of the fact that when the
death of the wife precedes that of the husband he acquires the community property, not as an
heir or as the beneficiary of his deceased wife, but because she never had more than an
inchoate interest or expectancy which is extinguished upon her death. Quoting the case of
Estate of Klumpke (167 Cal., 415, 419), the court said: "The decisions under this section (1401
Civil Code of California) are uniform to the effect that the husband does not take the
community property upon the death of the wife by succession, but that he holds it all from the
moment of her death as though acquired by himself. . . . It never belonged to the estate of the
deceased wife."
The argument of the appellee apparently leads to this dilemma: If he takes nothing
by succession from his deceased wife, how can the second paragraph of article 10 be invoked?
Can the appellee be heard to say that there is a legal succession under the law of California?
It seems clear that the second paragraph of article 10 applies only when a legal or testamentary
succession has taken place in the Philippines in accordance with the law of the Philippine
Islands and no legal succession under the law of California? It seems clear that the second
paragraph of article 10 applies only when a legal or testamentary succession has taken place
in the Philippines in accordance with the law of the Philippine Islands; and the foreign law is
consulted only in regard to the order of succession or the extent of the successional rights; in
other words, the second paragraph of article 10 can be invoked only when the deceased was
vested with a descendible interest in property within the jurisdiction of the Philippine Islands.
In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law. ed., 1028, 1031), the
court said:
17
"It is a principle firmly established that to the law of the state in
which the land is situated we must look for the rules which govern its descent,
alienation, and transfer, and for the effect and construction of wills and other
conveyances. (United States vs. Crosby, 7 Cranch, 115; 3 L. ed., 287;
Clark vs.Graham, 6 Wheat., 577; 5 L. ed., 334; McGoon vs. Scales, 9 Wall., 23;
19 L. ed., 545; Brine vs. Hartford F. Ins. Co., 96 U. S., 627; 24 L. ed., 858.)"
(See also Estate of Lloyd, 175 Cal., 704, 705.) This fundamental principle is
stated in the first paragraph of article 10 of our Civil Code as follows:
"Personal property is subject to the laws of the nation of the owner thereof;
real property to the laws of the country in which it is situated."
It is stated in 5 Cal. Jur., 478:
"In accord with the rule that real property is subject to the lex rei
sitæ, the respective rights of husband and wife in such property, in the
absence of an antenuptial contract, are determined by the law of the place
where the property is situated, irrespective of the domicile of the parties or of
the place where the marriage was celebrated." (See also Saul vs. His Creditors,
5 Martin [N. S.], 569; 16 Am. Dec., 212 [La.]; Heidenheimer vs. Loring, 26 S.
W., 99 [Texas].)
Under this broad principle, the nature and extent of the title which vested in Mrs.
Gibbs at the time of the acquisition of the community lands here in question must be
determined in accordance with the lex rei sitæ.
It is admitted that the Philippine lands here in question were acquired as community
property of the conjugal partnership of the appellee and his wife. Under the law of the
Philippine Islands, she was vested of a title equal to that of her husband. Article 1407 of the
Civil Code provides:
"All the property of the spouses shall be deemed partnership
property in the absence of proof that it belongs exclusively to the husband or
to the wife." Article 1395 provides:
"The conjugal partnership shall be governed by the rules of law
applicable to the contract of partnership in all matters in which such rules do
not conflict with the express provisions of this chapter." Article 1414 provides
that "the husband may dispose by will of his half only of the property of the
conjugal partnership." Article 1426 provides that upon dissolution of the
conjugal partnership and after inventory and liquidation, "the net remainder
of the partnership property shall be divided share and share alike between the
husband and wife, or their respective heirs." Under the provisions of the Civil
Code and the jurisprudence prevailing here, the wife, upon the acquisition of
any conjugal property, becomes immediately vested with an interest and title
therein equal to that of her husband, subject to the power of management and
disposition which the law vests in the husband. Immediately upon her death,
if there are no obligations of the decedent, as is true in the present case, her
 18

share in the conjugal property is transmitted to her heirs by succession.

(Articles 657, 659, 661, Civil Code; cf. also Coronel vs. Ona, 33 Phil., 456, 469.)
It results that the wife of the appellee was, by the law of the Philippine Islands, vested
of a descendible interest, equal to that of her husband, in the Philippine lands covered by
certificates of title Nos. 20880, 28336 and 28331, from the date of their acquisition to the date
of her death. That appellee himself believed that his wife was vested of such a title and interest
is manifest from the second of said certificates, No. 28336, dated May 14, 1927, introduced by
him in evidence, in which it is certified that "the spouses Allison D. Gibbs and Eva Johnson
Gibbs are the owners in fee simple of the conjugal lands therein described."
The descendible interest of Eva Johnson Gibbs in the lands aforesaid was
transmitted to her heirs by virtue of inheritance and this transmission plainly falls within the
inheritance and this transmission plainly falls within the language of section 1536 of Article
XI of Chapter 40 of the Administrative Code which levies a tax on inheritances. (Cf. Re Estate
of Majot, 199 N. Y., 29; 92 N. E., 402; 29 L. R. A. [N. S.], 780.) It is unnecessary in this
proceeding to determine the "order of succession" or the "extent of the successional rights"
(article 10, Civil Code, supra) which would be regulated by section 1386 of the Civil Code of
California which was in effect at the time of the death of Mrs. Gibbs.

The record does not show what the proper amount of the inheritance tax in this case
would be nor that the appellee (petitioner below) in any way challenged the power of the
Government to levy an inheritance tax or the validity of the statute under which the register
of deeds refused to issue a certificate of transfer reciting that the appellee is the exclusive
owner of the Philippine lands included in the three certificates of title here involved.
The judgment of the court below of March 10, 1931, is reversed with directions to
dismiss the petition, without special pronouncement as to the costs.
Avanceña, C.J., Malcolm, Villa-Real, Abad Santos, Hull, and Vickers, JJ., concur.
Street, J., dissents.
||| (Gibbs v. Government of the Philippine Islands, G.R. No. 35694, [December 23, 1933], 59 PHIL
293-303)

FIRST DIVISION
[G.R. No. 104776. December 5, 1994.]
BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.
EVANGELISTA, and the rest of 1, 767 NAMED-COMPLAINANTS, thru and
by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDO, petitioners, vs. PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION'S ADMINISTRATOR, NATIONAL LABOR RELATIONS
COMMISSION, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERS CORPORATION, respondents.
[G.R. Nos. 104911-14. December 5, 1994.]
BIENVENIDO M. CADALIN, ET AL., petitioners,vs. HON. NATIONAL
LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL,
INC. and/or ASIA INTERNATIONAL BUILDERS
CORPORATION,respondents.
[G.R. Nos. 105029-32. December 5, 1994.]
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT
INTERNATIONAL, INC., petitioners,vs. NATIONAL LABOR RELATIONS
COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M. AMUL,
DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO
DE VERA, SOLOMON B. REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ,
ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN ALEJANDRE,
WILFREDO D. ALIGADO, MARTIN AMISTAD, JR.,ROLANDO B. AMUL,
AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE ARLITA,
HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO, FALCONERO
BANAAG, RAMON BARBOSA, FELIX BARCENA, FERNANDO BAS, MARIO
BATACLAN, ROBERTO S. BATICA, ENRICO BELEN, ARISTEO BICOL,
LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M. BOBIER,
DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO,
GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN,
AMANTE CAILAO, IRENEO CANDOR, JOSE CASTILLO, MANUEL
CASTILLO, REMAR CASTROJERES, REYNALDO CAYAS, ROMEO
CECILIO, TEODULO CREUS, BAYANI DAYRIT, RICARDO DAYRIT,
ERNESTO T. DELA CRUZ, FRANCISCO DE GUZMAN, ONOFRE DE RAMA,
IGNACIO DE VERA, MODESTO DIZON, REYNALDO DIZON, ANTONIO S.
DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO
EJERCITO, JR.,EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN
ESGUERRA, EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO
ESPIRITU, NESTOR M. ESTEVA, BENJAMIN ESTRADA, VALERIO
19
EVANGELISTA, OLIGARIO FRANCISCO, JESUS GABAWAN, ROLANDO
GARCIA, ANGEL GUDA, PACITO HERNANDEZ, ANTONIO HILARIO,
HENRY L. JACOB, HONESTO JARDINIANO, ANTONIO JOCSON,
GERARDO LACSAMANA, EFREN U. LIRIO LORETO LONTOC, ISRAEL
LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN,
LEOVIGILDO MARCIAL, NOEL MARTINEZ, DANTE MATREO, LUCIANO
MELENDEZ, RENATO MELO, FRANCIS MEDIODA, JOSE C. MILANES,
RAYMUNDO C. MILAY, CRESENCIANO MIRANDA, ILDEFONSO C.
MOLINA, ARMANDO B. MONDEJAR RESURRECCION D. NAZARENO,
JUAN OLINDO, FRANCISCO R. OLIVARES, PEDRO ORBISTA,
JR.,RICARDO ORDOÑEZ, ERNIE PANCHO, JOSE PANCHO ,GORGONIO P.
PARALA, MODESTO PINPIN, JUANITO PAREA, ROMEO I. PATAG,
FRANCISCO PINPIN, LEONARDO POBLETE, JAIME POLLOS DOMINGO
PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL, GAUDENCIO
RETANAN, JR.,TOMAS B. RETENER, ALVIN C. REYES, RIZALINO REYES,
SOLOMON B. REYES, VIRGILIO G. RICAZA, RODELIO
RIETA ,JR.,BENITO RIVERA, JR.,BERNARDO J. ROBILLOS, PABLO A.
ROBLES, JOSE ROBLEZA, QUIRINO RONQUILLO, AVELINO M. ROQUE,
MENANDRO L. SABINO, PEDRO SALGATAR, EDGARDO SALONGA,
NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR.,GABRIEL
SANTOS, JUANITO SANTOS, PAQUITO SOLANTE, CONRADO A. SOLIS,
JR.,RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC,
MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO, BENEDICTO
TORRES, MAXIMIANO TORRES, FRANCISCO G. TRIAS, SERGIO A.
URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN
VICTORIA, GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO
VILLAFLORES, DOMINGO VILLAHERMOSA, ROLANDO VILLALOBOS,
ANTONIO VILLAUZ, DANILO VILLANUEVA, ROGELIO VILLANUEVA,
ANGEL VILLARBA, JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO
AALAGOS, NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES,
EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO, CELSO S.
ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO, RODRIGO G.
ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO,
LEOWILIN ACTA, EUGENIO C. ACUEZA, EDUARDO ACUPAN,
REYNALDO ACUPAN, SOLANO ACUPAN, MANUEL P. ADANA,
FLORENTINO R. AGNE, QUITERIO R. AGUDO, MANUEL P. AGUINALDO,
DANTE AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO,
JR.,CONRADO ALCANTARA, LAMBERTO Q. ALCANTARA, MARIANITO J.
ALCANTARA, BENCIO ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN
ALEJANDRO, EDUARDO L. ALEJANDRO, MAXIMINO ALEJANDRO,
ALBERTO ALMENAR, ARNALDO ALONZO, AMADO ALORIA, CAMILO
ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS
AMORES, BERNARD P. ANCHETA, TIMOTEO O. ANCHETA, JEOFREY
ANI, ELINO P. ANTILLON, ARMANDRO B. ANTIPONO, LARRY T.
ANTONIO, ANTONIO APILADO, ARTURO P. APILADO, FRANCISCO
APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR
AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O.
ARATEA, ARTURO V. ARAULLO, PRUDENCIO ARAULLO, ALEXANDER
ARCAIRA, FRANCISCO ARCIAGA, JOSE AREVALO, JUANITO AREVALO,
RAMON AREVALO, RODOLFO AREVALO, EULALIO ARGUELLES,
WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO ASUNCION,

ARTEMIO M. ASUNCION, EDGARDO ASUNCION, REXY M. ASUNCION,
VICENTE AURELIO, ANGEL AUSTRIA, RICARDO P. AVERILLA,
JR.,VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA,
FELIMON BACAL, JOSE L. BACANI, ROMULO R. BALBIERAN, VICENTE
BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O.
BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS,
VIVENCIO C. BAUAN, GAUDENCIO S. BAUTISTA, LEONARDO BAUTISTA,
JOSE BAUTISTA, ROSTICO BAUTISTA, RUPERTO B. BAUTISTA,
TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA,
WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B.
BELTRAN, EMELIANO BENALES, JR.,RAUL BENITEZ, PERFECTO
BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO I.
BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN, ANGELITO BICOL,
ANSELMO BICOL, CELESTINO BICOL, JR.,FRANCISCO BICOL, ROGELIO
BICOL, ROMULO L. BICOL, ROGELIO BILLIONES, TEOFILO N. BITO,
FERNANDO BLANCO, AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S.
BOOC, JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C. BRECINO,
EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO,
ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA,
GUILLERMO BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO
BUTIONG, JR.,HONESTO P. CABALLA, DELFIN CABALLERO,
BENEDICTO CABANIGAN, MOISES CABATAY, HERMANELI CABRERA,
PEDRO CAGATAN, JOVEN C. CAGAYAT, ROGELIO L. CALAGOS,
REYNALDO V. CALDERON, OSCAR C. CALDERON, NESTOR D. CALLEJA,
RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO,
ROBERTO CAMANA, FLORANTE C. CAMANAG EDGARDO M. CANDA,
SEVERINO CANTOS, EPIFANIO A. CAPONPON, ELIAS, D. CARILLO,
JR.,ARMANDO CARREON, MENANDRO M. CASTAÑEDA, BENIGNO A.
CASTILLO, CORNELIO L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO
CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P.
CASTILLO, SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A.
CASTRO, RAMO CASTRO, JR.,ROMEO A. DE CASTRO, JAIME B. CATLI,
DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO,
VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C. CHUA,
VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA,
TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO
CORALES, RENATO C. CORCUERA, APOLINAR CORONADO, ABELARDO
CORONEL, FELIX CORONEL, JR.,LEONARDO CORPUZ, JESUS M.
CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA,
FRANCISCO COSTALES, SR.,CELEDONIO CREDITO, ALBERTO A. CREUS,
ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ,
JR.,PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ,
TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA,
FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN,
CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE DATOON,
EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S.
DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE
GUZMAN, ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE
LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE
RAMA, GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA
CRUZ, LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A.
20
DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C.
DIGA, CLEMENTE DIMATULAC, ROLANDO DIONISIO, PHILIPP G.
DISMAYA, BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO,
BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO
D. DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B.
ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION,
EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO ESCARMOSA,
MIGUEL ESCARMOSA, ARMANDO ESCOBAR, ROMEO T. ESCUYOS,
ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU,
ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO ESTANISLAO,
ERNESTO M. ESTEBAN, MELANIO R. ESTRO, ERNESTO M. ESTEVA,
CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO
FALQUEZA, WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ,
ARTEMIO FERRER, MISAEL M. FIGURACION, ARMANDO F. FLORES,
BENJAMIN FLORES, EDGARDO C. FLORES, BUENAVENTURA
FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO,
VALERIANO FRANCISCO, RODOLFO GABAWAN, ESMERALDO
GAHUTAN, CESAR C. GALANG, SANTIAGO N. GALOSO, GABRIEL
GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES GARCIA,
JR.,ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA,
PATRICIO L. GARCIA, JR.,PANCIANO G. GARCIA, PONCIANO G. GARCIA,
JR.,RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G. GAROFIL,
RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA,
RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES,
ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR.,ALEXIS GUNO,
RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ,
IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR.,CESAR H.
HABANA, RAUL G. HERNANDEZ, REYNALDO HERNANDEZ,
JOVENIANO D. HILADO, JUSTO HILAPO, ROSTITO HINAHON,
FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO,
MANUEL L. ILAGAN, RENATO L .ILAGAN, CONRADO A. INSIONG,
GRACIANO G. ISLA, ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO
HICBAN, MAXIMIANO HONRADES, GENEROSO IGNACIO, FELIPE
ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN, BIENVENIDO JAVIER,
ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS
A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W.
JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON, VALENTINO S.
JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR.,RAUL JOSE,
RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM,
SR.,LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B.
LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC,
RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN,
VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL,
ALFREDO LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO,
ARTURO S. LEGASPI, BENITO DE LEMOS, JR.,PEDRO G. DE LEON,
MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING,
RENATO LISING, WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M.
LOPERA, ROGELIO LOPERA, CARLITO M. LOPEZ, CLODY LOPEZ,
GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ,
BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA,
DANTE LUAGE, ANTONIO M. LUALHATI, EMMANUEL LUALHATI,

JR.,LEONIDEZ C. LUALHATI, SEBASTIAN LUALHATI, FRANCISCO
LUBAT, ARMANDO LUCERO, JOSELITO L. DE LUMBAN, THOMAS
VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO MACALINO,
RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V. MACARAIG,
RODOLFO V. MACARAIG, BENJAMIN MACATANGAY, HERMOGENES
MACATANGAY, RODEL MACATANGAY, ROMULO MACATANGAY, OSIAS
Q. MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT,
EFREN C. MAGBANUA, BENJAMIN MAGBUHAT, ALFREDO C.
MAGCALENG, ANTONIO MAGNAYE, ALFONSO MAGPANTAY, RICARDO
C. MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M. MAGSINO,
MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V. MAGTIBAY,
GERONIMO MAHILUM, MANUEL MALONZO, RICARDO MAMADIS,
RODOLFO MANA, BERNARDO A. MANALILI, MANUEL MANALILI,
ANGELO MANALO, AGUILES L. MANALO, LEOPOLDO MANGAHAS,
BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL
MANONSON,.ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N.
MAPA, RAMON MAPILE, ROBERTO C. MARANA, NEMESIO MARASIGAN,
WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO,
JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A. MARQUEZ,
RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE,
RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO
M. MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE, REYNALDO F.
MEMIJE, RODEL MEMIJE, AVELINO MENDOZA, JR.,CLARO MENDOZA,
TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED,
RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR
MINIMO, BENJAMIN MIRANDA, FELIXBERTO D. MISA, CLAUDIO A.
MODESTO, JR.,OSCAR MONDEDO, GENEROSO MONTON, RENATO
MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M.
MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL,
JR.,ESPIRITU A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ,
ROGELIO MUNOZ, ERNESTO NAPALAN, MARCELO A. NARCIZO,
REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO D.
NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE
NEGRITE, ALFREDO NEPOMUCENO, HERBERT G. NG, FLORENCIO
NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA,
DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E. OCAMPO,
ANTONIO B. OCCIANO, REYNALDO P. OCSON, BENJAMIN ODESA,
ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V.
ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS,
VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO L.
PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO
T. PAGUIO, EMELIO PAKINGAN, LEANDRO PALABRICA, QUINCIANO
PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO
PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO
PASIMIO, JR.,JOSE V. PASION, ANGELITO M. PENA, DIONISIO
PENDRAS, HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO
PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E.
PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G. PERINO,
FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA,
ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE,
DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO
21
PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O.
PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L.
QUINTO, ROMEO QUINTOS, EDUARDO W. RACABO, RICARDO C. DE
RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO A.
RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.
RAMIREZ, ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS,
WILLARFREDO RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F.
RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E. RECOLASO,
ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME
RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA,
REDENTOR C. REY, ALFREDO S. REYES, AMABLE S. REYES, BENEDICTO
R. REYES, GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES,
ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M.
RICO, EMMANUEL RIETA, RICARDO RIETA, LEO B. ROBLES, RUBEN
ROBLES, RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO
ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO
RODRIGUEZ, ALMONTE ROMEO, ELIAS RONQUILLO, ELISE
RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO,
RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO
DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO,
VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA,
ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M. SANCHA,
ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO,
JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS,
EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S.
SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG,
FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G. SILVA,
EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON,
DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO
SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS,
EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA,
FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO,
FELICISMO P. TALUSIK, FERMIN TARUC, JR.,LEVY S. TEMPLO,
RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL TOLENTINO, MARIO
M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE
TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO
UMALI, SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO
VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO, EDGARDO C.
VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE VERA, WILFREDO D.
VERA, BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R.
VERZOSA, FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO
P. VIDALLO, SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN
VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA,
ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO VILLANUEVA,
LEONARDO M. VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI
VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL
VILLAROMAN, CARLOS VILLENA, FERDINAND VIVO, ROBERTO YABUT,
VICENTE YNGENTE, AND ORO C. ZUNIGA,respondents.

DECISION
QUIASON,J p:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine
Overseas Employment Administration's Administrator, et. al.," was filed under Rule 65 of the
Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the National Labor Relations
Commission (NLRC) in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and L-86-
05-460;
(2) to render a new decision: (i) declaring private respondents as in default; (ii)
declaring the said labor cases as a class suit; (iii) ordering Asia International Builders
Corporation (AIBC) and Brown and Root International Inc. (BRII) to pay the claims of the
1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro guilty of forum-
shopping; and (v) dismissing POEA Case No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of the NLRC, denying the motion
for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al.,v. Hon.
National Labor Relations Commission, et. al.," was filed under Rule 65 of the Revised Rules
of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases
Nos. L-84-06-555, L-85-10-777, L-85-10-799 and L-86-05-460 insofar as it: (i) applied the
three-year prescriptive period under the Labor Code of the Philippines instead of the ten-year
prescriptive period under the Civil Code of the Philippines; and (ii) denied the "three-hour
daily average" formula in the computation of petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for
reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders
Corporation, et. al.,v. National Labor Relations Commission, et. al." was filed under Rule 65
of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases
Nos. L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460, insofar as it granted the
claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied the
motions for reconsideration of AIBC and BRII (Rollo, pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the decision of
POEA in four labor cases: (1) awarded monetary benefits only to 149 claimants and (2)
directed Labor Arbiter Fatima J. Franco to conduct hearings and to receive evidence on the
claims dismissed by the POEA for lack of substantial evidence or proof of employment.
Consolidation of Cases
22
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while
G.R. Nos. 104911-14 were raffled to the Second Division. In the Resolution dated July 26, 1993,
the Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. No. 104911-14,
Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the motion
filed in G.R. Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and
105029-32, which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-
1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432).In the Resolution dated October 27,
1993, the First Division granted the motion to consolidate G.R. Nos. 104911-14 with G.R.
No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. No. 105029-32, Rollo, p. 1562).
I
On June 6, 1984, Bienvenido M..Cadalin, Rolando M. Amul and Donato B.
Evangelista, in their own behalf and on behalf of 728 other overseas contract workers (OCWs)
instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from their recruitment by
AIBC and employment by BRII (POEA Case NO. L-84-06-555).The claimants were
represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged
in construction; while AIBC is a domestic corporation licensed as a service contractor to
recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign
principals.
The amended complaint principally sought the payment of the unexpired portion of
the employment contracts, which was terminated prematurely, and secondarily, the payment
of the interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits; refund of SSS and premium
not remitted to the SSS; refund of withholding tax not remitted to the BIR; penalties for
committing prohibited practices; as well as the suspension of the license of AIBC and the
accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and
was given, together with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the
claimants to file a bill of particulars within ten days from receipt of the order and the movants
to file their answers within ten days from receipt of the bill of particulars. The POEA
Administrator also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation."
On July 23, 1984, AIBC filed a "Motion to Strike Out of the Records",the "Complaint" and the
"Compliance and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder and
Comments," averring, among other matters, the failure of AIBC and BRII to file their answers
and to attend the pre-trial conference on July 25, 1984. The claimants alleged that AIBC and
BRII had waived their right to present evidence and had defaulted by failing to file their
answers and 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 complainants' evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit
and Motion for Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants
opposed the motions.
23
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. cdphil
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.
24
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision
dated January 30, 1989 on the grounds that BRII had failed to appeal on time and AIBC had
not posted the supersedeas bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion," praying that all
the 1,767 claimants be awarded their monetary claims for failure of private respondents to file
their answers within the reglementary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
"WHEREFORE, premises considered, the Decision of the POEA in these
consolidated cases is modified to the extent and in accordance with the
following dispositions:
1. The claims of the 94 complainants identified and listed
in Annex "A" hereof are dismissed for having prescribed;
2. Respondents AIBC and Brown & Root are hereby
ordered, jointly and severally, to pay the 149 complainants,
identified and listed in Annex "B" hereof, the peso equivalent, at the
time of payment, of the total amount in US dollars indicated
opposite their respective names;
3. The awards given by the POEA to the 19 complaints
classified and listed in Annex "C" hereof, who appear to have worked
elsewhere than in Bahrain are hereby set aside.
4. All claims other than those indicated in Annex
"B",including those for overtime work and favorably granted by the
POEA, are hereby dismissed for lack of substantial evidence in
support thereof or are beyond the competence of this Commission
to pass upon.
In addition, this Commission, in the exercise of its powers and
authority under Article 218 (c) of the Labor Code, as amended by R.A. 6715,
hereby directs Labor Arbiter Fatima J. Franco of this Commission to summon
parties, conduct hearings and receive evidence, as expeditiously as possible,
and thereafter submit a written report to this Commission (First Division) of
the proceedings taken, regarding the claims of the following:
(a) complainants identified and listed in Annex "D"
attached and made an integral part of this Resolution, whose claims
were dismissed by the POEA for lack of proof of employment in
Bahrain (these complainants numbering 683, are listed in pages 13
to 23 of the decision of POEA, subject of the appeals) and,
(b) complainants identified and listed in Annex "E"
attached and made an integral part of this Resolution, whose awards

decreed by the POEA, to Our mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp. 113-115; G.R. Nos. 104911-14,
pp. 85-87; G.R. Nos. 105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12 co-claimants, who were
former clients of Atty. Del Mundo, filed a petition for certiorariwith 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);
25
6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista and 4
co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746; G.R. No. 104776,
Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri Banaag and 5 co-
claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R. Nos. 104911-14,
Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15
other co-claimants dated May 4, 1993 (G.R. No. 105029-32, Rollo, pp. 906-956; G.R. Nos.
104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-claimants
dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829);
10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and 36
co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R. Nos.
104911-14, Rollo, pp. 748-864; G.R. No. 104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo and 19 co-
claimants dated July 22, 1993 (G.R. No. 104776, Rollo, pp. 1173-1235; G.R. Nos. 105029-32,
Rollo, pp. 1193-1256; G.R. Nos. 104911-14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2 co-
claimants dated September 7, 1993 (G.R. Nos. 105029-3, Rollo, pp. 1266-1278; G.R.
No. 104776, Rollo, pp. 1243-1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C. Aceres and 37 co-
claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-
14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-
claimants dated January 10, 1994 (G.R. Nos. 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. No. 104911-
14).
III
The facts as found by the NLRC are as follows:
"We have taken painstaking efforts to sift over the more than fifty
volumes now comprising the records of these cases. From the records, it
appears that the complainants-appellants allege that they were recruited by
respondent-appellant AIBC for its accredited foreign principal, Brown & Root,
on various dates from 1975 to 1983. They 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.
 26

Having been officially processed as overseas contract workers by the terminates the services of the Employee under this Agreement because of the
Philippine Government, all the individual complainants signed standard completion or termination, or suspension of the work on which the
overseas employment contracts (Records, Vols. 25-32. Hereafter, reference to Employee's services were being utilized, or because of a reduction in force due
the records would be sparingly made, considering their chaotic arrangement) to a decrease in scope of such work, or by change in the type of construction
with AIBC before their departure from the Philippines. These overseas of such work. The Employer will be responsible for his return transportation
employment contracts invariably contained the following relevant terms and to his country of origin. Normally on the most expeditious air route, economy
conditions. class accommodation.
PART B — xxx xxx xxx
(1) Employment Position 10. VACATION/SICK LEAVE BENEFITS
Classification : —————————
a) After one (1) year of continuous service and/or satisfactory
(Code) : ————————— 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
(2) Company Employment
service will be computed on a pro-rata basis.
Status : —————————
b) Sick leave of 15 days shall be granted to the employee for every
(3) Date of Employment
year of service for non-work connected injuries or illness. If the employee
to Commence on : —————————
failed to avail of such leave benefits, the same shall be forfeited at the end of
(4) Basic Working the year in which said sick leave is granted.
Hours Per Week : —————————
11. BONUS
(5) Basic Working
A bonus of 20% (for offshore work) of gross income will be accrued
Hours per Month : —————————
and payable only upon satisfactory completion of this contract.
(6) Basic Hourly Rate : —————————
12. OFFDAY PAY
(7) Overtime Rate
The seventh day of the week shall be observed as a day of rest with 8
Per Hour : —————————
hours regular pay. If work is performed on this day, all hours work shall be
(8) Projected Period of Service paid at the premium rate. However, this offday pay provision is applicable
(Subject to C (1) of this [sic]) : ————————— only when the laws of the Host Country require payments for rest day.
Months and/or
In the State of Bahrain, where some of the individual complainants
Job Completion
were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued
xxx xxx xxx 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
3. HOURS OF WORK AND COMPENSATION
16, 1976. Some of the provisions of Amiri Decree No. 23 that are relevant to
a) The Employee is employed at the hourly rate and overtime rate as the claims of the complainants-appellants are as follows (emphasis supplied):
set out in Part B of this Document.
Art. 79: ...A worker shall receive payment for each extra
b) The hours of work shall be those set forth by the Employer, and hour equivalent to his wage entitlement increased by a minimum of
Employer may, at his sole option, change or adjust such hours as may be twenty-five per centum thereof for hours worked during the day;
deemed necessary from time to time. and by a minimum of fifty per centum thereof for hours worked
4. TERMINATION during the night which shall be deemed to being from seven o'clock
in the evening until seven o'clock in the morning ...."
a) Notwithstanding any other terms and conditions of this
Art. 80: Friday shall be deemed to be a weekly day of rest
agreement, the Employer may, at his sole discretion, terminate employee's
on full pay.
service with cause, under this agreement at any time. If the Employer

...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.
27
(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.
Eight:— Whether or not the POEA Administrator erred in not
dismissing POEA Case No. (L) 86-65-460 on the ground of multiplicity of
suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules
on Evidence governing the pleading and proof of a foreign law and admitted in evidence a
simple copy of the Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector).NLRC invoked Article 221 of the Labor Code of the Philippines, vesting on the
Commission ample discretion to use every and all reasonable means to ascertain the facts in
each case without regard to the technicalities of law or procedure. NLRC agreed with the
POEA Administrator that the Amiri Decree No. 23, being more favorable and beneficial to the
workers, should form part of the overseas employment contract of the complainants.
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
28
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 the1987 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
29
(5) that they are not concerned with the issue of whether POEA Case No. L-86-05-
460 should be dismissed, this being a private quarrel between the two labor lawyers (Rollo,
pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint
manifestations and motions of AIBC and BRII dated September 2 and 11, 1992, claiming that
all the claimants who entered into the compromise agreements subject of said manifestations
and motions were his clients and that Atty. Florante M. de Castro had no right to represent
them in said agreements. He also claimed that the claimants were paid less than the award
given them by NLRC; that Atty. De Castro collected additional attorney's fees on top of the
25% which he was entitled to receive; and that the consent of the claimants to the compromise
agreements and quitclaims were procured by fraud (G.R. No. 104776, Rollo, pp. 838-810).In
the Resolution dated November 23, 1992, the Court denied the motion to strike out the Joint
Manifestations and Motions dated September 2 and 11, 1992 (G.R. No. 104911-14, Rollo, pp.
608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce
Attorney's Lien," alleging that the claimants who entered into compromise agreements with
AIBI and BRII with the assistance of Atty. De Castro, had all signed a retainer agreement with
his law firm (G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty.
De Castro and Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and 16
of the Code of Professional Responsibility. The said lawyers allegedly misled this Court, by
making it appear that the claimants who entered into the compromise agreements were
represented by Atty. De Castro, when in fact they were represented by Atty. Del Mundo (G.R.
No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De
Castro for unethical practices and moved for the voiding of the quitclaims submitted by some
of the claimants.
G.R. Nos. 104911-14
The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the
grounds that NLRC gravely abused its discretion when it: (1) applied the three-year
prescriptive period under the Labor Code of the Philippines; and (2) it denied the claimant's
formula based on an average overtime pay of three hours a day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the
negotiation for an amicable settlement of their money claims in Bahrain as shown in the
Memorandum dated April 16, 1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).
 30

BRII and AIBC, in their Comment, reiterated their contention in G.R. In the instant case, what the respondents violated are not the rights
No. 104776 that the prescriptive period in the Labor Code of the Philippines, a special law, of the workers as provided by the Labor Code, but the provisions of the Amiri
prevails over that provided in the Civil Code of the Philippines, a general law. Decree No. 23 issued in Bahrain, which ipso facto amended the worker's
contracts of employment. Respondents consciously failed to conform to these
As to the memorandum of the Ministry of Labor of Bahrain on the method of
provisions which specifically provide for the increase of the worker's rate. It
computing the overtime pay, BRII and AIBC claimed that they were not bound by what
was only after June 30, 1983, four months after the brown builders brought a
appeared therein, because such memorandum was proposed by a subordinate Bahrain official
suit against B & R in Bahrain for this same claim, when respondent AIBC's
and there was no showing that it was approved by the Bahrain Minister of Labor. Likewise,
contracts have undergone amendments in Bahrain for the new
they claimed that the averaging method was discussed in the course of the negotiation for the
hires/renewals (Respondent's Exhibit 7).
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). Hence, premises considered, the applicable law of prescription to
this instant case is Article 1144 of the Civil Code of the Philippines, which
G.R. Nos. 105029-32
provides:
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its
'Art. 1144. The following actions may be brought within ten
discretion when it: (1) enforced the provisions of the Amiri Decree No. 23 of 1976 and not the
years from the time the cause of action accrues:
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 (1) Upon a written contract;
constitutional right to due process; and (3) ordered the POEA Administrator to hold new
(2) Upon an obligation created by law;'
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 Thus, herein money claims of the complainants against the respondents shall
of 1976 was applicable, NLRC erred when it did not apply the one-year prescription provided prescribe in ten years from August 16, 1976. Inasmuch as all claims were filed
in said law (Rollo, pp. 29-30). within the ten-year prescriptive period, no claim suffered the infirmity of
being prescribed" (G.R. No. 104776, Rollo, 89-90).
VI
In overruling the POEA Administrator, and holding that the prescriptive period is
G.R. No. 104776
three years as provided in Article 291 of the Labor Code of the Philippines, the NLRC argued
G.R. Nos. 104911-14
as follows:
G.R. Nos. 105029-32
"The Labor Code provides that 'all money claims arising from
All the petitions raise the common issue of prescription although they disagreed as
employer-employee relations ...shall be filed within three years from the time
to the time that should be embraced within the prescriptive period.
the cause of action accrued; otherwise they shall be forever barred' (Art. 291,
To the POEA Administrator, the prescriptive period was ten years, applying Article Labor Code, as amended).This three-year prescriptive period shall be the one
1144 of the Civil Code of the Philippines. NLRC believed otherwise, fixing the prescriptive applied here and which should be reckoned from the date of repatriation of
period at three years as provided in Article 291 of the Labor Code of the Philippines. 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
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different
three-year prescriptive period applies only to money claims specifically
grounds, insisted that NLRC erred in ruling that the prescriptive period applicable to the
recoverable under the Philippine Labor Code. Article 291 gives no such
claims was three years, instead of ten years, as found by the POEA Administrator.
indication. Likewise, We can not consider complainants' cause/s of action to
The Solicitor General expressed his personal view that the prescriptive period was have accrued from a violation of their employment contracts. There was no
one year as prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of violation; the claims arise from the benefits of the law of the country where
NLRC that Article 291 of the Labor Code of the Philippines was the operative law. they worked. (G.R. No. 104776, Rollo, pp. 90-91).
The POEA Administrator held the view that: 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
"These money claims (under Article 291 of the Labor Code) refer to
characterization, i.e.,whether to characterize the foreign law on prescription or statute of
those arising from the employer's violation of the employee's right as
limitation as "substantive" or "procedural." NLRC cited the decision in Bournias v. Atlantic
provided by the Labor Code.
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 'specificity' we might have a
different case; but here on the surface of things we appear to be dealing with
a 'broad,' and not a 'specific,' statute of limitations" (G.R. No. 104776, Rollo,
pp. 92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code
of the Philippines, which was applied by NLRC, refers only to claims "arising from the
employer's violation of the employee's right as provided by the Labor Code." They assert that
their claims are based on the violation of their employment contracts, as amended by the
Amiri Decree No. 23 of 1976 and therefore the claims may be brought within ten years as
provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos. 104911-14, pp.
31
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc.,70 SCRA 244
(1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the
Amiri Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law,"
which is Section 48 of the Code of Civil Procedure and that where such kind of law exists, it
takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of action based
on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the
governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry of the
contract" (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and requisites for
appeal, and so forth, are governed by the laws of the forum. This is true even if the action is
based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga,
Private International Law 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it
may be viewed either as procedural or substantive, depending on the characterization given
such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied
the statute of limitations of New York, instead of the Panamanian law, after finding that there
was no showing that the Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to give way to the law of the
forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law
becomes irrelevant when the country of the forum has a "borrowing statute." Said statute has
the practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws 152-153 [1938]).A "borrowing statute" directs the state of the forum to apply
the foreign statute of limitations to the pending claims based on a foreign law (Siegel, Conflicts
183 [1975]).While there are several kinds of "borrowing statutes," one from provides that an
action barred by the laws of the place where it accrued, will not be enforced in the forum even
though the local statute has not run against it (Goodrich and Scoles, Conflict of Laws 152-153
[1938]).Section 48 of our Code of Civil Procedure is of this kind. Said Section provides:
"If by the laws of the state or country where the cause of action arose, the
action is barred, it is also barred in the Philippines Islands."

Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions of the Code of Civil
Procedures as to which were inconsistent with it. There is no provision in the Civil Code of the
Philippines, which is inconsistent with or contradictory to Section 48 of the Code of Civil
Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex
proprio vigore insofar as it ordains the application in this jurisdiction of Section 156 of the
Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's
public policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed.
713 [1920]).To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as
regards the claims in question would contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987
Constitution emphasized that:
"The state shall promote social justice in all phases of national
development" (Sec. 10).
"The state affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare" (Sec. 18).
In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
"Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all."
Having determined that the applicable law on prescription is the Philippine law, the
next question is whether the prescriptive period governing the filing of the claims is three
years, as provided by the Labor Code or ten years, as provided by the Civil Code of the
Philippines.
The claimants are of the view that the applicable provision is Article 1144 of the Civil
Code of the Philippines, which provides:
"The following actions must be brought within ten years from the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment."
NLRC, on the other hand, believes that the applicable provision is Article 291 of the
Labor Code of the Philippines, which in pertinent part provides:
"Money claims-all money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three
32
(3) years from the time the cause of action accrued, otherwise they shall be
forever barred.
xxx xxx xxx"
The case of Philippine Air Lines Employees Association v. Philippine Air Lines,
Inc.,70 SCRA (1976) invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the
cases at bench (Rollo, p. 21).The said case involved the correct computation of overtime pay
as provided in the collective bargaining agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not 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. 1993)
provides:
"Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued otherwise
such action shall be forever barred, ..."
The court further explained:
"The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA
No. 444 as amended) will apply, if the claim for differentials for overtime
work is solely based on said law, and not on a collective bargaining agreement
or any other contract. In the instant case, the claim for overtime
compensation is not so much because of Commonwealth Act No. 444, as
amended but because the claim is demandable right of the employees, by
reason of the above-mentioned collective bargaining agreement."
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing
"actions to enforce any cause of action under said law." On the other hand, Article 291 of the
Labor Code of the Philippines provides the prescriptive period for filing "money claims arising
from employer-employee relations." The claim is the cases at bench all arose from the
employer-employee relations, which is broader in scope than claims arising from a specific
law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period
under Article 291 of the Labor Code of the Philippines applies only to money claims
specifically recoverable under said Code does not find support in the plain language of the
provision. Neither is the contention of the claimants in G.R. No. 104911-14 that said Article
refers only to claims "arising from the employer's violation of the employee's right," as
provided by the Labor Code supported by the facial reading of the provision.
VII

G.R. No. 104776
A. As the first two grounds for the petition in G.R. No. 104776, claimants aver: (1)
that while their complaints were filed on June 6, 1984 with POEA, the case was decided only
on January 30, 1989, a clear denial of their right to a speedy disposition of the case; and (2)
that NLRC and the POEA Administrator should have declared AIBC and BRII in default (Rollo,
pp. 31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which
provides:
"Sec. 16. All persons shall have the right to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies."
It is true that the constitutional right to "a speedy disposition of cases" is not limited
to the accused in criminal proceedings but extends to all parties in all cases, including civil
and administrative cases, and in all proceedings, including judicial and quasi-judicial
hearings. Hence, under the Constitution, any party to a case may demand expeditious action
on all officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy
disposition of cases" is a relative term. Just like the constitutional guarantee of "speedy trial"
accorded to the accused in all criminal proceedings, "speedy disposition of cases" is a flexible
concept. It is consistent with delays and depends upon the circumstances of each case. What
the Constitution prohibits are unreasonable, arbitrary and oppressive delays which render
rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining
whether or not the right to a "speedy disposition of cases" has been violated, thus:
"In the determination of whether or not the right to a "speedy trial" has been
violated, certain factors may be considered and balanced against each other.
These are length of delay, reason for the delay, assertion of the right or failure
to assert it, and prejudice caused by the delay. The same factors may also be
considered in answering judicial inquiry whether or not a person officially
charged with the administration of justice has violated the speedy disposition
of cases."
Likewise, in Gonzales v. Sandiganbayan,199 SCRA 298, (1991),we held:
"It must be here emphasized that the right to a speedy disposition of a case,
like the right to speedy trial, is deemed violated only when the proceeding is
attended by vexatious, capricious, and oppressive delays; or when unjustified
postponements of the trial are asked for and secured, or when without cause
or justified motive a long period of time is allowed to elapse without the party
having his case tried."
33
Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the
amended complaint, claimants had been asking that AIBC and BRII be declared in default for
failure to file their answers within the ten-day period provided in Section 1, Rule III of Book
VI of the Rules and Regulations of the POEA. At that time, there was a pending motion of
AIBC and BRII to strike out of the records the amended complaint and the "Compliance" of
claimants to the order of the POEA, requiring them to submit a bill of particulars.
The cases at bench are not of the run-of-the-mill variety, such that their final
disposition in the administrative level after seven years from their inception, cannot be said
to be attended by unreasonable, arbitrary and oppressive delays as to violate the
constitutional rights to a speedy disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants.
Said complaint had undergone several amendments, the first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They were deployed in
different areas, one group in and the other groups outside of, Bahrain. The monetary claims
totalling more than US$65 million according to Atty. Del Mundo, included:
"1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue
(B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits
consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to recruit of
AIBC and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not excluding
reportorial requirements thereof" (NLRC Resolution, September 2,
1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).

Inasmuch as the complaint did not allege with sufficient definiteness and clarity of
some facts, the claimants were ordered to comply with the motion of AIBC for a bill of
particulars. When claimants filed their "Compliance and Manifestation," AIBC moved to
strike out the complaint from the records for failure of claimants to submit a proper bill of
particulars. While the POEA Administrator denied the motion to strike out the complaint, he
ordered the claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the records
of employment of the more than 1,700 claimants had to be retrieved from various countries
in the Middle East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA Administrator were
interrupted several times by the various appeals, first to NLRC and then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases were filed against
AIBC and BRII on October 10, 1985 (POEA Cases No. L-85-10-777 andL-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
34
the other. All these have, to a large extent, abetted in confounding the issues
raised in these cases, jumble the presentation of evidence, and even derailed
the prospects of an amicable settlement. It would not be far-fetched to
imagine that both counsel, unwittingly, perhaps, painted a rainbow for the
complainants, with the proverbial pot of gold at its end containing more than
US$100 million, the aggregate of the claims in these cases. It is, likewise, not
improbable that their misplaced zeal and exuberance caused them to throw
all caution to the wind in the matter of elementary rules of procedure and
evidence" (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties and
the public respondents would not know which claim of which petitioner was dismissed and
which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class
suit" because "all the name complainants have similar money claims and similar rights sought
irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya
or in any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of common
or general interest to many and the parties are so numerous that it is impracticable to bring
them all before the court (Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law, many of the
claimants worked outside Bahrain. Some of the claimants were deployed in Indonesia and
Malaysia under different terms and conditions of employment.
NLRC and the POEA Administrator are correct in their stance that inasmuch as the
first requirement of a class suit is not present (common or general interest based on the Amiri
Decree of the State of Bahrain),it is only logical that only those who worked in Bahrain shall
be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims
is the same (for employee's benefits),there is no common question of law or fact. While some
claims are based on the Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is interested only in his own
demand and not in the claims of the other employees of defendants. The named claimants
have a special or particular interest in specific benefits completely different from the benefits
in which the other named claimants and those included as members of a "class" are claiming
(Berses v. Villanueva,25 Phil. 473 [1913]).It appears that each claimant is only interested in
collecting his own claims. A claimants has no concern in protecting the interests of the other
claimants as shown by the fact, that hundreds of them have abandoned their co-claimants and
have entered into separate compromise settlements of their respective claims. A principle
basic to the concept of "class suit" is that plaintiffs brought on the record must fairly represent
and protect the interests of the others (Dimayuga v. Court of Industrial Relations,101 Phil.
590 [1957]).For this matter, the claimants who worked in Bahrain can not be allowed to sue

in a class suit in a judicial proceeding. The most that can be accorded to them under the Rules
of Court is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule 3,
Sec. 6).
The Court is extra-cautious in allowing class suits because they are the exceptions to
the condition sine qua non,requiring the joinder of all indispensable parties.
In an improperly instituted class suit, there would be no problem if the decision
secured is favorable to the plaintiffs. The problem arises when the decision is adverse to them,
in which case the others who were impleaded by their self-appointed representatives, would
surely claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and
NLRC should have declared Atty. Florante De Castro guilty of "forum shopping, ambulance
chasing activities, falsification, duplicity and other unprofessional activities" and his
appearances as counsel for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum shopping Rule (Revised Circular No. 28-91) is intended to put a
stop to the practice of some parties of filing multiple petitions and complaints involving the
same issues, with the result that the courts or agencies have to resolve the same issues. Said
Rule however, applies only to petitions filed with the Supreme Court and the Court of Appeals.
It is entitled "Additional Requirements For Petitions Filed with the Supreme Court and the
Court of Appeals To Prevent Forum Shopping or Multiple Filing of Petitioners and
Complainants." The first sentence of the circular expressly states that said circular applies to
an governs the filing of petitions in the Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum
shopping rule to the lower courts and administrative agencies, said circular took effect only
on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical conduct
against Atty. De Castro because NLRC and POEA have no jurisdiction to investigate charges
of unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was
filed by Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services
rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 838-810; 1525).
A statement of a claim for a charging lien shall be filed with the court or
administrative agency which renders and executes the money judgment secured by the lawyer
for his clients. The lawyer shall cause written notice thereof to be delivered to his clients and
to the adverse party (Revised Rules of Court, Rule 138, Sec. 37).The statement of the claim for
the charging lien of Atty. Del Mundo should have been filed with the administrative agency
that rendered and executed the judgment.
Contempt of Court
35
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 e.e..,minutes of the
meetings between the Representative of the employees and the management
of the Company, the complaint filed by the employees on 14/2/83 where they
have claimed as hereinabove stated, sample of the Service Contract executed
between one of the employees and the company through its agent in (sic)
Philippines, Asia International Builders Corporation where it has been
provided for 48 hours of work per week and annual leave of 12 days and an
overtime wage of 1 & 1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35 months
for the Philippino (sic) employees ....
2. The average wage per hour for the Philippino (sic) employee is
US$2.69 ....
3. The average hours for the overtime is 3 hours plus in all public
holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation
for the difference of the wages of the overtime done for each Philippino (sic)
employee ...(Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but
by a subordinate official in the Bahrain Department of Labor; (2) that there was no showing
that the Bahrain Minister of Labor had approved said memorandum; and (3) that the offer
was made in the course of the negotiation for an amicable settlement of the claims and
therefore it was not admissible in evidence to prove that anything is due to the claimants.

While said document was presented to the POEA without observing the rule on
presenting official documents of a foreign government as provided inSection 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. LLjur
The admissibility of the offer of compromise made by BRII as contained in the
memorandum is another matter. Under Section 27, Rule 130 of the 1989 Revised Rules on
Evidence, an offer to settle a claim is not an admission that anything is due.
Said Rule provides:
"Offer of compromise not admissible. — In civil cases, an offer of compromise
is not an admission of any liability, and is not admissible in evidence against
the offeror."
This Rule is not only a rule of procedure to avoid the cluttering of the record with
unwanted evidence but a statement of public policy. There is great public interest in having
the protagonists settle their differences amicable before those ripen into litigation. Every
effort must be taken to encourage them to arrive at a settlement. The submission of offers and
counter-offers in the negotiation table is a step in the right direction. But to bind a party to
his offers, as what claimants would make this Court do, would defeat the salutary purpose of
the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater
benefits than those stipulated in the 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
36
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).
37
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). Cdpr
A principle well embedded in Administrative Law is that the technical rules of
procedure and evidence do not apply to the proceedings conducted by administrative agencies
(First Asian Transport & Shipping Agency Inc v. Ople,142 SCRA 542 [1986];Asiaworld
Publishing House, Inc. v. Ople,152 SCRA 219 [1987]).This principle is enshrined in Article 221
of the Labor Code of the Philippines and is now the bedrock of proceedings before NLRC.
Notwithstanding the non-applicability of technical rules of procedure and evidence
in administrative proceedings, there are cardinal rules which must be observed by the hearing
 38

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).
The three petitions were filed under Rule 65 of the Revised Rules of Court on the
grounds that NLRC had committed grave abuse of discretion amounting to lack of jurisdiction
in issuing the questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.
Padilla, Davide, Jr.,Bellosillo and Kapunan, JJ.,concur.
||| (Cadalin v. Administrator, Philippine Overseas Employment Administration, G.R. No. 104776,
104911-14, 105029-32, [December 5, 1994], 308 PHIL 728-789)

FIRST DIVISION
[G.R. No. L-68470. October 8, 1985.]
ALICE REYES VAN DORN, petitioner, vs. HON. MANUEL V.
ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial
Court of the National Capital Region Pasay City, and RICHARD
UPTON, respondents.
DECISION
MELENCIO-HERRERA, J p:
In this Petition for Certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside
the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by
respondent Judge, which denied her Motion to Dismiss said case, and her Motion for
Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines while private
respondent is a citizen of the United States; that they were married in Hongkong in 1972; that,
after the marriage, they established their residence in the Philippines; that they begot two children
born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in
Nevada, United States, in 1982; and that petitioner has re-married also in Nevada, this time to
Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the
Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita,
Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner
be ordered to render an accounting of that business, and that private respondent be declared with
right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that
the cause of action is barred by previous judgment in the divorce proceedings before the Nevada
Court wherein respondent had acknowledged that he and petitioner had "no community property"
as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the
ground that the property involved is located in the Philippines so that the Divorce Decree has no
bearing in the case. The denial is now the subject of this Certiorari proceeding.
Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to
appeal. Certiorari and Prohibition are neither the remedies to question the propriety of an
interlocutory order of the trial Court. However, when a grave abuse of discretion was patently
committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court
in a certiorari proceeding to exercise its supervisory authority and to correct the error committed
which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it
39
would be useless and a waste of time to go ahead with the proceedings. 2 We consider the petition
filed in this case within the exception, and we have given it due course.
For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property
in the Philippines.
Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property
because of the representation he made in the divorce proceedings before the American Court that
they had no community of property; that the Galleon Shop was not established through conjugal
funds; and that respondent's claim is barred by prior judgment.
For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail
over the prohibitive laws of the Philippines and its declared national policy; that the acts and
declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest
Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the property relations
between petitioner and private respondent, after their marriage, were upon absolute or relative
community property, upon complete separation of property, or upon any other regime. The pivotal
fact in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner
who appeared in person before the Court during the trial of the case. It also obtained jurisdiction
over private respondent who, giving his address as No. 381 Bush Street, San Francisco, California,
authorized his attorneys in the divorce case, Karp & Gradt, Ltd., to agree to the divorce on the
ground of incompatibility in the understanding that there were neither community property nor
community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the
law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce
proceedings:
xxx xxx xxx
"You are hereby authorized to accept service of Summons, to file an Answer,
appear on my behalf and do all things necessary and proper to represent me,
without further contesting, subject to the following:
"1. That my spouse seeks a divorce on the ground of incompatibility.
"2. That there is no community of property to be adjudicated by the Court.
"3. That there are no community obligations to be adjudicated by the court.
xxx xxx xxx" 4
There can be no question as to the validity of that Nevada divorce in any of the States of the United
States. The decree is binding on private respondent as an American citizen. For instance, private
respondent cannot sue petitioner, as her husband, in any State of the Union. What he is
 40

contending in this case is that the divorce is not valid and binding in this jurisdiction, the same
being contrary to local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only
Philippine nationals are covered by the policy against absolute divorces the same being considered
contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad,
which may be recognized in the Philippines, provided they are valid according to their national
law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the
standards of American law, under which divorce dissolves the marriage. As stated by the Federal
Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of matrimony by
a court of competent jurisdiction are to change the existing status or domestic
relation of husband and wife, and to free them both from the bond. The
marriage tie, when thus severed as to one party, ceases to bind either. A
husband without a wife, or a wife without a husband, is unknown to the law.
When the law provides, in the nature of a penalty, that the guilty party shall
not marry again, that party, as well as the other, is still absolutely freed from
the bond of the former marriage."
Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He
would have no standing to sue in the case below as petitioner's husband entitled to exercise control
over conjugal assets. As he is bound by the Decision of his own country's Court, which validly
exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his
own representation before said Court from asserting his right over the alleged conjugal
property. cdll
To maintain, as private respondent does, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of
the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect
and fidelity, and render support to private respondent. The latter should not continue to be one of
her heirs with possible rights to conjugal property. She should not be discriminated against in her
own country if the ends of justice are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the
Complaint filed in Civil Case No. 1075-P of his Court.
Without costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.

SECOND DIVISION
[G.R. No. 80116. June 30, 1989.]
IMELDA MANALAYSAY PILAPIL, petitioner, vs. HON. CORONA
IBAY-SOMERA, in her capacity as Presiding Judge of the Regional
Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his
capacity as the City Fiscal of Manila; and ERICH EKKEHARD
GEILING, respondents.
SYLLABUS
1. REMEDIAL LAW; CRIMINAL PROCEDURE; PROSECUTION OF OFFENSES; ADULTERY
AND CONCUBINAGE; SWORN WRITTEN COMPLAINT OF OFFENDED SPOUSE,
JURISDICTIONAL. — Under Article 344 of the Revised Penal Code, the crime of adultery, as well
as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint
filed by the offended spouse. It has long since been established, with unwavering consistency, that
compliance with this rule is a jurisdictional, and not merely a formal, requirement. While in point
of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the
requirement for a sworn written complaint is just as jurisdictional a mandate since it is that
complaint which starts the prosecutory proceeding and without which the court cannot exercise
its jurisdiction to try the case.
2. ID.; ID.; ID.; EXCLUSIVE AND SUCCESSIVE RULE IN THE PROSECUTION OF SEDUCTION,
ABDUCTION, RAPE AND ACTS OF LASCIVIOUSNESS, NOT APPLICABLE TO CONCUBINAGE
AND ADULTERY. — Now, the law specifically provides that in prosecutions for adultery and
concubinage the person who can legally file the complaint should be the offended spouse, and
nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no
provision is made for the prosecution of the crimes of adultery and concubinage by the parents,
grandparents or guardian of the offended party. The so-called exclusive and successive rule in the
prosecution of the first four offenses above mentioned do not apply to adultery and concubinage.
It is significant that while the State, asparens partriae, was added and vested by the 1985 Rules of
Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated
victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default
of her parents, grandparents or guardian, such amendment did not include the crimes of adultery
and concubinage. In other words, only the offended spouse, and no other, is authorized by law to
initiate the action therefor.
3. ID.; ID.; ID.; LEGAL CAPACITY TO SUE IN CIVIL CASES, DETERMINED AS OF THE FILING
OF THE COMPLAINT, APPLIED TO PROSECUTION OF CRIMINAL CASES. — Corollary to such
exclusive grant of power to the offended spouse to institute the action, it necessarily follows that
such initiator must have the status, capacity or legal representation to do so at the time of the filing
41
of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal
capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of
the complaint or petition. The absence of an equivalent explicit rule in the prosecution of criminal
cases does not mean that the same requirement and rationale would not apply. Understandably,
it may not have been found necessary since criminal actions are generally and fundamentally
commenced by the State, through the People of the Philippines, the offended party being merely
the complaining witness therein. However, in the so-called "private crimes", or those which cannot
be prosecuted de oficio, and the present prosecution for adultery is of such genre, the offended
spouse assumes a more predominant role since the right to commence the action, or to refrain
therefrom, is a matter exclusively within his power and option.
4. ID.; ID.; ID.; ID.; RATIONALE. — This policy was adopted out of consideration for the aggrieved
party who might prefer to suffer the outrage in silence rather than go through the scandal of a
public trial. Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus
presupposes that the marital relationship is still subsisting at the time of the institution of the
criminal action for adultery. This is a logical consequence since the raison d'etre of said provision
of law would be absent where the supposed offended party had ceased to be the spouse of the
alleged offender at the time of the filing of the criminal case.
5. ID.; ID.; ID.; ADULTERY AND CONCUBINAGE; AFTER A DIVORCE HAS BEEN DECREED,
THE INNOCENT SPOUSE NO LONGER HAS THE RIGHT TO INSTITUTE PROCEEDINGS
AGAINST THE OFFENDERS. — American jurisprudence, on cases involving statutes in that
jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been
decreed, the innocent spouse no longer has the right to institute proceedings against the
offenders where the statute provides that the innocent spouse shall have the exclusive right to
institute a prosecution for adultery. Where, however, proceedings have been properly commenced,
a divorce subsequently granted can have no legal effect on the prosecution of the criminal
proceedings to a conclusion.
6. ID.; ID.; ID.; ID.; U.S. RULE APPLIED IN THIS JURISDICTION. — We see no reason why the
same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory
law and jural policy on the matter. We are convinced that in cases of such nature, the status of the
complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus,
the person who initiates the adultery case must be an offended spouse, and by this is meant that
he is still married to the accused spouse, at the time of the filing of the complaint.
7. CIVIL LAW; PERSONS AND FAMILY RELATIONS; MARRIAGE IN THE FEDERAL
REPUBLIC OF GERMANY BETWEEN A FILIPINA AND A GERMAN, RECOGNIZED IN THE
PHILIPPINES. — In the present case, the fact that private respondent obtained a valid divorce in
his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may
be recognized in the Philippines insofar as private respondent is concerned in view of the
nationality principle in our civil law on the matter of status of persons.
8. ID.; ID.; ID.; SEVERANCE OF MATERIAL BOND HAD THE EFFECT OF DISSOCIATING THE
FORMER SPOUSES FROM EACH OTHER. — The allegation of private respondent that he could
not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no

legal significance or consequence in this case. When said respondent initiated the divorce
proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect
once a dissolution of the marriage is decreed. Neither would there be a danger of introducing
spurious heirs into the family, which is said to be one of the reasons for the particular formulation
of our law on adultery, since there would thenceforth be no spousal relationship to speak of. The
severance of the marital bond had the effect of dissociating the former spouses from each other,
hence the actuations of one would not affect or cast obloquy on the other.
9. REMEDIAL LAW; CRIMINAL PROCEDURE; PROSECUTION OF OFFENSES; RULE IN
MATA CASE (18 PHIL. 4 90), NOT APPLICABLE TO CASE AT BAR. — The aforecited case
of United States vs. Mata cannot be successfully relied upon by private respondent. In applying
Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code,
which punished adultery "although the marriage be afterwards declared void", the Court merely
stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her
marital vows, even though it should be made to appear that she is entitled to have her marriage
contract declared null and void, until and unless she actually secures a formal judicial declaration
to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be
filed after the declaration of nullity because such declaration that the marriage is void ab initio is
equivalent to stating that it never existed. There being no marriage from the beginning, any
complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on.
Moreover, what was consequently contemplated and within the purview of the decision in said
case is the situation where the criminal action for adultery was filed before the termination of the
marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would
necessarily apply where the termination of the marriage was effected, as in this case, by a valid
foreign divorce.
DECISION
REGALADO, J p:
An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce,
only to be followed by a criminal infidelity suit of the latter against the former, provides Us the
opportunity to lay down a decisional rule on what hitherto appears to be an unresolved
jurisdictional question.
On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private
respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of
Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage
started auspiciously enough, and the couple lived together for some time in Malate, Manila where
their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1
Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a
separation de facto between them.
42
After about three and a half years of marriage, such connubial disharmony eventuated in private
respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg
Local Court in January, 1983. He claimed that there was failure of their marriage and that they
had been living apart since April, 1982. 2
Petitioner, on the other hand, filed an action for legal separation, support and separation of
property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the
same is still pending as Civil Case No. 83-15866. 3
On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany,
promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody
of the child was granted to petitioner. The records show that under German law said court was
locally and internationally competent for the divorce proceeding and that the dissolution of said
marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction.
4
On June 27, 1986, or more than five months after the issuance of the divorce decree, private
respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while
still married to said respondent, petitioner "had an affair with a certain William Chia as early as
1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A.
de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases
on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal
approved a resolution, dated January 8, 1986, directing the filing of two complaints for adultery
against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two
branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs.
Imelda Pilapil and William Chia", docketed as Criminal Case No. 87-52435, was assigned to
Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines
vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of
Judge Leonardo Cruz, Branch XXV, of the same court. 7
On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid
resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar
petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of
Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the
respondent city fiscal to inform the Department of Justice "if the accused have already been
arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire
records of both cases to his office for review. 9
Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend
further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings
in Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the
arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date,
petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in
said Criminal Case No. 87-52435 until after the resolution of the petition for review then pending
before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground

of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated
September 8, 1987. The same order also directed the arraignment of both accused therein, that is,
petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to
be arraigned. Such refusal of the petitioner being considered by respondent judge as direct
contempt, she and her counsel were fined and the former was ordered detained until she submitted
herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14
On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a
prayer for a temporary restraining order, seeking the annulment of the order of the lower court
denying her motion to quash. The petition is anchored on the main ground that the court is without
jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be
prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an
offended spouse having obtained a final divorce decree under his national law prior to his filing
the criminal complaint." 15
On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents
from implementing the aforesaid order of September 8, 1987 and from further proceeding with
Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A.
Ordoñez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations,
issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints
against the petitioner. 16
We find this petition meritorious. The writs prayed for shall accordingly issue. LexLib
Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes
against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended
spouse. It has long since been established, with unwavering consistency, that compliance with this
rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the
jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a
sworn written complaint is just as jurisdictional a mandate since it is that complaint which starts
the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try
the case.
Now, the law specifically provides that in prosecutions for adultery and concubinage the person
who can legally file the complaint should be the offended spouse, and nobody else. Unlike the
offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the
prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian
of the offended party. The so-called exclusive and successive rule in the prosecution of the first
four offenses above mentioned do not apply to adultery and concubinage. It is significant that
while the State, as parens partriae, was added and vested by the 1985 Rules of Criminal Procedure
with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid
offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents,
grandparents or guardian, such amendment did not include the crimes of adultery and
concubinage. In other words, only the offended spouse, and no other, is authorized by law to
initiate the action therefor.
43
Corollary to such exclusive grant of power to the offended spouse to institute the action, it
necessarily follows that such initiator must have the status, capacity or legal representation to do
so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions;
in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined
as of the filing of the complaint or petition.
The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that
the same requirement and rationale would not apply. Understandably, it may not have been found
necessary since criminal actions are generally and fundamentally commenced by the State,
through the People of the Philippines, the offended party being merely the complaining witness
therein. However, in the so-called "private crimes", or those which cannot be prosecuted de oficio,
and the present prosecution for adultery is of such genre, the offended spouse assumes a more
predominant role since the right to commence the action, or to refrain therefrom, is a matter
exclusively within his power and option.
This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the
outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently
argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital
relationship is still subsisting at the time of the institution of the criminal action for adultery. This
is a logical consequence since the raison d'etre of said provision of law would be absent where the
supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing
of the criminal case. 21
In these cases, therefore, it is indispensable that the status and capacity of the complainant to
commence the action be definitely established and, as already demonstrated, such status or
capacity must indubitably exist as of the time he initiates the action. It would be absurd if his
capacity to bring the action would be determined by his status before or subsequent to the
commencement thereof, where such capacity or status existed prior to but ceased before, or was
acquired subsequent to but did not exist at the time of, the institution of the case. We would
thereby have the anomalous spectacle of a party bringing suit at the very time when he is without
the legal capacity to do so.
To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as
to when precisely the status of a complainant as an offended spouse must exist where a criminal
prosecution can be commenced only by one who in law can be categorized as possessed of such
status. Stated differently and with reference to the present case, the inquiry would be whether it is
necessary in the commencement of a criminal action for adultery that the marital bonds between
the complainant and the accused be unsevered and existing at the time of the institution of the
action by the former against the latter. cdphil
American jurisprudence, on cases involving statutes in that jurisdiction which are in pari
materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no
longer has the right to institute proceedings against the offenders where the statute provides that
the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where,
however, proceedings have been properly commenced, a divorce subsequently granted can have
no legal effect on the prosecution of the criminal proceedings to a conclusion. 22

In the cited Loftus case, the Supreme Court of Iowa held that —
" 'No prosecution for adultery can be commenced except on the complaint of
the husband or wife.' Section 4932, Code. Though Loftus was husband of
defendant when the offense is said to have been committed, he had ceased to
be such when the prosecution was begun; and appellant insists that his status
was not such as to entitle him to make the complaint. We have repeatedly said
that the offense is against the unoffending spouse, as well as the state, in
explaining the reason for this provision in the statute; and we are of the
opinion that the unoffending spouse must be such when the prosecution is
commenced." (Emphasis supplied.)
We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction,
considering our statutory law and jural policy on the matter. We are convinced that in cases of
such nature, the status of the complainant vis-a-vis the accused must be determined as of the time
the complaint was filed. Thus, the person who initiates the adultery case must be an offended
spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing
of the complaint.
In the present case, the fact that private respondent obtained a valid divorce in his country, the
Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in
the Philippines insofar as private respondent is concerned 23 in view of the nationality principle
in our civil law on the matter of status of persons.
Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a
United States court between Alice Van Dorn, a Filipina, and her American husband, the latter filed
a civil case in a trial court here alleging that her business concern was conjugal property and
praying that she be ordered to render an accounting and that the plaintiff be granted the right to
manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error
of such stance, thus:
"There can be no question as to the validity of that Nevada divorce in any of
the States of the United States. The decree is binding on private respondent
as an American citizen. For instance, private respondent cannot sue
petitioner, as her husband, in any State of the Union . . .
"It is true that owing to the nationality principle embodied in Article 15 of the
Civil Code, only Philippine nationals are covered by the policy against
absolute divorces the same being considered contrary to our concept of public
policy and morality. However, aliens may obtain divorces abroad, which may
be recognized in the Philippines, provided they are valid according to their
national law . . .
44
"Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below as
petitioner's husband entitled to exercise control over conjugal assets . . ." 25
Under the same considerations and rationale, private respondent, being no longer the
husband of petitioner, had no legal standing to commence the adultery case under the
imposture that he was the offended spouse at the time he filed suit.
The allegation of private respondent that he could not have brought this case before the decree of
divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case.
When said respondent initiated the divorce proceeding, he obviously knew that there would no
longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed.
Neither would there be a danger of introducing spurious heirs into the family, which is said to be
one of the reasons for the particular formulation of our law on adultery, 26 since there would
thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect
of dissociating the former spouses from each other, hence the actuations of one would not affect
or cast obloquy on the other.
The aforecited case of United States vs. Mata cannot be successfully relied upon by private
respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of
the Revised Penal Code, which punished adultery "although the marriage be afterwards declared
void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of
a married woman to her marital vows, even though it should be made to appear that she is entitled
to have her marriage contract declared null and void, until and unless she actually secures a formal
judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the
complaint can still be filed after the declaration of nullity because such declaration that the
marriage is void ab initio is equivalent to stating that it never existed. There being no marriage
from the beginning, any complaint for adultery filed after said declaration of nullity would no
longer have a leg to stand on. Moreover, what was consequently contemplated and within the
purview of the decision in said case is the situation where the criminal action for adultery was
filed before the termination of the marriage by a judicial declaration of its nullity ab initio. The
same rule and requisite would necessarily apply where the termination of the marriage was
effected, as in this case, by a valid foreign divorce.
Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, herein before cited, 27 must
suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended
spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised
as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve
a factual situation akin to the one at bar or any issue determinative of the controversy herein.
WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and
another one entered DISMISSING the complaint in Criminal Case No. 87-52435 for lack of
jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby
made permanent.
SO ORDERED. (Pilapil v. Ibay-Somera, G.R. No. 80116, [June 30, 1989], 256 PHIL 407-421)
 45

FIRST DIVISION The Supreme Court reversed and set aside the ruling of the trial court and recognized as valid and
as a matter of comity the decree of divorce granted in favor of the deceased Lorenzo N. Llorente
by the Superior Court of the State of California in and for the County of San Diego, made final on
[G.R. No. 124371. November 23, 2000.] December 4, 1952. According to the Court, the "national law" indicated in Article 16 of the Civil
Code cannot possibly apply to the general American law. There is no such law governing the
validity of testamentary provisions in the United States. Each State of the union has its own law
PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and
applicable to its citizens and in force only within the State. It can, therefore, refer to no other than
ALICIA F. LLORENTE, respondents.
the law of the State of which the decedent was a resident and there was also no showing that the
application of the renvoi doctrine was called for or required by New York State law. The Court also
said that the clear intent of Lorenzo to bequeath his property to his second wife and children by
SYNOPSIS her was glaringly shown in the will he executed and the Court did not wish to frustrate Lorenzo's
wishes, since he was a foreigner, not covered by Philippine laws on family rights and duties, status,
condition and legal capacity. The Court remanded the cases to the court of origin for determination
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from 1927
of the intrinsic validity of Lorenzo N. Llorente's will and determination of the parties' successional
to 1957 and a naturalized American citizen. On February 22, 1937, Lorenzo married petitioner
rights allowing proof of foreign law.
Paula Llorente. Before the outbreak of the Pacific War, Lorenzo departed for the United States and
Paula stayed in the conjugal home in barrio Antipolo, Nabua, Camarines Sur. When Lorenzo
returned to the Philippines to visit his wife in 1945, he discovered that his wife Paula was pregnant
and was "living in" and having an adulterous relationship with his brother, Ceferino Llorente. SYLLABUS
Lorenzo refused to forgive Paula and live with her. Lorenzo returned to the United States and filed
for divorce with the Superior Court of the State of California in and for the County of San Diego.
1. CIVIL LAW; PRIVATE INTERNATIONAL LAW; RENVOI DOCTRINE; NOT APPLICABLE IN
Paula was represented by counsel, John Riley, and actively participated in the proceedings. The
CASE AT BAR. — True, foreign laws do not prove themselves in our jurisdiction and our courts
Superior Court of the State of California, for the County of San Diego found all factual allegations
are not authorized to take judicial notice of them. Like any other fact, they must be alleged and
to be true and issued an interlocutory judgment of divorce. The divorce decree became final in
proved. While the substance of the foreign law was pleaded, the Court of Appeals did not admit
1952. On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. Apparently, Alicia had
the foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine,
no knowledge of the first marriage even if they resided in the same town as Paula, who did not
where the case was "referred back" to the law of the decedent's domicile, in this case, Philippine
oppose the marriage or cohabitation. From 1958 to 1985, Lorenzo and Alicia lived together as
law. We note that while the trial court stated that the law of New York was not sufficiently proven,
husband and wife and produced three children, Raul, Luz and Beverly, all surnamed Llorente. On
in the same breath it made the categorical, albeit equally unproven statement that "American law
March 13, 1981, Lorenzo executed a Last Will and Testament. In the will, Lorenzo bequeathed all
follows the 'domiciliary theory, hence, Philippine law applies when determining the validity of
his property to Alicia and their three children. On December 14, 1983, Lorenzo filed with the
Lorenzo's will. First, there is no such thing as one American law. The "national law" indicated in
Regional Trial Court, Iriga, Camarines Sur, a petition for the probate and allowance of his last will
Article 16 of the Civil Code cannot possibly apply to general American law. There is no such law
and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his
governing the validity of testamentary provisions in the United States. Each State of the union has
estate. The trial court admitted the will to probate. On June 11, 1985, before the proceedings could
its own law applicable to its citizens and in force only within the State. It can therefore refer to no
be terminated, Lorenzo died. Paula filed with the same court a petition for letters of administration
other than the law of the State of which the decedent was a resident. Second, there is no showing
over Lorenzo's estate in her favor. Alicia also filed in the testate proceeding a petition for the
that the application of the renvoi doctrine is called for or required by New York State law. The trial
issuance of letters testamentary. The trial court denied Alicia's petition and ruled that the divorce
court held that the will was intrinsically invalid since it contained dispositions in favor of Alice,
decree granted to the late Lorenzo Llorente was void and inapplicable in the Philippines, therefore,
who in the trial court's opinion was a mere paramour. The trial court threw the will out, leaving
her marriage to Lorenzo was likewise void. The trial court appointed Paula Llorente as legal
Alice, and her two children, Raul and Luz, with nothing. The Court of Appeals also disregarded the
administrator of the estate of the deceased, Lorenzo Llorente. Respondent Alicia filed with the trial
will. It declared Alice entitled to one half (½) of whatever property she and Lorenzo acquired
court a motion for reconsideration, but was denied. Alicia appealed to the Court of Appeals. The
during their cohabitation, applying Article 144 of the Civil Code of the Philippines. The hasty
appellate court promulgated its decision, affirming with modification the decision of the trial court.
application of Philippine law and the complete disregard of the will, already probated as duly
The trial court declared Alicia as co-owner of whatever properties she and the deceased Lorenzo
executed in accordance with the formalities of Philippine law, is fatal, especially in light of the
may have acquired during the twenty-five (25) years of cohabitation. Petitioner Paula moved for
factual and legal circumstances here obtaining.
reconsideration, but was denied for lack of merit. Hence, the present petition.

2. ID.; ID.; VALIDITY OF FOREIGN DIVORCE; DIVORCE OBTAINED BY PETITIONER'S
HUSBAND ABROAD VALID AND RECOGNIZED BY PHILIPPINE LAWS AS A MATTER OF
COMITY; SETTLED DOCTRINES. — In Van Dorn v. Romillo, Jr., we held that owing to the
nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered
by the policy against absolute divorces, the same being considered contrary to our concept of
public policy and morality. In the same case, the Court ruled that aliens may obtain divorces
abroad, provided they are valid according to their national law. Citing this landmark case, the
Court held in Quita v. Court of Appeals, that once proven that respondent was no longer a Filipino
citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would become
applicable and petitioner could "very well lose her right to inherit" from him. In Pilapil v. Ibay-
Somera, we recognized the divorce obtained by the respondent in his country, the Federal
Republic of Germany. There, we stated that divorce and its legal effects may be recognized in the
Philippines insofar as respondent is concerned in view of the nationality principle in our civil law
on the status of persons. For failing to apply these doctrines, the decision of the Court of Appeals
must be reversed. We hold that the divorce obtained by Lorenzo H. Llorente from his first wife
Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects of this
divorce (as to the succession to the estate of the decedent) are matters best left to the
determination of the trial court.
3. ID.; ID.; FORMALITIES OF WILL EXECUTED BY FOREIGN NATIONALS SHALL BE
GOVERNED BY PHILIPPINE LAW; DETERMINATION OF SUCCESSIONAL RIGHTS BEST
PROVED BY FOREIGN LAW WHICH MUST BE DULY PLEADED AND PROVED; CASE AT BAR.
— The clear intent of Lorenzo to bequeath his property to his second wife and children by her is
glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a
foreigner, not covered by our laws on "family rights and duties, status, condition and legal
capacity." Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best
proved by foreign law which must be pleaded and proved. Whether the will was executed in
accordance with the formalities required is answered by referring to Philippine law. In fact, the
will was duly probated. As a guide however, the trial court should note that whatever public policy
or good customs may be involved in our system of legitimes, Congress did not intend to extend the
same to the succession of foreign nationals. Congress specifically left the amount of successional
rights to the decedent's national law.
DECISION
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals 1 modifying that of the
Regional Trial Court, Camarines Sur, Branch 35, Iriga City 2declaring respondent Alicia F.
Llorente (hereinafter referred to as "Alicia"), as co-owners of whatever property she and the
deceased Lorenzo N. Llorente (hereinafter referred to as "Lorenzo") may have acquired during the
twenty-five (25) years that they lived together as husband and wife.
46
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United States Navy from
March 10, 1927 to September 30, 1957. 3
On February 22, 1937, Lorenzo and petitioner Paula Llorente (hereinafter referred to as "Paula")
were married before a parish priest, Roman Catholic Church, in Nabua, Camarines Sur. 4
Before the outbreak of the Pacific War, Lorenzo departed for the United States and Paula stayed
in the conjugal home in barrio Antipolo, Nabua, Camarines Sur.5
On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of
Naturalization No. 5579816 was issued in his favor by the United States District Court, Southern
District of New York. 6
Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo was granted an
accrued leave by the U.S. Navy, to visit his wife and he visited the Philippines. 7 He discovered
that his wife Paula was pregnant and was "living in" and having an adulterous relationship with
his brother, Ceferino Llorente. 8
On December 4, 1945, Paula gave birth to a boy registered in the Office of the Registrar of Nabua
as "Crisologo Llorente," with the certificate stating that the child was not legitimate and the line
for the father's name was left blank. 9
Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946, the couple drew a
written agreement to the effect that (1) all the family allowances allotted by the United States Navy
as part of Lorenzo's salary and all other obligations for Paula's daily maintenance and support
would be suspended; (2) they would dissolve their marital union in accordance with judicial
proceedings; (3) they would make a separate agreement regarding their conjugal property
acquired during their marital life; and (4) Lorenzo would not prosecute Paula for her adulterous
act since she voluntarily admitted her fault and agreed to separate from Lorenzo peacefully. The
agreement was signed by both Lorenzo and Paula and was witnessed by Paula's father and
stepmother. The agreement was notarized by Notary Public Pedro Osabel. 10
Lorenzo returned to the United States and on November 16, 1951 filed for divorce with the Superior
Court of the State of California in and for the County of San Diego. Paula was represented by
counsel, John Riley, and actively participated in the proceedings. On November 27, 1951, the
Superior Court of the State of California, for the County of San Diego found all factual allegations
to be true and issued an interlocutory judgment of divorce. 11
On December 4, 1952, the divorce decree became final. 12
In the meantime, Lorenzo returned to the Philippines. CADHcI
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. 13 Apparently, Alicia had no
knowledge of the first marriage even if they resided in the same town as Paula, who did not oppose
the marriage or cohabitation. 14

From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. 15 Their twenty-five
(25) year union produced three children, Raul, Luz and Beverly, all surnamed Llorente. 16
On March 13, 1981, Lorenzo executed a Last Will and Testament. The will was notarized by Notary
Public Salvador M. Occiano, duly signed by Lorenzo with attesting witnesses Francisco Hugo,
Francisco Neibres and Tito Trajano. In the will, Lorenzo bequeathed all his property to Alicia and
their three children, to wit:
"(1) I give and bequeath to my wife ALICIA R. FORTUNO exclusively my
residential house and lot, located at San Francisco, Nabua, Camarines Sur,
Philippines, including ALL the personal properties and other movables or
belongings that may be found or existing therein;
"(2) I give and bequeath exclusively to my wife Alicia R. Fortuno and to my
children, Raul F. Llorente, Luz F. Llorente and Beverly F. Llorente, in equal
shares, all my real properties whatsoever and wheresoever located,
specifically my real properties located at Barangay Aro-Aldao, Nabua,
Camarines Sur; Barangay Paloyon, Nabua, Camarines Sur; Barangay Baras,
Sitio Puga, Nabua, Camarines Sur; and Barangay Paloyon, Sitio Nalilidong,
Nabua, Camarines Sur;
"(3) I likewise give and bequeath exclusively unto my wife Alicia R. Fortuno
and unto my children, Raul F. Llorente, Luz F. Llorente and Beverly F.
Llorente, in equal shares, my real properties located in Quezon City
Philippines, and covered by Transfer Certificate of Title No. 188652; and my
lands in Antipolo, Rizal, Philippines, covered by Transfer Certificate of Title
Nos. 124196 and 165188, both of the Registry of Deeds of the province of Rizal,
Philippines;
"(4) That their respective shares in the above-mentioned properties, whether
real or personal properties, shall not be disposed of, ceded, sold and conveyed
to any other persons, but could only be sold, ceded, conveyed and disposed of
by and among themselves;
"(5) I designate my wife ALICIA R. FORTUNO to be the sole executor of this
my Last Will and Testament, and in her default or incapacity of the latter to
act, any of my children in the order of age, if of age;
"(6) I hereby direct that the executor named herein or her lawful substitute
should served (sic) without bond;
"(7) I hereby revoke any and all my other wills, codicils, or testamentary
dispositions heretofore executed, signed, or published, by me;
"(8) It is my final wish and desire that if I die, no relatives of mine in any
degree in the Llorente's Side should ever bother and disturb in any manner
whatsoever my wife Alicia R. Fortunato and my children with respect to any
47
real or personal properties I gave and bequeathed respectively to each one of
them by virtue of this Last Will and Testament." 17
On December 14, 1983, Lorenzo filed with the Regional Trial Court, Iriga, Camarines Sur, a
petition for the probate and allowance of his last will and testament wherein Lorenzo moved that
Alicia be appointed Special Administratrix of his estate. 18
On January 18, 1984, the trial court denied the motion for the reason that the testator Lorenzo was
still alive. 19
On January 24, 1984, finding that the will was duly executed, the trial court admitted the will to
probate. 20
On June 11, 1985, before the proceedings could be terminated, Lorenzo died. 21
On September 4, 1985, Paula filed with the same court a petition 22 for letters of administration
over Lorenzo's estate in her favor. Paula contended (1) that she was Lorenzo's surviving spouse,
(2) that the various property were acquired during their marriage, (3) that Lorenzo's will disposed
of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in
the conjugal property. 23
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR-755), a petition for
the issuance of letters testamentary. 24
On October 14, 1985, without terminating the testate proceedings, the trial court gave due course
to Paula's petition in Sp. Proc. No. IR-888. 25
On November 6, 13 and 20, 1985, the order was published in the newspaper "Bicol Star". 26
On May 18, 1987, the Regional Trial Court issued a joint decision, thus: ISaCTE
"Wherefore, considering that this court has so found that the divorce decree
granted to the late Lorenzo Llorente is void and inapplicable in the
Philippines, therefore the marriage he contracted with Alicia Fortunato on
January 16, 1958 at Manila is likewise void. This being so the petition of Alicia
F. Llorente for the issuance of letters testamentary is denied. Likewise, she is
not entitled to receive any share from the estate even if the will especially said
so her relationship with Lorenzo having gained the status of paramour which
is under Art. 739 (1).
"On the other hand, the court finds the petition of Paula Titular Llorente,
meritorious, and so declares the intrinsic disposition of the will of Lorenzo
Llorente dated March 13, 1981 as void and declares her entitled as conjugal
partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate
and then one-third should go to the illegitimate children, Raul, Luz and
Beverly, all surname (sic) Llorente, for them to partition in equal shares and
also entitled to the remaining free portion in equal shares.

"Petitioner, Paula Llorente is appointed legal administrator of the estate of
the deceased, Lorenzo Llorente. As such let the corresponding letters of
administration issue in her favor upon her filing a bond in the amount (sic) of
P100,000.00 conditioned for her to make a return to the court within three
(3) months a true and complete inventory of all goods, chattels, rights, and
credits, and estate which shall at any time come to her possession or to the
possession of any other person for her, and from the proceeds to pay and
discharge all debts, legacies and charges on the same, or such dividends
thereon as shall be decreed or required by this court; to render a true and just
account of her administration to the court within one (1) year, and at any
other time when required by the court and to perform all orders of this court
by her to be performed.
"On the other matters prayed for in respective petitions for want of evidence
could not be granted.
"SO ORDERED." 27
In time, Alicia filed with the trial court a motion for reconsideration of the aforequoted
decision. 28
On September 14, 1987, the trial court denied Alicia's motion for reconsideration but modified its
earlier decision, stating that Raul and Luz Llorente are not children "legitimate or otherwise" of
Lorenzo since they were not legally adopted by him. 29 Amending its decision of May 18, 1987,
the trial court declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to
one-third (1/3) of the estate and one-third (1/3) of the free portion of the estate. 30
On September 28, 1987, respondent appealed to the Court of Appeals. 31
On July 31, 1995, the Court of Appeals promulgated its decision, affirming with modification the
decision of the trial court in this wise:
"WHEREFORE, the decision appealed from is hereby AFFIRMED with the
MODIFICATION that Alicia is declared as co-owner of whatever properties
she and the deceased may have acquired during the twenty-five (25) years of
cohabitation.
"SO ORDERED." 32
On August 25, 1995, petitioner filed with the Court of Appeals a motion for reconsideration of the
decision. 33
On March 21, 1996, the Court of Appeals, 34 denied the motion for lack of merit.
Hence, this petition. 35
48
The Issue
Stripping the petition of its legalese and sorting through the various arguments raised, 36 the
issue is simple. Who are entitled to inherit from the late Lorenzo N. Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case to the trial court
for ruling on the intrinsic validity of the will of the deceased.
The Applicable Law
The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time
of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly
established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law.
The Civil Code clearly provides:
"ARTICLE 15. Laws relating to family rights and duties, or to the status,
condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad. SCcHIE
"ARTICLE 16. Real property as well as personal property is subject to the law
of the country where it is situated.
"However, intestate and testamentary succession, both with respect to the
order of succession and to the amount of successional rights and to the
intrinsic validity of testamentary provisions, shall be regulated by the
national law of the person whose succession is under
consideration, whatever may be the nature of the property and regardless of
the country wherein said property may be found." (italics ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized
to take judicial notice of them. Like any other fact, they must be alleged and proved. 37
While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign
law. The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case
was "referred back" to the law of the decedent's domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not sufficiently proven, in
the same breath it made the categorical, albeit equally unproven statement that "American law"
follows the 'domiciliary theory' hence, Philippine law applies when determining the validity of
Lorenzo's will. 38
First, there is no such thing as one American law. The "national law" indicated in Article 16 of the
Civil Code cannot possibly apply to general American law. There is no such law governing the
validity of testamentary provisions in the United States. Each State of the union has its own law
applicable to its citizens and in force only within the State. It can therefore refer to no other than

the law of the State of which the decedent was a resident. 39 Second, there is no showing that the
application of the renvoi doctrine is called for or required by New York State law.
The trial court held that the will was intrinsically invalid since it contained dispositions in favor of
Alice, who in the trial court's opinion was a mere paramour. The trial court threw the will out,
leaving Alice, and her two children, Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one half (1/2) of
whatever property she and Lorenzo acquired during their cohabitation, applying Article 144 of the
Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will, already probated
as duly executed in accordance with the formalities of Philippine law, is fatal, especially in light of
the factual and legal circumstances here obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr. 40 we held that owing to the nationality principle embodied in Article
15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces,
the same being considered contrary to our concept of public policy and morality. In the same case,
the Court ruled that aliensmay obtain divorces abroad, provided they are valid according to their
national law.
Citing this landmark case, the Court held in Quita v. Court of Appeals, 41 that once proven that
respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the
ruling in Van Dorn would become applicable and petitioner could "very well lose her right to
inherit" from him.
In Pilapil v. Ibay-Somera, 42 we recognized the divorce obtained by the respondent in his
country, the Federal Republic of Germany. There, we stated that divorce and its legal effects may
be recognized in the Philippines insofar as respondent is concerned in view of the nationality
principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must be reversed. 43 We
hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and
recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the
succession to the estate of the decedent) are matters best left to the determination of the trial court.
Validity of the Will
The Civil Code provides:
"ARTICLE 17. The forms and solemnities of contracts, wills, and other public
instruments shall be governed by the laws of the country in which they are
executed.
"When the acts referred to are executed before the diplomatic or consular
officials of the Republic of the Philippines in a foreign country, the solemnities
49
established by Philippine laws shall be observed in their execution." (italics
ours)
The clear intent of Lorenzo to bequeath his property to his second wife and children by her is
glaringly shown in the will he executed. We do not wish to frustrate his wishes, since he was a
foreigner, not covered by our laws on "family rights and duties, status, condition and legal
capacity." 44
Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved
by foreign law which must be pleaded and proved. Whether the will was executed in accordance
with the formalities required is answered by referring to Philippine law. In fact, the will was duly
probated. HAICcD
As a guide however, the trial court should note that whatever public policy or good customs may
be involved in our system of legitimes, Congress did not intend to extend the same to the
succession of foreign nationals. Congress specifically left the amount of successional rights to the
decedent's national law. 45
Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G. R. SP No.
17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and RECOGNIZES
as VALID the decree of divorce granted in favor of the deceased Lorenzo N. Llorente by the
Superior Court of the State of California in and for the County of San Diego, made final on
December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of the intrinsic
validity of Lorenzo N. Llorente's will and determination of the parties' successional rights allowing
proof of foreign law with instructions that the trial court shall proceed with all deliberate dispatch
to settle the estate of the deceased within the framework of the Rules of Court.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
||| (Llorente v. Court of Appeals, G.R. No. 124371, [November 23, 2000], 399 PHIL 342-357)

FIRST DIVISION
[G.R. No. 154380. October 5, 2005.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. CIPRIANO
ORBECIDO III, respondent.
DECISION
QUISUMBING, J p:
Given a valid marriage between two Filipino citizens, where one party is later naturalized as a
foreign citizen and obtains a valid divorce decree capacitating him or her to remarry, can the
Filipino spouse likewise remarry under Philippine law?
Before us is a case of first impression that behooves the Court to make a definite ruling on this
apparently novel question, presented as a pure question of law.
In this petition for review, the Solicitor General assails the Decision 1 dated May 15, 2002, of the
Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and its Resolution 2 dated July
4, 2002 denying the motion for reconsideration. The court a quo had declared that herein
respondent Cipriano Orbecido III is capacitated to remarry. The fallo of the impugned Decision
reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art. 26
of the Family Code and by reason of the divorce decree obtained against him
by his American wife, the petitioner is given the capacity to remarry under the
Philippine Law.
IT IS SO ORDERED. 3
The factual antecedents, as narrated by the trial court, are as follows.
On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United Church
of Christ in the Philippines in Lam-an, Ozamis City. Their marriage was blessed with a son and a
daughter, Kristoffer Simbortriz V. Orbecido and Lady Kimberly V. Orbecido.
In 1986, Cipriano's wife left for the United States bringing along their son Kristoffer. A few years
later, Cipriano discovered that his wife had been naturalized as an American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce decree and
then married a certain Innocent Stanley. She, Stanley and her child by him currently live at 5566
A. Walnut Grove Avenue, San Gabriel, California.
50
Cipriano thereafter filed with the trial court a petition for authority to remarry invoking Paragraph
2 of Article 26 of the Family Code. No opposition was filed. Finding merit in the petition, the court
granted the same. The Republic, herein petitioner, through the Office of the Solicitor General
(OSG), sought reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26
OF THE FAMILY CODE 4
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to the instant
case because it only applies to a valid mixed marriage; that is, a marriage celebrated between a
Filipino citizen and an alien. The proper remedy, according to the OSG, is to file a petition for
annulment or for legal separation. 5 Furthermore, the OSG argues there is no law that governs
respondent's situation. The OSG posits that this is a matter of legislation and not of judicial
determination. 6
For his part, respondent admits that Article 26 is not directly applicable to his case but insists that
when his naturalized alien wife obtained a divorce decree which capacitated her to remarry, he is
likewise capacitated by operation of law pursuant to Section 12, Article II of the Constitution. 7
At the outset, we note that the petition for authority to remarry filed before the trial court actually
constituted a petition for declaratory relief. In this connection, Section 1, Rule 63 of the Rules of
Court provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
Section 1. Who may file petition — Any person interested under a deed, will,
contract or other written instrument, or whose rights are affected by a statute,
executive order or regulation, ordinance, or other governmental regulation
may, before breach or violation thereof, bring an action in the appropriate
Regional Trial Court to determine any question of construction or validity
arising, and for a declaration of his rights or duties, thereunder.
xxx xxx xxx
The requisites of a petition for declaratory relief are: (1) there must be a justiciable controversy;
(2) the controversy must be between persons whose interests are adverse; (3) that the party
seeking the relief has a legal interest in the controversy; and (4) that the issue is ripe for judicial
determination. 8
This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between two Filipino
citizens where one later acquired alien citizenship, obtained a divorce decree, and remarried while
in the U.S.A. The interests of the parties are also adverse, as petitioner representing the State
asserts its duty to protect the institution of marriage while respondent, a private citizen, insists on
a declaration of his capacity to remarry. Respondent, praying for relief, has legal interest in the

controversy. The issue raised is also ripe for judicial determination inasmuch as when respondent
remarries, litigation ensues and puts into question the validity of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code apply to
the case of respondent? Necessarily, we must dwell on how this provision had come about in the
first place, and what was the intent of the legislators in its enactment?
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209,
otherwise known as the "Family Code," which took effect on August 3, 1988. Article 26 thereof
states:
All marriages solemnized outside the Philippines in accordance with the laws
in force in the country where they were solemnized, and valid there as such,
shall also be valid in this country, except those prohibited under Articles 35,
37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No.
227 was likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second
paragraph was added to Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)
On its face, the foregoing provision does not appear to govern the situation presented by the case
at hand. It seems to apply only to cases where at the time of the celebration of the marriage, the
parties are a Filipino citizen and a foreigner. The instant case is one where at the time the marriage
was solemnized, the parties were two Filipino citizens, but later on, the wife was naturalized as an
American citizen and subsequently obtained a divorce granting her capacity to remarry, and
indeed she remarried an American citizen while residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings 9 on the Family Code, the Catholic Bishops'
Conference of the Philippines (CBCP) registered the following objections to Paragraph 2 of Article
26:
1. The rule is discriminatory. It discriminates against those whose spouses
are Filipinos who divorce them abroad. These spouses who are
divorced will not be able to re-marry, while the spouses of
foreigners who validly divorce them abroad can.
51
2. This is the beginning of the recognition of the validity of divorce even for
Filipino citizens. For those whose foreign spouses validly divorce
them abroad will also be considered to be validly divorced here and
can re-marry. We propose that this be deleted and made into law
only after more widespread consultation. (Emphasis supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph
2 of Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision
Committee, is to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. AETcSa
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo,
Jr. 10 The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The
Court held therein that a divorce decree validly obtained by the alien spouse is valid in the
Philippines, and consequently, the Filipino spouse is capacitated to remarry under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the marriage, the
parties were Filipino citizens, but later on, one of them obtains a foreign citizenship by
naturalization?
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals. 11 In Quita,
the parties were, as in this case, Filipino citizens when they got married. The wife became a
naturalized American citizen in 1954 and obtained a divorce in the same year. The Court therein
hinted, by way of obiter dictum, that a Filipino divorced by his naturalized foreign spouse is no
longer married under Philippine law and can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason, we hold that
Paragraph 2 of Article 26 should be interpreted to include cases involving parties who, at the time
of the celebration of the marriage were Filipino citizens, but later on, one of them becomes
naturalized as a foreign citizen and obtains a divorce decree. The Filipino spouse should likewise
be allowed to remarry as if the other party were a foreigner at the time of the solemnization of the
marriage. To rule otherwise would be to sanction absurdity and injustice. Where the interpretation
of a statute according to its exact and literal import would lead to mischievous results or
contravene the clear purpose of the legislature, it should be construed according to its spirit and
reason, disregarding as far as necessary the letter of the law. A statute may therefore be extended
to cases not within the literal meaning of its terms, so long as they come within its spirit or
intent. 12
If we are to give meaning to the legislative intent to avoid the absurd situation where the Filipino
spouse remains married to the alien spouse who, after obtaining a divorce is no longer married to
the Filipino spouse, then the instant case must be deemed as coming within the contemplation of
Paragraph 2 of Article 26. AHDTIE
 52

In view of the foregoing, we state the twin elements for the application of Paragraph 2 of Article
26 as follows:
1. There is a valid marriage that has been celebrated between a Filipino citizen
and a foreigner; and
2. A valid divorce is obtained abroad by the alien spouse capacitating him or
her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien spouse
capacitating the latter to remarry.
only be made properly upon respondent's submission of the aforecited evidence in his
favor. CcAHEI
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The assailed
Decision dated May 15, 2002, and Resolution dated July 4, 2002, of the Regional Trial Court of
Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Ynares-Santiago, Carpio and Azcuna, JJ., concur.

In this case, when Cipriano's wife was naturalized as an American citizen, there was still a valid ||| (Republic v. Orbecido III, G.R. No. 154380, [October 5, 2005], 509 PHIL 108-117)
marriage that has been celebrated between her and Cipriano. As fate would have it, the naturalized
alien wife subsequently obtained a valid divorce capacitating her to remarry. Clearly, the twin
requisites for the application of Paragraph 2 of Article 26 are both present in this case. Thus
Cipriano, the "divorced" Filipino spouse, should be allowed to remarry.
We are also unable to sustain the OSG's theory that the proper remedy of the Filipino spouse is to
file either a petition for annulment or a petition for legal separation. Annulment would be a long
and tedious process, and in this particular case, not even feasible, considering that the marriage
of the parties appears to have all the badges of validity. On the other hand, legal separation would
not be a sufficient remedy for it would not sever the marriage tie; hence, the legally separated
Filipino spouse would still remain married to the naturalized alien spouse.
However, we note that the records are bereft of competent evidence duly submitted by respondent
concerning the divorce decree and the naturalization of respondent's wife. It is settled rule that
one who alleges a fact has the burden of proving it and mere allegation is not evidence. 13
Accordingly, for his plea to prosper, respondent herein must prove his allegation that his wife was
naturalized as an American citizen. Likewise, before a foreign divorce decree can be recognized by
our own courts, the party pleading it must prove the divorce as a fact and demonstrate its
conformity to the foreign law allowing it. 14 Such foreign law must also be proved as our courts
cannot take judicial notice of foreign laws. Like any other fact, such laws must be alleged and
proved. 15 Furthermore, respondent must also show that the divorce decree allows his former wife
to remarry as specifically required in Article 26. Otherwise, there would be no evidence sufficient
to declare that he is capacitated to enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the Family
Code (E.O. No. 209, as amended by E.O. No. 227), should be interpreted to allow a Filipino citizen,
who has been divorced by a spouse who had acquired foreign citizenship and remarried, also to
remarry. However, considering that in the present petition there is no sufficient evidence
submitted and on record, we are unable to declare, based on respondent's bare allegations that his
wife, who was naturalized as an American citizen, had obtained a divorce decree and had
remarried an American, that respondent is now capacitated to remarry. Such declaration could

SECOND DIVISION
[G.R. No. 103493. June 19, 1997.]
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL
FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO
DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS and WILLIAM
H. CRAIG, respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; FOREIGN JUDGMENT; WHEN CAN BE GIVEN THE
EFFECT OF RES JUDICATA. — While this court has given the effect ofres judicata to foreign
judgments in several cases, it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under Sec. 50, Rule 39 of the Rules of Court. It is
not necessary for this purpose to initiate a separate action or proceeding for enforcement of the
foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment,
in order for the court to properly determine its efficacy. This is because in this jurisdiction, with
respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely
constitutes prima facieevidence of the justness of the claim of a party and, as such, is subject to
proof to the contrary. SDHETI
2. ID.; ID.; MOTION TO DISMISS; PRINCIPLE OF "FORUM NON CONVENIENS", NOT A
GROUND. — The trial court's refusal to take cognizance of the case is not justifiable under the
principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule
16, Sec. 1, which does not include forum non conveniens. The propriety of dismissing a case based
on this principle requires a factual determination, hence, it is more properly considered a matter
of defense. Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after "vital facts are established, to determine
whether special circumstances" require the court's desistance. In this case, the trial court
abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents
in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC)
is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was
the extinguishment of the latter's debt which was the object of the transaction under litigation.
The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the
U.S. case.
3. ID.; ID.; SERVICE OF SUMMON; WHEN MAY BE EFFECTED. — It was error we think for the
Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be
obtained because this is an action in personam and summons were served by extraterritorial
service. Rule 14, Sec. 17 on extraterritorial service provides that service of summons on a non-
53
resident defendant may be effected out of the Philippines by leave of Court where, among others,
"the property of the defendant has been attached within the Philippines." It is not disputed that
the properties, real and personal, of the private respondents had been attached prior to service of
summons under the Order of the trial court dated April 20, 1987. ICaDHT
DECISION
MENDOZA, J p:
This case presents for determination the conclusiveness of a foreign judgment upon the rights of
the parties under the same cause of action asserted in a case in our local court. Petitioners brought
this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the
time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in
addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition
for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from
petitioners Ayala International Finance Limited (hereafter called AYALA)1 and Philsec
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00 secured by
shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate the
payment of the loans, private respondent 1488, Inc., through its president, private respondent
Drago Daic, assumed Ducat's obligation under an Agreement, dated January 27, 1983, whereby
1488, Inc. executed a Warranty Deed with Vendor's Lien by which it sold to petitioner Athona
Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A. for
US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of
US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to
be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently,
upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat
from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession
belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount
covered by the note became due and demandable. Accordingly, on October 17, 1985, private
respondent 1488, Inc. sued petitioners PHILSEC, AYALA and ATHONA in the United States for
payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud
allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock
delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District
Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of
the action was later transferred to the United States District Court for the Southern District of
Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original
complaint. ATHONA filed an answer with counterclaim, impleading private respondents herein
as counterdefendants, for allegedly conspiring in selling the property at a price over its market
value. Private respondent Perlas, who had allegedly appraised the property, was later dropped as

counterdefendant. ATHONA sought the recovery of damages and excess payment allegedly made
to 1488, Inc. and, in the alternative, the rescission of sale of the property. For their part, PHILSEC
and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their person, but,
as their motion was denied, they later filed a joint answer with counterclaim against private
respondents and Edgardo V. Guevarra, PHILSEC's own former president, for the rescission of the
sale on the ground that the property had been over-valued. On March 13, 1990, the United States
District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was "frivolous and [was] brought against him simply to humiliate
and embarrass him." For this reason, the U.S. court imposed so-called Rule 11 sanctions on
PHILSEC and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners
filed a complaint "For Sum of Money with Damages and Writ of Preliminary Attachment" against
private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No.
16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in
Civil Action No. H-86-440 of the United States District Court of Southern Texas that private
respondents committed fraud by selling the property at a price 400 percent more than its true
value of US$800,000.00. Petitioners claimed that, as a result of private respondents' fraudulent
misrepresentations, ATHONA, PHILSEC and AYALA were induced to enter into the Agreement
and to purchase the Houston property. Petitioners prayed that private respondents be ordered to
return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20,
1987, the trial court issued a writ of preliminary attachment against the real and personal
properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum
non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action.
Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA,
as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only
participation was to extend financial accommodation to ATHONA under a separate loan
agreement. On the other hand, private respondents 1488, Inc. and its president Daic filed a joint
"Special Appearance and Qualified Motion to Dismiss," contending that the action being in
personam, extraterritorial service of summons by publication was ineffectual and did not vest the
court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic, who
is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the
evidentiary requirements of the controversy may be more suitably tried before the forum of
the litis pendentia in the U.S., under the principle in private international law of forum non
conveniens," even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9,
1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of
litis pendentia considering that
54
the "main factual element" of the cause of action in this case which is the
validity of the sale of real property in the United States between defendant
1488 and plaintiff ATHONA is the subject matter of the pending case in the
United States District Court which, under the doctrine of forum non
conveniens, is the better (if not exclusive) forum to litigate matters needed to
determine the assessment and/or fluctuations of the fair market value of real
estate situated in Houston, Texas, U.S.A. from the date of the transaction in
1983 up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-
residents and the action was not an action in rem or quasi in rem, so that extraterritorial service
of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier
issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the
principle of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over
the defendants, despite the previous attachment of shares of stocks belonging to 1488, Inc. and
Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 against
Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the
defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL's
former name) and the Athona Holdings, NV. The case at bar involves the same
parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In
the U.S. case, breach of contract and the promissory notes are sued upon by
1488 Inc., which likewise alleges fraud employed by herein appellants, on the
marketability of Ducat's securities given in exchange for the Texas property.
The recovery of a sum of money and damages, for fraud purportedly
committed by appellees, in overpricing the Texas land, constitute the action
before the Philippine court, which likewise stems from the same Warranty
Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the
recovery of a sum of money for alleged tortious acts, so that service of summons by publication did
not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case
No. 16563 on the ground offorum non conveniens was likewise affirmed by the Court of Appeals
on the ground that the case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign
elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller,
1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign
corporation which does not claim to be doing business in the Philippines, is wholly owned by

Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign
corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE
SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED
UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURT'S
DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON
BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE
TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF
APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY
REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE
TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION
FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE
PETITIONERS' RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR
CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-
RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was
pending in the Court of Appeals, the United States District Court for the Southern District of Texas
rendered judgment 5 in the case before it. The judgment, which was in favor of private
respondents, was affirmed on appeal by the Circuit Court of Appeals. 6 Thus, the principal issue
to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the U.S.
court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment
admitting the foreign decision is not necessary. On the other hand, petitioners argue that the
foreign judgment cannot be given the effect of res judicata without giving them an opportunity to
impeach it on grounds stated in Rule 39, §50 of the Rules of Court, to wit: "want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this court has given the effect of res judicata to
foreign judgments in several cases, 7 it was after the parties opposed to the judgment had been
given ample opportunity to repel them on grounds allowed under the law. 8 It is not necessary for
this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment.
What is essential is that there is opportunity to challenge the foreign judgment, in order for the
court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions
in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima
55
facie evidence of the justness of the claim of a party and, as such, is subject to proof to the
contrary. 9 Rule 39, §50 provides:
SEC. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal
of a foreign country, having jurisdiction to pronounce the judgment is as
follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive
upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive
evidence of a right as between the parties and their successors in interest by
a subsequent title; but the judgment may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton,
Ltd., 10 which private respondents invoke for claiming conclusive effect for the foreign judgment
in their favor, the foreign judgment was considered res judicata because this Court found "from
the evidence as well as from appellant's own pleadings" 11 that the foreign court did not make a
"clear mistake of law or fact" or that its judgment was void for want of jurisdiction or because of
fraud or collusion by the defendants. Trial had been previously held in the lower court and only
afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of
Washington to have the effect of res judicata in the case before the lower court. In the same vein,
in Philippine International Shipping Corp. v. Court of Appeals, 12 this court held that the foreign
judgment was valid and enforceable in the Philippines there being no showing that it was vitiated
by want of notice to the party, collusion, fraud or clear mistake of law or fact. The prima facie
presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the
judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary. Neither the trial court nor the
appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the
evidence presented thereat, to assure a proper determination of whether the issues then being
litigated in the U.S. court were exactly the issues raised in this case such that the judgment that
might be rendered would constitute res judicata. As the trial court stated in its disputed order
dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of this case
and the pending case in the United States are not identical, precisely the
Order of January 26, 1988 never found that the causes of action of this case
and the case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners' action is barred
by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over
their persons, but their claim was brushed aside by both the trial court and the Court of Appeals. 13
 56

Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil
Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended because
of the pendency of this case. To sustain the appellate court's ruling that the foreign judgment
constitutes res judicata and is a bar to the claim of petitioners would effectively preclude
petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise:
a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is
pleaded to resist a claim as in this case, but it may be opposed by the defendant if the foreign
judgment is sought to be enforced against him in a separate proceeding. This is plainly untenable.
It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the
jurisdiction where affirmative relief is being sought. Hence, in the interest of
justice, the complaint should be considered as a petition for the recognition
of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court
in order that the defendant, private respondent herein, may present evidence
of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law,
if applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070
should be consolidated. 15 After all, the two have been filed in the Regional Trial Court of Makati,
albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while
Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings,
petitioners should have the burden of impeaching the foreign judgment and only in the event they
succeed in doing so may they proceed with their action against private respondents.
where, among others, "the property of the defendant has been attached within the Philippines."
1 8 It is not disputed that the properties, real and personal, of the private respondents had been
attached prior to service of summons under the Order of the trial court dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend
the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule
11 sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought
to be enforced is severable from the main judgment under consideration in Civil Case No. 16563.
The separability of Guevarra's claim is not only admitted by petitioners, 20 it appears from the
pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil Case No.
16563. 21 Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed. cdasia
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is
REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070
and for further proceedings in accordance with this decision. The temporary restraining order
issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ ., concur.
||| (Philsec Investment Corp. v. Court of Appeals, G.R. No. 103493, [June 19, 1997], 340 PHIL
232-244)

Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the principle
of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, §1,
which does not include forum non conveniens. 16 The propriety of dismissing a case based on this
principle requires a factual determination, hence, it is more properly considered a matter of
defense. Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after "vital facts are established, to determine
whether special circumstances" require the court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings
filed by private respondents in connection with the motion to dismiss. It failed to consider that
one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura
Ducat) is a Filipino, and that it was the extinguishment of the latter's debt which was the object of
the transaction under litigation. The trial court arbitrarily dismissed the case even after finding
that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction
over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons
were served by extraterritorial service. Rule 14, §17 on extraterritorial service provides that service
of summons on a non-resident defendant may be effected out of the Philippines by leave of Court

SECOND DIVISION
[G.R. No. 162894. February 26, 2008.]
RAYTHEON INTERNATIONAL, INC., petitioner, vs. STOCKTON W.
ROUZIE, JR., respondent.
DECISION
TINGA, J p:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure which seeks the reversal of the Decision 1 and Resolution 2 of the
Court of Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by
respondent against petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly
organized and existing under the laws of the State of Connecticut, United States of America,
and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby
BMSI hired respondent as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service contract with the Republic of the
Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo eruption
and mudflows. 3
On 16 July 1994, respondent filed before the Arbitration Branch of the National
Labor Relations Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST),
Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal
termination and breach of employment contract. 4 On 28 September 1995, Labor Arbiter
Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay respondent's
money claims. 5 Upon appeal by BMSI, the NLRC reversed the decision of the Labor Arbiter
and dismissed respondent's complaint on the ground of lack of jurisdiction. 6Respondent
elevated the case to this Court but was dismissed in a Resolution dated 26 November 1997.
The Resolution became final and executory on 09 November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union. The
Complaint, 7 docketed as Civil Case No. 1192-BG, named as defendants herein petitioner
Raytheon International, Inc. as well as BMSI and RUST, the two corporations impleaded in
the earlier labor case. The complaint essentially reiterated the allegations in the labor case
that BMSI verbally employed respondent to negotiate the sale of services in government
projects and that respondent was not paid the commissions due him from the Pinatubo
57
dredging project which he secured on behalf of BMSI. The complaint also averred that BMSI
and RUST as well as petitioner itself had combined and functioned as one company.
In its Answer, 8 petitioner alleged that contrary to respondent's claim, it was a
foreign corporation duly licensed to do business in the Philippines and denied entering into
any arrangement with respondent or paying the latter any sum of money. Petitioner also
denied combining with BMSI and RUST for the purpose of assuming the alleged obligation of
the said companies. 9 Petitioner also referred to the NLRC decision which disclosed that per
the written agreement between respondent and BMSI and RUST, denominated as "Special
Sales Representative Agreement," the rights and obligations of the parties shall be governed
by the laws of the State of Connecticut. 10 Petitioner sought the dismissal of the complaint on
grounds of failure to state a cause of action and forum non conveniens and prayed for
damages by way of compulsory counterclaim. 11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based
on Affirmative Defenses and for Summary Judgment 12 seeking the dismissal of the
complaint on grounds of forum non conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution of the omnibus motion, the deposition
of Walter Browning was taken before the Philippine Consulate General in Chicago. 13
In an Order 14 dated 13 September 2000, the RTC denied petitioner's omnibus
motion. The trial court held that the factual allegations in the complaint, assuming the same
to be admitted, were sufficient for the trial court to render a valid judgment thereon. It also
ruled that the principle of forum non conveniens was inapplicable because the trial court
could enforce judgment on petitioner, it being a foreign corporation licensed to do business
in the Philippines. 15
Petitioner filed a Motion for Reconsideration 16 of the order, which motion was
opposed by respondent. 17 In an Order dated 31 July 2001, 18 the trial court denied
petitioner's motion. Thus, it filed a Rule 65 Petition 19 with the Court of Appeals praying for
the issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the
trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from
conducting further proceedings. 20
On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying
the petition for certiorari for lack of merit. It also denied petitioner's motion for
reconsideration in the assailed Resolution issued on 10 March 2004. 22
The appellate court held that although the trial court should not have confined itself
to the allegations in the complaint and should have also considered evidence aliunde in
resolving petitioner's omnibus motion, it found the evidence presented by petitioner, that is,
the deposition of Walter Browning, insufficient for purposes of determining whether the
complaint failed to state a cause of action. The appellate court also stated that it could not rule
one way or the other on the issue of whether the corporations, including petitioner, named as
defendants in the case had indeed merged together based solely on the evidence presented by
respondent. Thus, it held that the issue should be threshed out during trial. 23 Moreover, the
appellate court deferred to the discretion of the trial court when the latter decided not to desist

from assuming jurisdiction on the ground of the inapplicability of the principle of forum non
conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT FOR FAILURE TO STATE A
CAUSE OF ACTION AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REFUSING TO DISMISS THE COMPLAINT ON THE GROUND
OF FORUM NON CONVENIENS. 24
Incidentally, respondent failed to file a comment despite repeated notices. The
Ceferino Padua Law Office, counsel on record for respondent, manifested that the lawyer
handling the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before
the filing of the instant petition and that it could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a Resolution 25 dated 20 November
2006, the Court resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI
included a valid choice of law clause, that is, that the contract shall be governed by the laws of
the State of Connecticut. It also mentions the presence of foreign elements in the dispute —
namely, the parties and witnesses involved are American corporations and citizens and the
evidence to be presented is located outside the Philippines — that renders our local courts
inconvenient forums. Petitioner theorizes that the foreign elements of the dispute necessitate
the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura, 26 the Court outlined three consecutive phases
involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice of
law, and recognition and enforcement of judgments. Thus, in the instances 27 where the
Court held that the local judicial machinery was adequate to resolve controversies with a
foreign element, the following requisites had to be proved: (1) that the Philippine Court is one
to which the parties may conveniently resort; (2) that the Philippine Court is in a position to
make an intelligent decision as to the law and the facts; and (3) that the Philippine Court has
or is likely to have the power to enforce its decision. 28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed
in a Philippine court and where the court has jurisdiction over the subject matter, the parties
and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or the
convenience of the parties point to a foreign forum. This is an exercise of sovereign
prerogative of the country where the case is filed. 29
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law 30 and by the material allegations in the complaint, irrespective of
whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought
therein. 31 Civil Case No. 1192-BG is an action for damages arising from an alleged breach of
58
contract. Undoubtedly, the nature of the action and the amount of damages prayed are within
the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over
herein respondent (as party plaintiff) upon the filing of the complaint. On the other hand,
jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary
appearance in court. 32
That the subject contract included a stipulation that the same shall be governed by
the laws of the State of Connecticut does not suggest that the Philippine courts, or any other
foreign tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and
choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further question whether the
application of a substantive law which will determine the merits of the case is fair to both
parties. 33 The choice of law stipulation will become relevant only when the substantive
issues of the instant case develop, that is, after hearing on the merits proceeds before the trial
court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may
refuse impositions on its jurisdiction where it is not the most "convenient" or available forum
and the parties are not precluded from seeking remedies elsewhere. 34 Petitioner's
averments of the foreign elements in the instant case are not sufficient to oust the trial court
of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a matter
of defense. While it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the court's desistance. 35
Finding no grave abuse of discretion on the trial court, the Court of Appeals
respected its conclusion that it can assume jurisdiction over the dispute notwithstanding its
foreign elements. In the same manner, the Court defers to the sound discretion of the lower
courts because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state
a cause of action against petitioner. Failure to state a cause of action refers to the insufficiency
of allegation in the pleading. 36 As a general rule, the elementary test for failure to state a
cause of action is whether the complaint alleges facts which if true would justify the relief
demanded. 37
The complaint alleged that petitioner had combined with BMSI and RUST to
function as one company. Petitioner contends that the deposition of Walter Browning
rebutted this allegation. On this score, the resolution of the Court of Appeals is instructive,
thus:
. . . Our examination of the deposition of Mr. Walter Browning as
well as other documents produced in the hearing shows that these
 59

evidence aliundeare not quite sufficient for us to mete a ruling that the
complaint fails to state a cause of action.
Annexes "A" to "E" by themselves are not substantial, convincing
and conclusive proofs that Raytheon Engineers and Constructors, Inc.
(REC) assumed the warranty obligations of defendant Rust International
in the Makar Port Project in General Santos City, after Rust International
ceased to exist after being absorbed by REC. Other documents already
submitted in evidence are likewise meager to preponderantly conclude that
Raytheon International, Inc., Rust International[,] Inc. and Brand Marine
Service, Inc. have combined into one company, so much so that Raytheon
International, Inc., the surviving company (if at all) may be held liable for
the obligation of BMSI to respondent Rouzie for unpaid commissions.
Neither these documents clearly speak otherwise. 38
As correctly pointed out by the Court of Appeals, the question of whether petitioner,
BMSI and RUST merged together requires the presentation of further evidence, which only a
full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The
Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby
AFFIRMED. Costs against petitioner.
SO ORDERED.
Carpio, Sandoval-Gutierrez, * Carpio-Morales and Velasco, Jr., JJ., concur.
||| (Raytheon International, Inc. v. Rouzie, Jr., G.R. No. 162894, [February 26, 2008], 570 PHIL
151-160)

FIRST DIVISION
[G.R. No. 120077. October 13, 2000.]
THE MANILA HOTEL CORP. and MANILA HOTEL INTL.
LTD., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, ARBITER CEFERINA J. DIOSANA and MARCELO
G. SANTOS, respondents.
SYNOPSIS
Private respondent Marcelo Santos was an overseas worker employed as printer at the Mazoon
Printing Press, Sultanate of Oman. While in Oman, on May 2, 1998, he received a letter from Mr.
Gerald R. Shmidt, General Manager of Palace Hotel, Beijing, China, offering him the same position
as printer with a higher monthly salary and increased benefits as he was recommended by his
friend Nestor Buenio. Palace Hotel is a member of the Manila Hotel Group. Santos signified his
acceptance. Subsequently, an employment contract for a period of two years beginning September
1, 1998 was perfected. However, since it was only on November 5, 1988 that Santos left for Beijing,
China, the employment contract was amended. The amended employment contract was signed by
Mr. Shmidt as the representative of Palace Hotel, and was noted by the Vice President for
Operations and Development of MHICL, Miguel O. Cergueda. On August 10, 1989, the Palace
Hotel informed respondent Santos by letter signed by Mr. Shmidt that his employment at the
Palace Hotel print shop will be terminated due to business reverses brought about by the political
upheaval in China. On February 20, 1990, respondent Santos filed a complaint for illegal dismissal
against MHC, MHICL, the Palace Hotel and Mr. Shmidt before the Arbitration Branch, National
Capital Region, National Labor Relations Commission. The Palace Hotel and Mr. Shmidt were not
served with summons and neither participated in the proceedings before the Labor Arbiter.
Subsequently, the Labor Arbiter decided against MHC and MHICL. MHC and MHICL appealed to
the NLRC which decided in favor of Santos. Hence, this appeal.
The main aspects of the case transpired in two foreign jurisdictions, and the case involves purely
foreign elements. The only link that the Philippines has with the case is that respondent Santos is
a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases involving
Filipino citizens can be tried here. This is not to say that Philippine courts and agencies have no
power to solve controversies involving foreign employers. If Santos were an "overseas contract
worker," a Philippine forum, specifically the POEA, not the NLRC, would protect him. However,
he is not an "overseas contract worker," a fact which he admits with conviction. He was hired
directly by the Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of
Oman where he was then employed. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government.
60
Further, it is basic that a corporation has a personality separate and distinct from those composing
it as well as from that of any other legal entity to which it may be related. Clear and convincing
evidence is needed to pierce the veil of corporate fiction. The Court found no evidence to show that
MHICL and MHC are one and the same entity. Moreover, when one "notes" a contract, one is not
expressing his agreement or approval, as a party would. In Sichangco v. Board of Commissioners
of Immigration, the Court recognized that the term "noted" means that the person so noting has
merely taken cognizance of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter. Considering that no employer-employee
relationship existed between MHICL, MHC and respondent Santos, the Labor Arbiter had no
jurisdiction over respondent's claim.
The Court ANNULLED the orders and resolutions of the National Labor Relations Commission.
SYLLABUS
1. REMEDIAL LAW; COURTS; JURISDICTION; NOT ALL CASES INVOLVING FILIPINO
CITIZENS CAN BE TRIED IN THE PHILIPPINES. — We note that the main aspects of the case
transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link
that the Philippines has with the case is that respondent Santos is a Filipino citizen. The Palace
Hotel and MHICL are foreign corporations. Not all cases involving our citizens can be tried here.
2. ID.; ID.; ID.; RULE OF FORUM NON CONVENIENS; REQUISITES. — Under the rule of forum
non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses
to do so provided: (1) that the Philippine court is one to which the parties may conveniently resort
to; (2) that the Philippine court is in a position to make an intelligent decision as to the law and
the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision.
3. ID.; ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. — Respondent Santos was hired directly
by the Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was hired without the intervention of the POEA
or any authorized recruitment agency of the government. . . . We fail to see how the NLRC is a
convenient forum given that all the incidents of the case — from the time of recruitment, to
employment to dismissal occurred outside the Philippines. The inconvenience is compounded by
the fact that the proper defendants, the Palace Hotel and MHICL are not nationals of the
Philippines. Neither are they "doing business in the Philippines." Likewise, the main witnesses,
Mr. Shmidt and Mr. Henk are non-residents of the Philippines.
4. ID.; ID.; ID.; PRINCIPLE OF LEX LOCI CONTRACTUS; NOT APPLICABLE IN CASE AT BAR.
— Neither can an intelligent decision be made as to the law governing the employment contract as
such was perfected in foreign soil. This calls to fore the application of the principle of lex loci
contractus (the law of the place where the contract was made). The employment contract
was not perfected in the Philippines. Respondent Santos signified his acceptance by writing a
letter while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the People's
Republic of China.

5. ID.; ID.; ID.; PHILIPPINE COURT COULD NOT EXECUTE A DECISION SINCE
JURISDICTION OVER THE PERSON OF THE DEFENDANT WAS NOT ACQUIRED. — Even
assuming that a proper decision could be reached by the NLRC, such would not have any binding
effect against the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under
the laws of China and was not even served with summons. Jurisdiction over its person was not
acquired.
6. LABOR AND SOCIAL LEGISLATIONS; LABOR CODE; NATIONAL LABOR RELATIONS
COMMISSION; NO POWER TO DETERMINE THE FACTS SINCE THE ALLEGED ILLEGAL
DISMISSAL TOOK PLACE IN OTHER COUNTRY. — Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People's
Republic of China. The NLRC was not in a position to determine whether the Tiannamen Square
incident truly adversely affected operations of the Palace Hotel as to justify respondent Santos'
retrenchment.
7. ID.; ID.; POEA, NOT NLRC, HAS JURISDICTION OVER OVERSEAS CONTRACT WORKER.
— This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an employment
contract executed in a foreign country. If Santos were an "overseas contract worker," a Philippine
forum, specifically the POEA, not the NLRC, would protect him. He is not an "overseas contract
worker" a fact which he admits with conviction.
8. MERCANTILE LAW; CORPORATION CODE; PIERCING THE VEIL OF CORPORATE ENTITY;
ELUCIDATED. — Piercing the veil of corporate entity is an equitable remedy. It is resorted to when
the corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend a
crime. It is done only when a corporation is a mere alter ego or business conduit of a person or
another corporation.
9. ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. — True, MHC is an incorporator of MHICL
and owns fifty percent (50%) of its capital stock. However, this is not enough to pierce the veil of
corporate fiction between MHICL and MHC. . . . In Traders Royal Bank v. Court of Appeals, we
held that "the mere ownership by a single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction
of separate corporate personalities." . . . Likewise, there is no evidence to show that the Palace
Hotel and MHICL are one and the same entity. The fact that the Palace Hotel is a member of the
"Manila Hotel Group" is not enough to pierce the corporate veil between MHICL and the Palace
Hotel.
10. ID.; ID.; ID.; TESTS TO DETERMINE WHETHER THE CORPORATE VEIL MAY BE
PIERCED. — The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporation's finances, policy
and business practices with regard to the transaction attacked. There must be proof that the other
corporation had no separate mind, will or existence with respect the act complained of. Second,
control must be used by the defendant to commit fraud or wrong. Third, the aforesaid control or
breach of duty must be the proximate cause of the injury or loss complained of. The absence of any
of the elements prevents the piercing of the corporate veil.
61
11. ID.; ID.; CORPORATION HAS PERSONALITY SEPARATE AND DISTINCT FROM THOSE
COMPOSING IT. — It is basic that a corporation has a personality separate and distinct from those
composing it as well as from that of any other legal entity to which it may be related. Clear and
convincing evidence is needed to pierce the veil of corporate fiction. In this case, we find no
evidence to show that MHICL and MHC are one and the same entity.
12. CIVIL LAW; OBLIGATIONS AND CONTRACTS; "NOTED"; CONSTRUED. — [W]e note that
the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely signed under the word "noted". When one
"notes" a contract, one is not expressing his agreement or approval, as a party would. In Sichangco
v. Board of Commissioners of Immigration, the Court recognized that the term "noted" means
that the person so noting has merely taken cognizance of the existence of an act or declaration,
without exercising a judicious deliberation or rendering a decision on the matter. Mr. Cergueda
merely signed the "witnessing part" of the document. The "witnessing part" of the document is
that which, "in a deed or other formal instrument is that part which comes after the recitals, or
where there are no recitals, after the parties." As opposed to a party to a contract, a witness is
simply one who, "being present, personally sees or perceives a thing; a beholder, a spectator, or
eyewitness." One who "notes" something just makes a "brief written statement" a memorandum
or observation.
13. LABOR AND SOCIAL LEGISLATIONS; LABOR CODE; EMPLOYER-EMPLOYEE
RELATIONSHIP; ELEMENTS. — In determining the existence of an employer-employee
relationship, the following elements are considered: "(1) the selection and engagement of the
employee; "(2) the payment of wages; "(3) the power to dismiss; and "(4) the power to control
employee's conduct."
14. ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. — [MHICL] did not select respondent Santos
as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did not engage respondent Santos to work. The terms of employment were
negotiated and finalized through correspondence between respondent Santos, Mr. Schmidt and
Mr. Henk, who were officers and representatives of the Palace Hotel and not MHICL. Neither did
respondent Santos adduce any proof that MHICL had the power to control his conduct. Finally, it
was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos'
services.
15. ID.; ID.; ID.; "LABOR-ONLY CONTRACTOR"; NO ESTABLISHED IN CASE AT BAR. —
Neither is there evidence to suggest that MHICL was a "labor-only contractor." There is no proof
that MHICL "supplied" respondent Santos or even referred him for employment to the Palace
Hotel.
16. ID.; ID.; NATIONAL LABOR RELATIONS COMMISSION; LABOR ARBITERS; EXCLUSIVE
AND ORIGINAL JURISDICTION. — Labor Arbiters have exclusive and original jurisdiction only
over the following: "1. Unfair labor practice cases; "2. Termination disputes; "3. If accompanied
with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment; "4. Claims for actual, moral,

exemplary and other forms of damages arising from employer-employee relations; "5. Cases
arising from any violation of Article 264 of this Code, including questions involving legality of
strikes and lockouts; and "6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement."
17. ID.; ID.; ID.; ID.; ID.; EMPLOYER-EMPLOYEE RELATIONSHIP IS AN INDISPENSABLE
JURISDICTIONAL REQUIREMENT. — In all these cases, an employer-employee relationship is
an indispensable jurisdictional requirement. The jurisdiction of labor arbiters and the NLRC
under Article 217 of the Labor Code is limited to disputes arising from an employer-employee
relationship which can be resolved by reference to the Labor Code, or other labor statutes, or their
collective bargaining agreements.
18. REMEDIAL LAW; COURTS; JURISDICTION OVER THE SUBJECT MATTER;
DETERMINED BY THE ALLEGATIONS OF COMPLAINT. — "To determine which body has
jurisdiction over the present controversy, we rely on the sound judicial principle that jurisdiction
over the subject matter is conferred by law and is determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein." cSHATC
19. ID.; ID.; ID.; LACK OF JURISDICTION AMOUNTS TO GRAVE ABUSE OF DISCRETION. —
Considering that the NLRC was forum non-conveniens and considering further that no employer-
employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter
Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case no. 00-
02-01058-90. . . . The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of
the complaint. His failure to dismiss the case amounts to grave abuse of discretion.
DECISION
PARDO, J p:
The case before the Court is a petition for certiorari 1 to annul the following orders of the National
Labor Relations Commission (hereinafter referred to as "NLRC") for having been issued without
or with excess jurisdiction and with grave abuse of discretion: 2
(1) Order of May 31, 1993. 3 Reversing and setting aside its earlier resolution of August 28,
1992. 4 The questioned order declared that the NLRC, not the Philippine Overseas Employment
Administration (hereinafter referred to as "POEA"), had jurisdiction over private respondent's
complaint;
(2) Decision of December 15, 1994. 5 Directing petitioners to jointly and severally pay private
respondent twelve thousand and six hundred dollars (US$12,600.00) representing salaries for the
unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00) as extra four
months salary for the two (2) year period of his contract, three thousand six hundred dollars
62
(US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight hundred dollars
(US$19,800.00) or its peso equivalent and attorney's fees amounting to ten percent (10%) of the
total award; and
(3) Order of March 30, 1995. 6 Denying the motion for reconsideration of the petitioners. EHSITc
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an
overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman.
Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People's Republic
of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila
Hotel International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled corporation
duly organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong Kong. 7 MHC is an
"incorporator" of MHICL, owning 50% of its capital stock. 8
By virtue of a "management agreement" 9 with the Palace Hotel (Wang Fu Company Limited),
MHICL 10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent
Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace
Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one
Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly
salary and increased benefits. The position was slated to open on October 1, 1988. 11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment
contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was
acceptable, to return the same to Mr. Henk in Manila, together with his passport and two
additional pictures for his visa to China.TAIEcS
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30,
1988, under the pretext that he was needed at home to help with the family's piggery and poultry
business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4,
1988) and notified them that he was going to arrive in Manila during the first week of July 1988.

The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years. 12 It provided for a monthly salary of nine hundred
dollars (US$900.00) net of taxes, payable fourteen (14) times a year. 13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace
Hotel. 14
Subsequently, respondent Santos signed an amended "employment agreement" with the Palace
Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The
Vice President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed
the employment agreement under the word "noted."
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned
to China and reassumed his post on July 17, 1989. AaEcDS
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten
note that respondent Santos be given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt
that his employment at the Palace Hotel print shop would be terminated due to business reverses
brought about by the political upheaval in China. 15 We quote the letter: 16
"After the unfortunate happenings in China and especially Beijing (referring
to Tiannamen Square incidents), our business has been severely affected. To
reduce expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured
this does in no way reflect your past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will contact you directly and
give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and
paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt,
demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
63
"His service with the Palace Hotel, Beijing was not abruptly terminated but
we followed the one-month notice clause and Mr. Santos received all benefits
due him.
"For your information the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in various
departments of the hotel is going on which is a normal management practice
to control costs.
"When going through the latest performance ratings, please also be advised
that his performance was below average and a Chinese National who is doing
his job now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed
up for work but still enjoyed free accommodation/laundry/meals up to the
day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC). He
prayed for an award of nineteen thousand nine hundred and twenty-three dollars (US$19,923.00)
as actual damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney's fees
equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace
Hotel and Mr. Shmidt as respondents. DCSETa
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter. 18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus: 19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as unearned
salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had
jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20

"WHEREFORE, let the appealed Decision be, as it is hereby, declared null
and void for want of jurisdiction. Complainant is hereby enjoined to file his
complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
resolution. He argued that the case was not cognizable by the POEA as he was not an "overseas
contract worker." 21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor
Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was
retrenched or dismissed. 22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the testimonial
and documentary evidence presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital
Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera. 24
On November 25, 1994, Labor Arbiter de Vera submitted his report. 25 He found that respondent
Santos was illegally dismissed from employment and recommended that he be paid actual
damages equivalent to his salaries for the unexpired portion of his contract. 26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit: 27
"WHEREFORE, finding that the report and recommendations of Arbiter de
Vera are supported by substantial evidence, judgment is hereby rendered,
directing the respondents to jointly and severally pay complainant the
following computed contractual benefits: (1) US$12,600.00 as salaries for the
unexpired portion of the parties' contract; (2) US$3,600.00 as extra four (4)
months salary for the two (2) years period (sic) of the parties' contract; (3)
US$3,600.00 as "14th month pay" for the aforesaid two (2) years contract
stipulated by the parties or a total of US$19,800.00 or its peso equivalent,
plus (4) attorney's fees of 10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de
Vera's recommendation had no basis in law and in fact. 28
On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Hence, this petition. 30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the annulment
of the entry of judgment of the NLRC dated July 31, 1995. 31
64
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition. 32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the
petition and its annexes, they can not defend and sustain the position taken by the NLRC in its
assailed decision and orders. The Solicitor General prayed that he be excused from filing a
comment on behalf of the NLRC. 33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the
NLRC to file its own comment to the petition. 35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the case
involves purely foreign elements. The only link that the Philippines has with the case is that
respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not
all cases involving our citizens can be tried here. ICTaEH
The employment contract. — Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was
then employed. He was hired without the intervention of the POEA or any authorized recruitment
agency of the government. 36
Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction
over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties
may conveniently resort to; (2) that the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and (3) that the Philippine court has or is likely to have power
to enforce its decision. 37 The conditions are unavailing in the case at bar.
Not Convenient. — We fail to see how the NLRC is a convenient forum given that all the incidents
of the case — from the time of recruitment, to employment to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace
Hotel and MHICL are notnationals of the Philippines. Neither are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the
Philippines.
No power to determine applicable law. — Neither can an intelligent decision be made as to the law
governing the employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the place where the contract was
made). 38

The employment contract was not perfected in the Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the
Palace Hotel in the People's Republic of China.
No power to determine the facts. — Neither can the NLRC determine the facts surrounding the
alleged illegal dismissal as all acts complained of took place in Beijing, People's Republic of China.
The NLRC was not in a position to determine whether the Tiannamen Square incident truly
adversely affected operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. — Even assuming that a proper decision
could be reached by the NLRC, such would not have any binding effect against the employer, the
Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not
even served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an employment
contract executed in a foreign country. If Santos were an "overseas contract worker," a Philippine
forum, specifically the POEA, not the NLRC, would protect him. 39 He is not an "overseas
contract worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's
decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL
was liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot
be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However,
this is not enough to pierce the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate
fiction is used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is
done only when a corporation is a mere alter ego or business conduit of a person or another
corporation.
In Traders Royal Bank v. Court of Appeals, 42 we held that "the mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not
of itself a sufficient reason for disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the defendant must
have control or complete domination of the other corporation's finances, policy and business
practices with regard to the transaction attacked. There must be proof that the other corporation
had no separate mind, will or existence with respect the act complained of. Second, control must
be used by the defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty
65
must be the proximate cause of the injury or loss complained of. The absence of any of the elements
prevents the piercing of the corporate veil. 43
It is basic that a corporation has a personality separate and distinct from those composing it as
well as from that of any other legal entity to which it may be related. 44 Clear and convincing
evidence is needed to pierce the veil of corporate fiction. 45 In this case, we find no evidence to
show that MHICL and MHC are one and the same entity. DSHTaC
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment
contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel D.
Cergueda signed the employment contract as a mere witness. He merely signed under the word
"noted."
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would. 46 In Sichangco v. Board of Commissioners of Immigration, 47the Court recognized that
the term "noted" means that the person so noting has merely taken cognizance of the existence of
an act or declaration, without exercising a judicious deliberation or rendering a decision on the
matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the
document is that which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no recitals, after the parties (italics ours)." 48 As opposed to a party
to a contract, a witness is simply one who, "being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness." 49 One who "notes" something just makes a "brief written
statement" 50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship between
Santos and MHICL. In determining the existence of an employer-employee relationship, the
following elements are considered: 51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It did not select
respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by his
friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of
employment were negotiated and finalized through correspondence between respondent Santos,
Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace Hotel
and notMHICL. Neither did respondent Santos adduce any proof that MHICL had the power to
 66

control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of
terminated respondent Santos' services. the claims asserted therein." 55
Neither is there evidence to suggest that MHICL was a "labor-only contractor." 52 There is no The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His
proof that MHICL "supplied" respondent Santos or even referred him for employment to the failure to dismiss the case amounts to grave abuse of discretion. 56
Palace Hotel.
V. The Fallo
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and
entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to
resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994
pierce the corporate veil between MHICL and the Palace Hotel.
and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
IV. Grave Abuse of Discretion
No costs.
Considering that the NLRC was forum non-conveniens and considering further that no employer-
employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter SO ORDERED.
Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
00-02-01058-90. AaCcST
||| (Manila Hotel Corp. v. National Labor Relations Commission, G.R. No. 120077, [October 13,
Labor Arbiters have exclusive and original jurisdiction only over the following: 53
2000], 397 PHIL 1-23)
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to
disputes arising from an employer-employee relationship which can be resolved by reference to
the Labor Code, or other labor statutes, or their collective bargaining agreements. 54
"To determine which body has jurisdiction over the present controversy, we rely on the sound
judicial principle that jurisdiction over the subject matter is conferred by law and is determined

SECOND DIVISION
[G.R. No. 133876. December 29, 1999.]
BANK OF AMERICA, NT and SA, petitioner, vs. AMERICAN REALTY
CORPORATION and COURT OF APPEALS, respondents.
SYNOPSIS
As security for restructured loans, private respondent, a third party mortgagor, executed two (2)
real estate mortgages in favor of petitioner. Eventually, the corporate borrowers defaulted in the
payment of the restructured loans. Consequently, petitioner filed collection suits before foreign
courts. Later petitioner likewise filed an application for extra-judicial foreclosure of real estate
mortgage. This prompted private respondent to file an action for damages against petitioner. The
trial court rendered judgment in favor of private respondents. According to the trial court, the
filing by petitioner of collections suits operated as a waiver of the security of the mortgages. The
Court of Appeals affirmed the assailed decision of the lower court. Its motion for reconsideration
having been denied, petitioner resorted to this action. aSDCIE
A mortgage creditor may institute against the mortgage debtor either a personal action for debt or
a real action to foreclose the mortgage. The remedies available to the mortgage creditor are
deemed alternative and not cumulative. An election of one remedy operates as a waiver of the
other.
A suit brought before a foreign court having competence and jurisdiction to entertain the action is
deemed to be within the contemplation of the remedy available to the mortgagee-creditor. This
would best serve the interest of justice and fair play and further discourage the noxious practice of
splitting up a lone cause of action.
Despite the fact that the award of actual and compensatory damages by the lower court exceeded
that prayed for in the complaint, the same was nonetheless valid. Inasmuch as the petitioner was
afforded the opportunity to refute the evidence formally offered by private respondent, the
rudiments of fair play were deemed satisfied.
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; MORTGAGE; REMEDIES OF MORTGAGE CREDITOR;
ELUCIDATED. — The jurisprudence laid down in Bachrach and similar cases adjudicated
thereafter provides: "In the absence of express statutory provisions, a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose
67
the mortgage. In other words, he may pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be impaired, for each of the two remedies is complete
in itself. Thus, an election to bring a personal action will leave open to him all the properties of the
debtor for attachment and execution, even including the mortgaged property itself. And, if he
waives such personal action and pursues his remedy against the mortgaged property, an
unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in
which case, all the properties of the defendant, other than the mortgaged property, are again open
to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of
action undiminished, and any advantages attendant to the pursuit of one or the other remedy are
purely accidental and are all under his right of election. On the other hand, a rule that would
authorize the plaintiff to bring a personal action against the debtor and simultaneously or
successively another action against the mortgaged property, would result not only in multiplicity
of suits so offensive to justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity
(Osorio vs. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being
sued in the place of his residence or of the residence of the plaintiff, and then again in the place
where the property lies." In Danao vs. Court of Appeals, this Court, reiterating jurisprudence
enunciated in Manila Trading and Supply Co. vs. Co Kim and Movido vs. RFC, 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. 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.
2. ID.; ID.; ID.; ID.; WHEN REMEDY IS CHOSEN. — The remedies available to the mortgage
creditor are deemed alternative and not cumulative. Notably, an election of one remedy operates
as a waiver of the other. For this purpose, a remedy is deemed chosen upon the filing of the suit
for collection or upon the filing of the complaint in an action for foreclosure of mortgage, pursuant
to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extra-judicial 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 Cerna vs. Court
of Appeals, we agreed with the petitioner in said case, that the filing of a collection suit barred the
foreclosure of the mortgage. Hence, 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.
3. ID.; ID.; ID.; THIRD PARTY MORTGAGOR; LIABILITY. — 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. 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.
4. REMEDIAL LAW; EVIDENCE; APPRECIATION OF THE FOREIGN LAW. — 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. 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. 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, said foreign law would still not find applicability. Thus,
when the foreign law, judgment or contract is contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order shall not be applied. Additionally, prohibitive
laws concerning persons, their acts or property, and those which have for their object public order,
public policy and good customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a foreign country. The public
policy sought to be protected in the instant case is the principle imbedded in our jurisdiction
proscribing the splitting up of a single cause of action. 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. TSIDaH
5. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; AWARD GIVEN EXCEEDING THAT PRAYED
FOR; UPHELD. — 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. 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. 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. 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. And
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. 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.
6. REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESS; FINDINGS OF TRIAL COURT,
RESPECTED. — 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. The time-tested
jurisprudence is that the findings and conclusions of the trial court on the credibility of witnesses
68
enjoy a badge of respect for the reason that trial courts have the advantage of observing the
demeanor of witnesses as they testify.
7. CIVIL LAW; DAMAGES; EXEMPLARY DAMAGES. — 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. Considering its purpose, it must be fair and reasonable in
every case and should not be awarded to unjustly enrich a prevailing party. In our view, an award
of P50,000.00 as exemplary damages in the present case qualifies the test of
reasonableness. cEASTa
DECISION
BUENA, J p:
Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted over
a third party mortgagor's property situated in the Philippines by filing an action for the collection
of the principal loan before foreign courts? cdrep
Sought to be reversed in the instant petition for review on certiorari under Rule 45 of the Rules of
Court are the decision 1 of public respondent Court of Appeals in CA G.R. CV No. 51094,
promulgated on 30 September 1997 and its resolution, 2 dated 22 May 1998, denying petitioner's
motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing
institution duly licensed to do business in the Philippines, organized and existing under and by
virtue of the laws of the State of California, United States of America while private respondent
American Realty Corporation (ARC) is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited liability company
organized and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted three major multi-
million United States (US) Dollar loans to the following corporate borrowers: (1) Liberian
Transport Navigation, S.A.; (2) El Challenger S.A. and (3) Eshley Compania Naviera S.A.
(hereinafter collectively referred to as "borrowers"), all of which are existing under and by virtue
of the laws of the Republic of Panama and are foreign affiliates of private respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and the corporate borrowers
signed and entered into restructuring agreements. As additional security for the restructured loans,
private respondent ARC as third party mortgagor executed two real estate mortgages, 4 dated 17
February 1983 and 20 July 1984, over its parcels of land including improvements thereon, located
at Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are covered by Transfer Certificate
of Title Nos. T-78759, T-78760, T-78761, T-78762 and T-78763. Cdpr

Eventually, the corporate borrowers defaulted in the payment of the restructured loans prompting
petitioner BANTSA to file civil actions 5 before foreign courts for the collection of the principal
loan, to wit:
"a) In England, in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2098) against Liberian
Transport Navigation S.A., Eshley Compania Naviera S.A., El
Challenger S.A., Espriona Shipping Company S.A., Eddie Navigation
Corp., S.A., Eduardo Katipunan Litonjua and Aurelio Katipunan
Litonjua on June 17, 1992.
b) In England, in its High Court of Justice, Queen's Bench Division,
Commercial Court (1992-Folio No. 2245) against El Challenger S.A.,
Espriona Shipping Company S.A., Eduardo Katipuan Litonjua &
Aurelio Katipunan Litonjua on July 2, 1992; cdrep
c) In Hongkong, in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992) against Eshley Compania Naviera S.A., El Challenger
S.A., Espriona Shipping Company S.A. Pacific Navigators
Corporation, Eddie Navigation Corporation S.A., Litonjua
Chartering (Edyship) Co., Inc., Aurelio Katipunan Litonjua, Jr. and
Eduardo Katipunan Litonjua on November 19, 1992; and
d) In Hongkong, in the Supreme Court of Hongkong High Court (Action No.
4040 of 1992) against Eshley Compania Naviera S.A., El Challenger
S.A., Espriona Shipping Company, S.A., Pacific Navigators
Corporation, Eddie Navigation Corporation S.A., Litonjua
Chartering (Edyship) Co., Jr. and Eduardo Katipunan Litonjua on
November 21, 1992."
In the civil suits instituted before the foreign courts, private respondent ARC, being a third party
mortgagor, was not impleaded as 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. cdasia
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.
69
In its answer 9 petitioner alleged that the rule prohibiting the mortgagee from foreclosing the
mortgage after an ordinary suit for collection has been filed, is not applicable in the present case,
claiming that:
"a) The plaintiff, being a mere third party mortgagor and not a party to the
principal restructuring agreements, was never made a party defendant in the
civil cases filed in Hongkong and England;
"b) There is actually no civil suit for sum of money filed in the Philippines
since the civil actions were filed in Hongkong and England. As such, any
decisions (sic) which may be rendered in the abovementioned courts are not
(sic) enforceable in the Philippines unless a separate action to enforce the
foreign judgments is first filed in the Philippines, pursuant to Rule 39, Section
50 of the Revised Rules of Court. prLL
"c) Under English Law, which is the governing law under the principal
agreements, the mortgagee does not lose its security interest by filing civil
actions for sums of money."
On 14 December 1993, private respondent filed a motion for suspension 10 of the redemption
period on the ground that "it cannot exercise said right of redemption without at the same time
waiving or contradicting its contentions in the case that the foreclosure of the mortgage on its
properties is legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private respondent's motion for
suspension after which a copy of said order was duly received by the Register of Deeds of
Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale,
consolidated its ownership over the real properties, resulting to the issuance of Transfer Certificate
of Title Nos. T-18627, T-186272, T-186273, T-16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold the real properties
to Stateland Investment Corporation for the amount of Thirty Nine Million Pesos
(P39,000,000.00). 12 Accordingly, Transfer Certificate of Title Nos. T-187781(m), T-187782(m),
T-187783(m), T-16653P(m) and T-16652P(m) were issued in the latter's name. prLL
After trial, the lower court rendered a decision 13 in favor of private respondent ARC dated 12 May
1993, the decretal portion of which reads:
"WHEREFORE, judgment is hereby rendered declaring that the filing in
foreign courts by the defendant of collection suits against the principal
debtors operated as a waiver of the security of the mortgages. Consequently,
the plaintiff's rights as owner and possessor of the properties then covered by
Transfer Certificates of Title Nos. T-78759, T-78762, T-78763, T-78760 and
T-78761, all of the Register of Deeds of Meycauayan, Bulacan, Philippines,

were violated when the defendant caused the extrajudicial foreclosure of the
mortgages constituted thereon.
"Accordingly, the defendant is hereby ordered to pay the plaintiff the
following sums, all with legal interest thereon from the date of the filing of the
complaint up to the date of actual payment:
"1) Actual or compensatory damages in the amount of Ninety Nine Million
Pesos (P99,000,000.00); cdtai
"2) Exemplary damages in the amount of Five Million Pesos (P5,000,000.00);
and
"3) Costs of suit.
"SO ORDERED."
On appeal, the Court of Appeals affirmed the assailed decision of the lower court prompting
petitioner to file a motion for reconsideration which the appellate court denied.
Hence, the instant petition for review 14 on certiorari where herein petitioner BANTSA ascribes
to the Court of Appeals the following assignment of errors:
1. The Honorable Court of Appeals disregarded the doctrines laid down by
this Hon. Supreme Court in the cases of Caltex Philippines,
Inc. vs. Intermediate Appellate Court docketed as G.R. No. 74730
promulgated on August 25, 1989 and Philippine Commercial
International Bank vs. IAC, 196 SCRA 29 (1991 case), although said
cases were duly cited, extensively discussed and specifically
mentioned, as one of the issues in the assignment of errors found on
page 5 of the decision dated September 30, 1997. Cdpr
2. The Hon. Court of Appeals acted with grave abuse of discretion when it
awarded the private respondent actual and exemplary damages
totalling P171,600,000.00, as of July 12, 1998 although such huge
amount was not asked 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.
70
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. cdrep
According to petitioner, the mere filing of a personal action to collect the principal loan does not
suffice; a final judgment must be secured and obtained in the personal action so that waiver of the
remedy of foreclosure may be appreciated. To put it differently, absent any of the two requisites,
the mortgagee-creditor is deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the jurisprudence laid
down in Bachrach 15 and similar cases adjudicated thereafter, thus:
"In the absence of express statutory provisions, a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a
real action to foreclose the mortgage. In other words, he may pursue either of
the two remedies, but not both. By such election, his cause of action can by no
means be impaired, for each of the two remedies is complete in itself. Thus,
an election to bring a personal action will leave open to him all the properties
of the debtor for attachment and execution, even including the mortgaged
property itself. And, if he waives such personal action and pursues his remedy
against the mortgaged property, an unsatisfied judgment thereon would still
give him the right to sue for a deficiency judgment, in which case, all the
properties of the defendant, other than the mortgaged property, are again
open to him for the satisfaction of the deficiency. In either case, his remedy is
complete, his cause of action undiminished, and any advantages attendant to
the pursuit of one or the other remedy are purely accidental and are all under
his right of election. On the other hand, a rule that would authorize the
plaintiff to bring a personal action against the debtor and simultaneously or
successively another action against the mortgaged property, would result not
only in multiplicity of suits so offensive to justice (Soriano vs. Enriques, 24
Phil. 584) and obnoxious to law and equity (Osorio vs. San Agustin, 25 Phil.,
404), but also in subjecting the defendant to the vexation of being sued in the
place of his residence or of the residence of the plaintiff, and then again in the
place where the property lies." LexLib
In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence enunciated in Manila
Trading and Supply Co. vs. Co Kim 17 and Movido vs. RFC, 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. (Underscoring Ours)
Anent real properties in particular, the Court has laid down the rule that a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose
the mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not
cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose,
a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the
complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the
1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by
the mortgage creditor upon filing of the petition not with any court of justice but with the Office of
the Sheriff of the province where the sale is to be made, in accordance with the provisions of Act
No. 3135, as amended by Act No. 4118. cdphil
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. cda
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 . . . ."
71
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. cdll
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." prcd
Petitioner further faults the Court of Appeals for allegedly disregarding the doctrine enunciated in
Caltex, wherein this High Court relaxed the application of the general rules to wit:
"In the present case, however, we shall not follow this rule to the letter but
declare that it is the collection suit which was waived and/or abandoned. This
ruling is more in harmony with the principles underlying our judicial system.
It is of no moment that the collection suit was filed ahead, what is
determinative is the fact that the foreclosure proceedings ended even before
the decision in the collection suit was rendered. . . ."

Notably, though, petitioner took the Caltex ruling out of context. We must stress that the Caltex
case was never intended to overrule the well-entrenched doctrine enunciated in Bachrach, which
to our mind still finds applicability in cases of this sort. To reiterate, Bachrach is still good law.
We then quote the decision 25 of the trial court, in the present case, thus:
"The aforequoted ruling in Caltex is the exception rather than the rule,
dictated by the peculiar circumstances obtaining therein. In the said case, the
Supreme Court chastised Caltex for making ". . . a mockery of our judicial
system when it initially filed a collection suit then, during the pendency
thereof, foreclosed extrajudicially the mortgaged property which secured the
indebtedness, and still pursued the collection suit to the end." Thus, to
prevent a mockery of our judicial system", the collection suit had to be
nullified because the foreclosure proceedings have already been pursued to
their end and can no longer be undone.
xxx xxx xxx
"In the case at bar, it has not been shown whether the defendant pursued to
the end or are still pursuing the collection suits filed in foreign courts. There
is no occasion, therefore, for this court to apply the exception laid down by
the Supreme Court in Caltex, by nullifying the collection suits. Quite
obviously, too, the aforesaid collection suits are beyond the reach of this
Court. Thus the only way the court may prevent the specter of a creditor
having "plural redress for a single breach of contract" is by holding, as the
Court hereby holds, that the defendant has waived the right to foreclose the
mortgages constituted by the plaintiff on its properties originally covered by
Transfer Certificates of Title Nos. 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." LibLex
xxx xxx xxx
"Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the
1.3 million promissory note secured by real estate mortgages and
72
subsequently filed a petition for extrajudicial foreclosure, it violates the rule
against splitting a cause of action."
Accordingly, applying the foregoing rules, we hold that petitioner, by the expediency of filing four
civil suits before foreign courts, necessarily abandoned the remedy to foreclose the real estate
mortgages constituted over the properties of third-party mortgagor and herein private respondent
ARC. Moreover, by filing the four civil actions and by eventually foreclosing extrajudicially the
mortgages, petitioner in effect transgressed the rules against splitting a cause of action well-
enshrined in jurisprudence and our statute books. LibLex
In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure after the collection
suit was filed, considering that the creditor should not be afforded "plural redress for a single
breach of contract." For cause of action should not be confused with the remedy created for its
enforcement. 28
Notably, it is not the nature of the redress which is crucial but the efficacy of the remedy chosen in
addressing the creditor's cause. Hence, a suit brought before a foreign court having competence
and jurisdiction to entertain the action is deemed, for this purpose, to be within the contemplation
of the remedy available to the mortgagee-creditor. This pronouncement would best serve the
interest of justice and fair play and further discourage the noxious practice of splitting up a lone
cause of action.
Incidentally, BANTSA alleges that under English Law, which according to petitioner is the
governing law with regard to the principal agreements, the mortgagee does not lose its security
interest by simply filing civil actions for sums of money. 29
We rule in the negative. LLphil
This argument shows desperation on the part of petitioner to rivet its crumbling cause. In the case
at bench, Philippine law shall apply notwithstanding the evidence presented by petitioner to prove
the English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction that
there is no judicial notice of any foreign law. A foreign law must be properly pleaded and proved
as a fact. 30 Thus, if the foreign law involved is not properly pleaded and proved, our courts will
presume that the foreign law is the same as our local or domestic or internal law. 31 This is what
we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter were properly pleaded
and proved in accordance with Section 24, Rule 132 of the Rules of Court and the jurisprudence
laid down in Yao Kee, et al. vs. Sy-Gonzales, 32 said foreign law would still not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established public
policy of the forum, the said foreign law, judgment or order shall not be applied. 33
Additionally, prohibitive laws concerning persons, their acts or property, and those which have for
their object public order, public policy and good customs shall not be rendered ineffective by laws

or judgments promulgated, or by determinations or conventions agreed upon in a foreign
country. 34
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action. LibLex
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent —
"If two or more suits are instituted on the basis of the same cause of action,
the filing of one or a judgment upon the merits in any one is available as a
ground for the dismissal of the others."
Moreover, foreign law should not be applied when its application would work undeniable injustice
to the citizens or residents of the forum. To give justice is the most important function of law;
hence, a law, or judgment or contract that is obviously unjust negates the fundamental principles
of Conflict of Laws. 35
Clearly then, English Law is not applicable. Cdpr
As to the second pivotal issue, we hold that the private respondent is entitled to the award of actual
or compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially foreclosing
the real estate mortgages constituted a clear violation of the rights of herein private respondent
ARC, as third-party mortgagor.
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
73
director of Philippine Appraisal Company, Inc. (TSN, ibid., p. 3). The latter's
testimony was subjected to extensive cross-examination by counsel for
defendant-appellant (TSN, April 22, 1994, pp. 6-22)." 39
In the matter of credibility of witnesses, the Court reiterates the familiar and well-entrenched rule
that the factual findings of the trial court should be respected.40 The time-tested jurisprudence is
that the findings and conclusions of the trial court on the credibility of witnesses enjoy a badge of
respect for the reason that trial courts have the advantage of observing the demeanor of witnesses
as they testify. 41
This Court will not alter the findings of the trial court on the credibility of witnesses, principally
because they are in a better position to assess the same than the appellate court. 42 Besides, trial
courts are in a better position to examine real evidence as well as observe the demeanor of
witnesses. 43
Similarly, the appreciation of evidence and the assessment of the credibility of witnesses rest
primarily with the trial court. 44 In the case at bar, we see no reason that would justify this Court
to disturb the factual findings of the trial court, as affirmed by the Court of Appeals, with regard
to the award of actual damages.
In arriving at the amount of actual damages, the trial courts justified the award by presenting the
following ratiocination in its assailed decision 45 , to wit:
"Indeed, the Court has its own mind in the matter of valuation. The size of the
subject real properties are (sic) set forth in their individual titles, and the
Court itself has seen the character and nature of said properties during the
ocular inspection it conducted. Based principally on the foregoing, the Court
makes the following observations:
"1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del
Monte, Bulacan, which is (sic) not distant from Metro Manila — the biggest
urban center in the Philippines — and are easily accessible through well-
paved roads;
"2. The properties are suitable for development into a subdivision for low cost
housing, as admitted by defendant's own appraiser (TSN, May 30, 1994, p.
31);
"3. The pigpens which used to exist in the property have already been
demolished. Houses of strong materials are found in the vicinity of the
property (Exhs. 2, 2-1 to 2-7), and the vicinity is a growing community. It has
even been shown that the house of the Barangay Chairman is located adjacent
to the property in question (Exh. 27), and the only remaining piggery (named
Cherry Farm) in the vicinity is about 2 kilometers away from the western
boundary of the property in question (TSN, November 19, p. 3); prcd

"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. prcd
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 for awarding an amount allegedly not asked
nor prayed for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory damages by the lower court
exceeded that prayed for in the complaint, the same is nonetheless valid, subject to certain
qualifications. cda
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
74
"SECTION 5. Amendment to conform to or authorize presentation of
evidence. — When issues not raised by the pleadings are tried with the express
or implied consent of the parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the pleadings as may
be necessary to cause them to conform to the evidence and to raise these
issues may be made upon motion of any party at any time, even after
judgment; but failure to amend does not affect the result of the trial of these
issues. If evidence is objected to at the trial on the ground that it is not within
the issues made by the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be subserved thereby. The court
may grant a continuance to enable the amendment to be made."
The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de Agricultures de
Talisay-Silay, Inc. 49 citing Northern Cement Corporation vs.Intermediate Appellate
Court 50 is enlightening:
"There have been instances where the Court has held that even without the
necessary amendment, the amount proved at the trial may be validly awarded,
as in Tuazon v. Bolanos (95 Phil. 106), where we said that if the facts shown
entitled plaintiff to relief other than that asked for, no amendment to the
complaint was necessary, especially where defendant had himself raised the
point on which recovery was based. The appellate court could treat the
pleading as amended to conform to the evidence although the pleadings were
actually not amended. Amendment is also unnecessary when only clerical
error or non substantial matters are involved, as we held in Bank of
the Philippine Islands vs. Laguna (48 Phil. 5). In Co Tiamco vs. Diaz (75 Phil.
672), we stressed that the rule on amendment need not be applied rigidly,
particularly where no surprise or prejudice is caused the objecting party. And
in the recent case of National Power Corporation vs. Court of Appeals (113
SCRA 556), we held that where there is a variance in the defendant's pleadings
and the evidence adduced by it at the trial, the Court may treat the pleading
as amended to conform with the evidence. prLL
"It is the view of the Court that pursuant to the above-mentioned rule and in
light of the decisions cited, the trial court should not be precluded from
awarding an amount higher than that claimed in the pleading
notwithstanding the absence of the required amendment. But it is upon the
condition that the evidence of such higher amount has been presented
properly, with full opportunity on the part of the opposing parties to support
their respective contentions and to refute each other's evidence.
"The failure of a party to amend a pleading to conform to the evidence
adduced during trial does not preclude an adjudication by the court on the
basis of such evidence which may embody new issues not raised in the
pleadings, or serve as a basis for a higher award of damages. Although the
 75

pleading may not have been amended to conform to the evidence submitted SO ORDERED.
during trial, judgment may nonetheless be rendered, not simply on the basis
of the issues alleged but also on the basis of issues discussed and the Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.
assertions of fact proved in the course of trial. The court may treat the
||| (Bank of America v. American Realty Corp., G.R. No. 133876, [December 29, 1999], 378 PHIL
pleading as if it had been amended to conform to the evidence, although it
1279-1304)
had not been actually so amended. Former Chief Justice Moran put the
matter in this way:
'When evidence is presented by one party, with the expressed or
implied consent of the adverse party, as to issues not alleged in the
pleadings, judgment may be rendered validly as regards those issues,
which shall be considered as if they have been raised in the pleadings.
There is implied consent to the evidence thus presented when the
adverse party fails to object thereto.'
"Clearly, a court may rule and render judgment on the basis of the evidence
before it even though the relevant pleading had not been previously amended,
so long as no surprise or prejudice is thereby caused to the adverse party. Put
a little differently, so long as the basis requirements of fair play had been met,
as where litigants were given full opportunity to support their respective
contentions and to object to or refute each other's evidence, the court may
validly treat the pleadings as if they had been amended to conform to the
evidence and proceed to adjudicate on the basis of all the evidence before it."
In the instant case, in as much as the petitioner was afforded the opportunity to refute and object
to the evidence, both documentary and testimonial, formally offered by private respondent, the
rudiments of fair play are deemed satisfied. In fact, the testimony of Reynaldo Flores was put
under scrutiny during the course of the cross-examination. Under these circumstances, the court
acted within the bounds of its jurisdiction and committed no reversible error in awarding actual
damages the amount of which is higher than that prayed for. Verily, the lower court's actuations
are sanctioned by the Rules and supported by jurisprudence. prcd
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. Accordingly, petitioner is hereby ordered to pay private
respondent the sum of P99,000,000.00 as actual or compensatory damages; P50,000.00 as
exemplary damage and the costs of suit. LexLib

THIRD DIVISION
[G.R. No. 55960. November 24, 1988.]
YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN
YEN, petitioners, vs. AIDA SY-GONZALES, MANUEL SY, TERESITA
SY-BERNABE, RODOLFO SY, and HONORABLE COURT OF
APPEALS, respondents.
SYLLABUS
1.CIVIL LAW; CUSTOM, DEFINED. — Custom is defined as "a rule of conduct formed by
repetition of acts, uniformly observed (practiced) as a social rule, legally binding and obligatory"
[In the Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta, Romulo,
de Leon, Mabanta and Reyes", July 30, 1979, 92 SCRA 3, 12].
2.ID.; ID.; MUST BE PROVED ACCORDING TO THE RULES ON EVIDENCE. — The law requires
that "a custom must be proved as a fact, according to the rules of evidence" [Article 12, Civil Code.]
On this score the Court had occasion to state that "a local custom as a source of right can not be
considered by a court of justice unless such custom is properly established by competent evidence
like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence, if not one of a
higher degree, should be required of a foreign custom.
3.ID.; FOREIGN MARRIAGE; HOW PROVED. — To establish a valid foreign marriage two things
must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2) the
alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49
(1922)].
4.REMEDIAL LAW; EVIDENCE; PROOF OF WRITTEN FOREIGN LAW; TESTIMONY OF
COMPETENT WITNESS, INCLUDED. — In proving a foreign law the procedure is provided in the
Rules of Court. Proof of a written foreign law, on the other hand, is provided for under Rule 132
Section 25. The Court has interpreted section 25 to include competent evidence like the testimony
of a witness to prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher
110 Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).]
5.ID.; ID.; ID.; MARRIAGE CONTRACTED PURSUANT TO A FOREIGN LAW MUST BE
PROVED TO BE RECOGNIZED; CASE AT BAR. — Accordingly, in the absence of proof of the
Chinese law on marriage, it should be presumed that it is the same as ours . . . [Wong Woo Yiu v.
Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her
testimony that there was no solemnizing officer as is known here in the Philippines [See Article 56,
Civil Code] when her alleged marriage to Sy Kiat was celebrated it therefore follows that her
marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v.
Vivo, supra., pp. 555-556.]
76
6.ID.; PHILIPPINE COURTS CANNOT TAKE JUDICIAL NOTICE OF FOREIGN LAWS. —
Philippine courts cannot take judicial notice of foreign laws. They must be alleged and proved as
any other fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil.
610 (1930).]
7.ID.; EVIDENCE; PROOF OF WRITTEN FOREIGN LAW; RULING IN MEMORACION CASE,
NOT APPLICABLE TO CASE AT BAR. — The Memoracion case however is not applicable to the
case at bar as said case did not concern a foreign marriage and the issue posed was whether or not
the oral testimony of a spouse is competent evidence to prove the fact of marriage in a complaint
for adultery.
8.CIVIL LAW; PERSONS; PATERNITY AND FILIATION; FAILURE TO ESTABLISH
CELEBRATION OF MARRIAGE ACCORDING TO THE LAWS OF CHINA; EFFECT ON STATUS
OF CHILDREN. — Failure to establish the marriage of Yao Kee with Sy Kiat according to the laws
of China, they cannot be accorded the status of legitimate children but only that of acknowledged
natural children. Petitioners are natural children, it appearing that at the time of their conception
Yao Kee and Sy Kiat were not disqualified by any impediment to marry one another [See Art. 269,
Civil Code.] And they are acknowledged children of the deceased because of Sy Kiat's recognition
of Sze Sook Wah.
9.ID.; ID.; ID.; RECOGNITION OF NATURAL CHILDREN; ACKNOWLEDGMENT OF ONE
NATURAL CHILD BENEFITS HER SISTERS AND BROTHERS OF THE FULL BLOOD. — The
acknowledgment of Sze Sook Wah extends to Sze Lai Cho and Sy Chun Yen who are her sisters of
the full blood [See Art. 271, Civil Code].
10.ID.; ID.; ID.; COMPROMISE AGREEMENT ACKNOWLEDGING THEIR NATURAL
CHILDREN AND PROVIDING FOR THEIR SUPPORT CONSTITUTES A STATEMENT BEFORE
A COURT OF RECORD. — Compromise agreement entered into by their parents acknowledging
their five (5) natural children and providing for their support approved by the Court of First
Instance constitutes a statement before a court of record by which a child may be voluntarily
acknowledged [See Art. 278, Civil Code].
11.REMEDIAL LAW; BATAS PAMBANSA BLG. 129; FUNCTIONS AND JURISDICTION OF THE
JUVENILE AND DOMESTIC RELATIONS COURTS, VESTED NOW WITH THE REGIONAL
TRIAL COURT. — With the enactment of Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, the Juvenile and Domestic Relations Courts were abolished.
Their functions and jurisdiction are now vested with the Regional Trial Courts [See Section 19
(7), B.P. Blg. 129 and Divinagracia v. Bellosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356,
360]
12.ID.; ACTIONS; ISSUE ON PATERNITY AND FILIATION MAY BE PASSED UPON IN A
TESTATE OR INTESTATE PROCEEDING; REASON. — A case involving paternity and
acknowledgment may be ventilated as an incident in the intestate or testate proceeding (See
Baluyot vs. Ines Luciano, L-42215, July 13, 1976). But that legal provision presupposes that such
an administration proceeding is pending or existing and has not been terminated. The reason for
this rule is not only "to obviate the rendition of conflicting rulings on the same issue by the Court

of First Instance and the Juvenile and Domestic Relations Court" [Vda. de Baluyut v. Luciano, G.R.
No. L-42215, July 13, 1976, 72 SCRA 52, 63] but more importantly to prevent multiplicity of suits.
DECISION
CORTES, J p:
Sy Kiat, a Chinese national, died on January 17, 1977 in Caloocan City where he was then residing,
leaving behind real and personal properties here in the Philippines worth P300,000.00 more or
less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy filed a petition for
the grant of letters of administration docketed as Special Proceedings Case No. C-699 of the then
Court of First Instance of Rizal Branch XXXIII, Caloocan City. In said petition they alleged among
others that (a) they are the children of the deceased with Asuncion Gillego; (b) to their knowledge
Sy Kiat died intestate; (c) they do not recognize Sy Kiat's marriage to Yao Kee nor the filiation of
her children to him; and, (d) they nominate Aida Sy-Gonzales for appointment as administratrix
of the intestate estate of the deceased [Record on Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun Chen who alleged
that: (a) Yao Kee is the lawful wife of Sy Kiat whom he married on January 19, 1931 in China; (b)
the other oppositors are the legitimate children of the deceased with Yao Kee; and, (c) Sze Sook
Wah is the eldest among them and is competent, willing and desirous to become the administratrix
of the estate of Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.]
After hearing, the probate court, finding among others that:
(1)Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp.
49-64;]
(2)Sze Sook Wah, Sze Lai Cho and Sze Chum Yen are the legitimate children
of Yao Kee with Sy Kiat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and,
(3)Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the
acknowledged illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI
decision, pp. 27-28; Rollo, pp. 64-65.]
held in favor of the oppositors (petitioners herein) and appointed Sze Sook Wah as the
administratrix of the intestate estate of the deceased [CFI decision, pp. 68-69; Rollo, pp. 106.]
On appeal the Court of Appeals rendered a decision modifying that of the probate court, the
dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby
MODIFIED and SET ASIDE and a new judgment rendered as follows:
77
(1)Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe
and Rodolfo Sy acknowledged natural children of the deceased Sy Kiat with
Asuncion Gillego, an unmarried woman with whom he lived as husband and
wife without benefit of marriage for many years:
(2)Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the
acknowledged natural children of the deceased Sy Kiat with his Chinese wife
Yao Kee, also known as Yui Yip, since the legality of the alleged marriage of
Sy Kiat to Yao Kee in China had not been proven to be valid to the laws of the
Chinese People's Republic of China (sic);
(3)Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor
of Tomas Sy (Exhibit "G-1", English translation of Exhibit "G") of the Avenue
Tractor and Diesel Parts Supply to be valid and accordingly, said property
should be excluded from the estate of the deceased Sy Kiat; and
(4)Affirming the appointment by the lower court of Sze Sook Wah as judicial
administratrix of the estate of the deceased. [CA decision, pp. 11-12; Rollo, pp.
36-37.]
From said decision both parties moved for partial reconsideration, which was however denied by
respondent court. They thus interposed their respective appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No. 56045 entitled "Aida Sy-
Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze Sook
Wah, Sze Lai Cho and Sy Chun Yen" questioning paragraphs (3) and (4) of the dispositive portion
of the Court of Appeals' decision. The Supreme Court however resolved to deny the petition and
the motion for reconsideration. Thus on March 8, 1982 entry of judgment was made in G.R. No.
56045. *
The instant petition, on the other hand, questions paragraphs (1) and (2) of the dispositive portion
of the decision of the Court of Appeals. This petition was initially denied by the Supreme Court on
June 22, 1981. Upon motion of the petitioners the Court in a resolution dated September 16, 1981
reconsidered the denial and decided to give due course to this petition.
Herein petitioners assign the following as errors:
I.RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN
DECLARING THE MARRIAGE OF SY KIAT TO YAO YEE AS NOT HAVE (sic)
BEEN PROVEN VALID IN ACCORDANCE WITH LAWS OF THE PEOPLE'S
REPUBLIC OF CHINA.
II.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE AND
RODOLFO SY AS NATURAL CHILDREN OF SY KIAT WITH ASUNCION
GILLEGO. [Petition, p. 2; Rollo, p. 6.]

I.Petitioners argue that the marriage of Sy Kiat to Yao Kee in accordance with Chinese law and
custom was conclusively proven. To buttress this argument they rely on the following testimonial
and documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as follows:
Yao Kee testified that she was married to Sy Kiat on January 19, 1931 in
Fookien, China; that she does not have a marriage certificate because the
practice during that time was for elders to agree upon the betrothal of their
children, and in her case, her elder brother was the one who contracted or
entered into [an] agreement with the parents of her husband; that the
agreement was that she and Sy Kiat would be married, the wedding date was
set, and invitations were sent out; that the said agreement was complied with;
that she has five children with Sy Kiat, but two of them died; that those who
are alive are Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being
Sze Sook Wah who is already 38 years old; that Sze Sook Wah was born on
November 7, 1939; that she and her husband, Sy Kiat, have been living in
Fookien, China before he went to the Philippines on several occasions; that
the practice during the time of her marriage was a written document [is
exchanged] just between the parents of the bride and the parents of the groom,
or any elder for that matter; that in China, the custom is that there is a go-
between, a sort of marriage broker who is known to both parties who would
talk to the parents of the bride-to-be; that if the parents of the bride-to-be
agree to have the groom-to-be their son-in-law, then they agree on a date as
an engagement day; that on engagement day, the parents of the groom would
bring some pieces of jewelry to the parents of the bride-to-be, and then one
month after that, a date would be set for the wedding, which in her case, the
wedding date to Sy Kiat was set on January 19, 1931; that during the wedding
the bridegroom brings with him a couch (sic) where the bride would ride and
on that same day, the parents of the bride would give the dowry for her
daughter and then the document would be signed by the parties but there is
no solemnizing officer as is known in the Philippines; that during the wedding
day, the document is signed only by the parents of the bridegroom as well as
by the parents of the bride; that the parties themselves do not sign the
document; that the bride would then be placed in a carriage where she would
be brought to the town of the bridegroom and before departure the bride
would be covered with a sort of a veil; that upon reaching the town of the
bridegroom, the bridegroom takes away the veil; that during her wedding to
Sy Kiat (according to said Chinese custom), there were many persons present;
that after Sy Kiat opened the door of the carriage, two old ladies helped her
go down the carriage and brought her inside the house of Sy Kiat; that during
her wedding, Sy Chiok, the eldest brother of Sy Kiat, signed the document
with her mother; that as to the whereabouts of that document, she and Sy Kiat
were married for 46 years already and the document was left in China and
she doubt if that document can still be found now; that it was left in the
possession of Sy Kiat's family; that right now, she does not know the
78
whereabouts of that document because of the lapse of many years and
because they left it in a certain place and it was already eaten by the termites;
that after her wedding with Sy Kiat, they lived immediately together as
husband and wife, and from then on, they lived together; that Sy Kiat went to
the Philippines sometime in March or April in the same year they were
married; that she went to the Philippines in 1970, and then came back to
China; that again she went back to the Philippines and lived with Sy Kiat as
husband and wife; that she begot her children with Sy Kiat during the several
trips by Sy Kiat made back to China. [CFI decision, pp. 13-15; Rollo, pp. 50-
52.]
Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated that he was among
the many people who attended the wedding of his sister with Sy Kiat and that no marriage
certificate is issued by the Chinese government, a document signed by the parents or elders of the
parties being sufficient [CFI decision, pp. 15-16; Rollo, pp. 52-53.]
Third, the statements made by Asuncion Gillego when she testified before the trial court to the
effect that (a) Sy Kiat was married to Yao Kee according to Chinese custom; and, (b) Sy Kiat's
admission to her that he has a Chinese wife whom he married according to Chinese custom [CFI
decision, p. 17; Rollo, p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on October 3, 1972 where
the following entries are found: "Marital status — Married"; "If married give name of spouse —
Yao Kee"; "Address — China"; "Date of marriage — 1931"; and "Place of marriage — China"
[Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12, 1968 where the
following entries are likewise found: "Civil status — Married"; and, "If married, state name and
address of spouse — Yao Kee Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the Embassy of the People's
Republic of China to the effect that "according to the information available at the Embassy Mr. Sy
Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also Chinese were married on January 19,
1931 in Fukien, the People's Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between Yao Kee and Sy Kiat. However,
the same do not suffice to establish the validity of said marriage in accordance with Chinese law
or custom.
Custom is defined as "a rule of conduct formed by repetition of acts, uniformly observed (practiced)
as a social rule, legally binding and obligatory" [In the Matter of the Petition for Authority to
Continue Use of the Firm Name "Ozaeta, Romulo, de Leon, Mabanta and Reyes", July 30, 1979,
SCRA 3, 12 citing JBL Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed. Vol. 1, p. 7.] The
law requires that "a custom must be proved as a fact, according to the rules of evidence" [Article
12, Civil Code.] On this score the Court had occasion to state that "a local custom as a source of
right can not be considered by a court of justice unless such custom is properly established by

competent evidence like any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same
evidence, if not one of a higher degree, should be required of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code which states that:
Art. 71.All marriages performed outside the Philippines in accordance with
the laws in force in the country where they were performed, and valid there
as such, shall also be valid in this country, except bigamous, polygamous, or
incestuous marriages, as determined by Philippine law. (Emphasis
supplied.) **
Construing this provision of law the Court has held that to establish a valid foreign marriage two
things must be proven, namely: (1) the existence of the foreign law as a question of fact; and (2)
the alleged foreign marriage by convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49
(1922).]
In proving a foreign law the procedure is provided in the Rules of Court. With respect to
an unwritten foreign law, Rule 130 section 45 states that:
SEC. 45.Unwritten law. — The oral testimony of witnesses, skilled therein, is
admissible as evidence of the unwritten law of a foreign country, as are also
printed and published books of reports of decisions of the courts of the foreign
country, if proved to be commonly admitted in such courts.
Proof of a written foreign law, on the other hand, is provided for under Rule 132 section 25, thus:
SEC. 25.Proof of public or official record. — An official record or an entry
therein, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody
of the record, or by his deputy, and accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. If the office
in which the record is kept is in a foreign country, the certificate may be made
by a secretary of embassy or legation, consul general, consul, vice consul, or
consular agent or by any officer in the foreign service of the Philippines
stationed in the foreign country in which the record is kept and authenticated
by the seal of his office.
The Court has interpreted section 25 to include competent evidence like the testimony of a witness
to prove the existence of a written foreign law [Collector of Internal Revenue v. Fisher, 110 Phil.
686, 700-701 (1961) citing Willamette Iron and Steel Works v. Muzzal, 61 Phil. 471 (1935).]
In the case at bar petitioners did not present any competent evidence relative to the law and
custom of China on marriage. The testimonies of Yao and Gan Ching cannot be considered as proof
of China's law or custom on marriage not only because they are self-serving evidence, but more
importantly, there is no showing that they are competent to testify on the subject matter. For
failure to prove the foreign law or custom, and consequently, the validity of the marriage in
79
accordance with said law or custom, the marriage between Yao Kee and Sy Kiat cannot be
recognized in this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling they are not duty bound to prove
the Chinese law on marriage as judicial notice thereof had been taken by this Court in the case
of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the principle that Philippine
courts cannot take judicial notice of foreign laws. They must be alleged and proved as any other
fact [Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610
(1930).]
Moreover a reading of said case would show that the party alleging the foreign marriage presented
a witness, one Li Ung Bieng, to prove that matrimonial letters mutually exchanged by the
contracting parties constitute the essential requisite for a marriage to be considered duly
solemnized in China. Based on his testimony, which as found by the Court is uniformly
corroborated by authors on the subject of Chinese marriage, what was left to be decided was the
issue of whether or not the fact of marriage in accordance with Chinese law was duly proven [Sy
Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court has indeed taken judicial notice of
the law of China on marriage in the aforecited case, petitioners however have not shown any proof
that the Chinese law or custom obtaining at the time the Sy Joc Lieng marriage was celebrated in
1847 was still the law when the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or eighty-
four (84) years later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as being applicable
to the instant case. They aver that the judicial pronouncement in the Memoracion case, that the
testimony of one of the contracting parties is competent evidence to show the fact of marriage,
holds true in this case.
The Memoracion case however is not applicable to the case at bar as said case did not concern a
foreign marriage and the issue posed was whether or not the oral testimony of a spouse is
competent evidence to prove the fact of marriage in a complaint for adultery.
Accordingly, in the absence of proof of the Chinese law on marriage, it should be presumed that it
is the same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31, 1965, 13 SCRA 552,
555.] Since Yao Kee admitted in her testimony that there was no solemnizing officer as is known
here in the Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Kiat was
celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her marriage to Sy Kiat, even
if true, cannot be recognized in this jurisdiction [Wong Woo Yiu v. Vivo, supra., pp. 555-556.]
II.The second issue raised by petitioners concerns the status of private respondents.
Respondent court found the following evidence of petitioners' filiation:

(1)Sy Kiat's Master Card of Registered Alien where the following are entered:
"Children if any: give number of children — Four"; and, "Name — All living in
China" [Exhibit "SS-1";]
(2)the testimony of their mother Yao Kee who stated that she had five children
with Sy Kiat, only three of whom are alive namely, Sze Sook Wah Sze Lai Chu
and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and,
(3)an affidavit executed on March 22, 1961 by Sy Kiat for presentation to the
Local Civil Registrar of Manila to support Sze Sook Wah's application for a
marriage license, wherein Sy Kiat expressly stated that she is his daughter
[Exhibit "3".]
Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her he has three
daughters with his Chinese wife, two of whom — Sook Wah and Sze Kai Cho — she knows, and one
adopted son [TSN, December 6, 1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with Sy Kiat according to the
laws of China, they cannot be accorded the status of legitimate children but only that of
acknowledged natural children. Petitioners are natural children, it appearing that at the time of
their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry one
another [See Art. 269, Civil Code.] And they are acknowledged children of the deceased because
of Sy Kiat's recognition of Sze Sook Wah [Exhibit "3"] and its extension to Sze Lai Cho and Sy Chun
Yen who are her sisters of the full blood [See Art. 271, Civil Code.]
Private respondents on the other hand are also the deceased's acknowledged natural children with
Asuncion Gillego, a Filipina with whom he lived for twenty-five (25) years without the benefit of
marriage. They have in their favor their father's acknowledgment, evidenced by a compromise
agreement entered into by and between their parents and approved by the Court of First Instance
on February 12, 1974 wherein Sy Kiat not only acknowledged them as his children by Asuncion
Gillego but likewise made provisions for their support and future inheritance, thus:
xxx xxx xxx
2.The parties also acknowledge that they are common-law husband and wife
and that out of such relationship, which they have likewise decided to
definitely and finally terminate effective immediately, they begot five children,
namely: Aida Sy, born on May 30, 1950; Manuel Sy, born on July 1, 1953;
Teresita Sy, born on January 28, 1955; Ricardo Sy now deceased, born on
December 14, 1956; and Rodolfo Sy, born on May 7, 1958.
3.With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY . . .,
the parties mutually agree and covenant that —
(a)The stocks and merchandise and the furniture and
equipments . . ., shall be divided into two equal shares between, and
distributed to, Sy Kiat who shall own one-half of the total and the
80
other half to Asuncion Gillego who shall transfer the same to their
children, namely, Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy.
(b)the business name and premises . . . shall be retained by
Sy Kiat. However, it shall be his obligation to give to the aforenamed
children an amount of One Thousand Pesos (P1,000;00) monthly
out of the rental of the two doors of the same building now occupied
by Everett Construction.
xxx xxx xxx
(5)With respect to the acquisition, during the existence of the common-law
husband-and-wife relationship between the parties, of the real estates and
properties registered and/or appearing in the name of Asuncion Gillego . . .,
the parties mutually agree and covenant that the said real estates and
properties shall be transferred in equal shares to their children, namely,
Aida Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy, but to be administered by
Asuncion Gillego during her lifetime. . . . [Exhibit "D".] (Emphasis supplied.)
xxx xxx xxx
This compromise agreement constitutes a statement before a court of record by which a child may
be voluntarily acknowledged [See Art. 278, Civil Code.]
Petitioners further argue that the questions on the validity of Sy Kiat's marriage to Yao Kee and
the paternity and filiation of the parties should have been ventilated in the Juvenile and Domestic
Relations Court.
Specifically, petitioners rely on the following provision of Republic Act No. 5502, entitled "An Act
Revising Rep. Act No. 3278, otherwise known as the Charter of the City of Caloocan"; with regard
to the Juvenile and Domestic Relations Court:
SEC. 91-A.Creation and Jurisdiction of the Court. —
xxx xxx xxx
The provisions of the Judiciary Act to the contrary notwithstanding, the court
shall have exclusive original jurisdiction to hear and decide the following
cases;
xxx xxx xxx
(2)Cases involving custody, guardianship, adoption, revocation of adoption,
paternity and acknowledgment;
(3)Annulment of marriages, relief from marital obligations legal separation
of spouses, and actions for support;
 81

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

Accordingly, this Court finds no reversible error committed by respondent court.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.

EN BANC
[G.R. No. L-6897. November 29, 1956.]
In the Matter of the Claim for Attorney's Fees. CLARO M.
RECTO, claimant-appellee, vs. ESPERANZA P. DE HARDEN and
FRED M. HARDEN, defendants-appellants.
SYLLABUS
1. ATTORNEY AND CLIENT; WIFE'S CONTRACT FOR LEGAL SERVICES
WITHOUT HUSBAND'S CONSENT; CONTINGENT FEES ON HER SHARE IN CONJUGAL
PARTNERSHIP DOES NOT BIND THE LATTER. — Where the wife executed a contract of
professional services whereby she binds herself among other things that she agrees to pay her
attorney twenty (20%) per cent of the value of the share and participation which she may
receive in the funds and properties of the conjugal partnership of herself and her husband,
such contract does not seek to bind the conjugal partnership. The wife merely bound herself
— and assumed the personal obligation — to pay by way of contingent fees, 20% of her share
in said partnership. The contract neither gives, nor purports to give to her lawyer any right
whatsoever, personal or real, in and to her aforesaid share. The amount thereof is simply a
basis for the computation of said fees.
2. ID.; CONTINGENT FEES NOT PROHIBITED IN THE PHILIPPINES. —
Appellants contention "that article 1491 of the Civil Code of the Philippine in effect prohibit
contingent fees in untenable. Contingent fees are not prohibited in the Philippines and are
impliedly sanctioned by our Canons (No. 13) of Professional Ethics. (See also Ulanday vs.
Manila Co., 45 Phil., 540, 554).
3. ID.; WIFE'S CONTRACT FOR LEGAL SERVICES; INTERPRETED AND
CONSTRUED. — Appellant's contention that the contract in question has for it purpose to
secure of divorce allegedly in violation of Articles 1305, 1352 and 1409 of the Civil Code of the
Philippines is not borne out either by the language of the contract between them or by the
intent of the parties thereto. Its purpose was not to secure a divorce or facilitate or promote
the procurement of a divorce. It merely sought to protect the interest of the wife in the
conjugal partnership, during the pendency of a divorce suit she intended to file in the United
States. What is more, inasmuch as the husband and wife are admittedly citizens of the United
States, their status and the dissolution thereof are governed — pursuant to Art. 9 of the Civil
Code of Spain (which was in force in the Philippines at the time of the execution of the contract
in question) and Article 15 of the Civil Code of the Philippines — by the laws of the United
States, which sanction divorce. In short, the contract of services, between the wife and her
lawyer, is not contrary to law, morals, good customs, public order or public policy.
82
4. ID.; CONTRACT OF SERVICES WHEN NOT OPPRESSIVE OR INEQUITABLE.
— Considering the character of the services rendered by the attorney in the case at bar, the
nature and importance of the issues in said litigations, the amount of labor, time (1944 to
1952) and the trouble involved therein, the skill displayed in connection with said cases, the
value of the property affected by the controversy the professional character and standing of
the lawyer, the risks assumed and the results obtained, Held: that the character and standing
of the lawyer, the risks assumed and the results obtained, Held: that the contract of services
in question is neither harsh nor oppressive or inequitable.
5. OBLIGATIONS AND CONTRACTS; ATTORNEY AND CLIENT; WIFE'S
CONTRACT OF SERVICES; 20% CONTINGENT FEES ON HER SHARE IN CONJUGAL
PARTNERSHIP; INTENTION TO FILE SUIT FOR DIVORCE AS CONDITION; RENDERED
IMPOSSIBLE BY WIFE. — The contract of services was made principally, in contemplation
of a suit for divorce which the wife intended to file before a competent court in California,
"and of the liquidation of the conjugal partnership between' her and her husband. Had she
filed said action for divorce and secure a decree of divorce, said conjugal partnership would
have been dissolved and then liquidated and the share of the wife therein would have been
fixed. However this cannot take place, either now or in the forseeable future owing to the
agreements between the wife and her husband which were made for the evident purpose of
defeating the attorney's claim for his fees. In other words the occurrences within the time
contemplated by the parties — bearing in mind the nature of and circumstances under which
they entered into, said contract of services — of the event upon which the amount of said fees
depended, was rendered impossible by the wife. Hence, whether such event be regarded as a
condition or as a period, she may not insist upon its occurrence prior to the enforcement of
the rights of the lawyer, for "the condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment," (Art. 1186 Civil Code) and "the debtor shall lose every
right to make use of the period" when he "violates any undertaking in consideration of which
the creditor agreed to the period." (Art. 1198, Civil Code).
DECISION
CONCEPCION, J p:
This is an appeal taken by Esperanza P. de Harden and Fred M. Harden from a
decision of the Court of First Instance of Manila, the pertinent part of which is of the following
tenor:.
"The contingent fee to which the claimant is entitled under
paragraph 3 of the contract, Exhibit JJJ or 20, is 20% of P1,920,554.85 or the
sum of P384,110.97.
"WHEREFORE, this Court hereby approves the recommendation of
the Commissioner with the above-stated modification, and finds that
Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED

EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS AND
NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of Esperanza
P. de Harden's share in the conjugal properties owned by her and her husband,
Fred M. Harden, as contingent fee stipulated in paragraph 3 of the Contract
of Professional Services, Exhibit JJJ or 20, and the said Esperanza P. de
Harden is hereby ordered to pay the said amount above-stated." It appears
that sometime in July, 1941,appellant, Mrs. Harden, and appellee, Claro M.
Recto, executed the following:
"CONTRACT OF PROFESSIONAL SERVICES
KNOW ALL MEN BY THESE PRESENTS:
"That I, ESPERANZA PEREZ DE HARDEN, of age, married to Fred
M. Harden, and temporarily residing in the Philippines, with address at 534
Sales Street, Manila, have engaged the services of Attorney Claro M. Recto to
appear and act as my counsel in the action which I will file against my
husband, Fred M. Harden, for the purpose of securing an increase in the
amount of support being received by me from the conjugal partnership of
myself and said Fred M. Harden, and for the purpose likewise of protecting
and preserving my rights in the properties of the said conjugal partnership,
in contemplation of the divorce suit which I intent to file against him in the
competent Court of California and of the liquidation of the conjugal
partnership between us, this contract of services to be under the following
conditions:
"1. That in lieu of retainer fee, which under the circumstances I am
not in a position to pay, I hereby agree to pay Attorney Claro M. Recto, such
payment to be made monthly, during the pendency of the litigation and until
the termination of the same, twenty-five (25%) per cent of the total increase
in allowance or pension which may be awarded to me by the court over and
above the amount of P1,500.00 which I now receive monthly from defendant
Fred M. Harden out of the funds of the conjugal partnership; Provided, that
should the case be terminated or an amicable settlement thereof be arrived at
by the parties before the expiration of two years from the date of the filing of
the complaint, I shall continue to pay the said twenty-five (25%) per cent up
to the end of said period.
"2. That the aforesaid monthly payments shall be in addition to
whatever amount may be adjudged by the court against the defendant Fred
M. Harden or against the conjugal partnership by way of litis expense, that is,
attorney's fees chargeable as expenses of litigation.
"3. That as full and complete satisfaction of the fees of Attorney
Claro M. Recto in connection with the case above referred to, and said case
being for the purposes aforestated, that is, to secure an increase in the amount
of support I now receive as well as to protect and preserve my rights and
interest in the properties of the conjugal partnership, in contemplation of
83
divorce and of the liquidation of said partnership, I hereby agree to pay said
Attorney Claro M. Recto twenty (20%) per cent of the value of the share and
participation which I may receive in the funds and properties of the said
conjugal partnership of myself and defendant Fred M. Harden, as a result of
the liquidation thereof either by death, divorce, judicial separation,
compromise or by any means or method by virtue of which said partnership
is or may be liquidated.
"4. All expenses in connection with the litigation are to be for my
account, but the same may be advanced by Attorney Claro M. Recto, to be
reimbursed to him either from the money which I receive by way of support
or from the funds of the conjugal partnership.
"5. It is hereby understood that this contract includes the services of
Attorney Claro M. Recto in connection with the securing of the liquidation of
the properties and assets of the conjugal partnership of myself and Fred M.
Harden, upon dissolution of said partnership or for any other cause
mentioned in Paragraph (3) hereof.
IN WITNESS WHEREOF, I have signed these presents in the City
_____ of Manila, Philippines this _______ day of July, 1941.
s/ Esperanza P. de Harden
t/ ESPERANZA P. DE HARDEN
ACCEPTED:
s/ Claro M. Recto
t/ CLARO M. RECTO"
In compliance therewith, on July 12, 1941, the appellee, as counsel for Mrs. Harden,
commenced Civil Case No. 59634 of the Court of First Instance of Manila, entitled "Esperanza
P. de Harden vs. Fred M. Harden and Jose Salumbides." In the complaint therein filed, it was
prayed, among other things: (a) that Mrs. Harden be given the exclusive administration of the
business and all properties of the conjugal partnership of Mr. and Mrs. Harden; (b) that, in
the event of denial of this prayer, the defendants be ordered to inform her "of everything
pertaining to the administration of said business and properties", as well as to render accounts
thereof and to permit her to examine the books and records pertinent thereto; (c) that Mr.
Harden be ordered to account to Mrs. Harden, and to return to this jurisdiction, the sum of
P449,015.44 allegedly withdrawn by him from the Philippines or sent by him to Hongkong on
April 1, 1941; (d) that defendant Salumbides be ordered to account for all moneys, amounting
to P285,000.00, belonging to the business and assets of said conjugal partnership and
deposited by him in a safety box, either in his name, or in that of Antonio Wilson, from
January 23 to December 23, 1940; (e) that the transfer, in the name of Salumbides, of certain
shares of stock, allegedly belonging to the conjugal partnership, be rescinded and said
defendant ordered to transfer said shares of stock in the name of Mrs. Harden or in that of
Mr. and Mrs. Harden, should Mr. Harden be allowed to continue as administrator of said
partnership; ( f ) that the transfer, made by Mr. Harden and/or by defendant Salumbides, as
his attorney-in-fact, of 36,000 shares of stock of the Angelo Mining Company, to some

residents of Hongkong, be rescinded and said shares returned to the assets of the conjugal
partnership and placed in the name of Mr. and Mrs. Harden; (g) that the monthly allowance
of Mrs. Harden be increased from P1,500 to P15,000; (h) that, pending final decision, Mr.
Harden be ordered to increase the allowance or pension of Mrs. Harden and their daughter
Sarah Elizabeth to P10,000 a month; and (i) that a writ of preliminary injunction be issued
restraining the defendants from disposing of the assets of the conjugal partnership in fraud
of Mrs. Harden.
By an order dated July 12, 1941, the court authorized the issuance of said writ, upon
the filing of the corresponding bond. It appears that, pursuant to an agreement submitted by
both parties, and with a view to avoiding unnecessary embarrassment, restraint or
inconvenience in the financial operations of the business enterprises affected by said writ of
preliminary injunction, the same was amended by an order dated July 19, 1941, in the sense
that.
". . . without prejudicing in any way the rights of the parties in this
case, a separate bank account be established in the Chartered Bank of India,
Australia and China, of Manila, and all transactions in connection with the
aforesaid businesses passed through that account by Mr. Harden or his duly
authorized representative, who at present is Mr. Salumbides, without the
necessity of securing a particular order from this Court on each occasion; that
the present funds in the Philippine National Bank in the name of Plaza Lunch
and Fred M. Harden be utilized for the purpose of starting said special bank
account in the Chartered Bank of India, Australia and China; that all income
from the aforesaid businesses be deposited in this special bank account and
no checks be drawn upon the same, except to pay the necessary overhead and
running expenses including purchases of tobacco, merchandise, etc., required
for the proper operation of said businesses; that a new set of books be opened
by Mr. Harden or his duly authorized representative covering all business
transactions passed through said special bank account and the same be
opened for inspection by the plaintiff's duly authorized representative.
"The order of injunction of July 12, 1941, is modified only to the
above extent, and in all other respects is maintained."
Subsequently, the Philippines was invaded by the Japanese and placed under
military occupation. Then came the liberation, in the course of which the records of this case
were destroyed. On October 23, 1946, said records were reconstituted at the instance of
appellee herein. Thereafter, the proceedings were resumed and, in due course, the Court of
First Instance of Manila rendered, on or about October 31, 1949, a decision the dispositive
part of which we quote:
"In view of the foregoing considerations, this court finds and so
holds that —
"(a) Fred M. Harden abandoned his domicile of origin in New Jersey
and established a domicile of choice in Manila, Philippines, since 1901;
84
"(b) The matrimonial domicile of Fred M. Harden and Esperanza P.
de Harden was established in Manila, Philippines, from the date of their
marriage on December 14, 1917;
"(c) Since they did not execute any antenuptial contract before their
marriage, all the properties, real or personal, acquired by either or both of
them on and after December 14, 1917, up to the present, over and above the
sum of P20,000.00 representing Fred M. Harden's capital, are hereby
declared conjugal properties;
"(d) The total amount of P1,944,794.37 representing deposits in
safety deposit boxes in the name of Jose Salumbides, the selling price of the
house in Los Angeles, California, and the pre-war and post-war remittances
abroad of Fred M. Harden, from which has already been deducted the sum of
P160,000.00 covering payments for deficiency Federal income taxes and
attorney's fees, both in the tax case and the present one, is hereby declared
chargeable to the share of defendant Harden and deductible from whatever
participation he may still have in the said conjugal partnership upon the
liquidation thereof, upon his failure to return and deposit them in the name
of the Plaza Lunch with the Manila branch of the Chartered Bank of India,
Australia and China up to the time this decision shall become final;
"(e) A conjugal lien be annotated in the original and owner's
duplicate of Transfer Certificates of Title Nos. 24393, 52436 and 54911 of the
Register of Deeds of Manila and in Original Certificate of Title No. 2292 of
Quezon Province, and on all the certificates of shares belonging to said
conjugal partnership, as well as in the corresponding books of the companies
or corporations issuing them, whereby it will be made to appear that any
subsequent alienation or encumbrance of said properties by Fred M. Harden
alone or his representative without the consent of his wife will be deemed
fraudulent and subject to revocation or cancellation for being in fraud and
prejudicial to the right of Esperanza P. de Harden;
"( f ) Within a period of fifteen (15) days after this decision shall have
become final, Fred M. Harden and Esperanza P. de Harden are hereby
ordered to execute a document to be approved by this court creating and
express active trust upon the remaining cash assets and income of the
conjugal partnership in the Philippines, whereby the Philippine Trust
Company, with offices in Manila, will act as trustee, subject to the right of
Fred M. Harden to receive therefrom the sum of P2,500,00 a month by way
of allowance and an equal amount for the plaintiff as separate support and
maintenance;
"(g) Within thirty (30) days after this decision shall have become
final, Fred M. Harden shall inform the plaintiff of all the properties and
businesses of the conjugal partnership, be they in the Philippines or abroad,
and render a true and complete accounting of the earnings and profits thereof;

"(h) The plaintiff is entitled to litis expensae in the amount of
P175,000.00 for services rendered by her counsel up to the rendition of this
judgment, which Fred M. Harden or the herein receiver is ordered to pay
within a period of fifteen (15) days after this decision has become final; and
"(i) The writ of preliminary injunction of July 12, 1941, is hereby
declared permanent and the order of receivership of November 20, 1946, is
hereby maintained, but said auxiliary remedies will be automatically lifted
upon the conclusion of the annotation of the conjugal lien and the execution
of the deed of trust above mentioned. Without costs.
"IT IS SO ORDERED."
The defendants appealed from said decision to this Court, where the case was
docketed as case No. L-3687. While the appeal was thus pending before us, herein appellee
filed a manifestation and a motion, both dated February 20, 1952. In said "manifestation",
appellee stated that Mrs. Harden had instructed him, by letter, to "discontinue all proceedings
relative to" said case, "vacate all orders and judgments rendered therein, and abandon and
nullify all her claims to the conjugal partnership existing between her and Mr. Harden", in
accordance with several instruments dated January 29, 1952, and executed without the
knowledge, advise and consent of said appellee, as counsel for Mrs. Harden, whereby: (1) Mr.
and Mrs. Harden had purportedly agreed to settle their differences in consideration of the
sum of $5,000 paid by Mr. Harden to Mrs. Harden, and a monthly pension of P500 to be paid
by him to her; (2) Mr. Harden had created a trust fund of $20,000 from which said monthly
pension of $500 would be taken; and (3) Mr. and Mrs. Harden had mutually released and
forever discharged each other from all actions, debts, duties, accounts, demands and claims
to the conjugal partnership, in consideration of the sum of $1. It was further asserted, in
appellee's "manifestation", that the purpose of the said instruments, executed by Mr. and Mrs.
Harden, was to defeat the claim of the former for attorney's fees, for which reason, he prayed,
in his aforementioned motion, that
"a) Pending the resolution of this motion, the receiver appointed
herein be authorized to continue holding the properties above mentioned in
his custody in order not to defeat the undersigned's inchoate lien on them;
"b) A day set aside to receive the evidence of the undersigned and
those of the plaintiff and the defendant Fred M. Harden, in order to determine
the amount of fees due to the undersigned, by the appointment of a referee or
commissioner for the reception of such
"c) After due hearing, the undersigned be declared entitled to the
sum of P400,000.00 as his fees for services rendered in behalf of the plaintiff
in this case, under paragraph 3 of the contract, Annex 'A', and to that end a
charging lien therefore be established upon the properties above-mentioned;
"d) And the receiver be ordered to pay to the undersigned the full
amount of the fees to which the latter is found to be entitled."
85
Counsel for the defendants-appellants, in turn, moved for the dismissal of the case,
to which appellee objected. Acting upon the issues raised in such motion for dismissal and in
appellee's motion to establish and enforce his charging lien, as counsel for Mrs. Harden, this
Court issued on July 22, 1952, a resolution the pertinent part of which reads:
"It will be seen from the above that the defendants-appellants pray
for the complete dismissal of the above entitled case without prejudice to the
annotation of the contingent claim of Attorney Claro M. Recto on the property
under receivership, other than the 368,553 shares of the Balatoc Mining
Company which belong to Fred M. Harden. On the other hand, Attorney Claro
M. Recto agrees to the lifting of the writ of preliminary injunction, the orders
of contempt and commitment, and all other interlocutory orders which were
issued in the course of this case, with the exception of the receivership, but
objects to the dismissal of the case on the ground that, since receivership is
merely an auxiliary remedy, the present case should be allowed to remain
pending for the purpose of maintaining the receivership to safeguard his right
to collect the fees that may be due him.
"Attorney Claro M. Recto prays that a commissioner or referee be
immediately appointed by this Court to receive evidence in support of his
allegations as to his attorney's lien and its enforcement. Counsel for the
defendants-appellants does not object to this proceeding provided that the
restrictions set forth by him be observed. However, this Court does not have
the proper facilities for receiving evidence in order to determine the amount
of the fees claimed by Attorney Claro M. Recto, and it is deemed advisable
that this matter be determined by the Court of First Instance. This is specially
so considering the opposition to the claim of Attorney Claro M. Recto filed by
Attorney J. W. Ferrier, Sr. in behalf of Esperanza P. de Harden.
"In view of the foregoing, the above entitled case is hereby remanded
to the court of origin in order to determine the amount of fees claimed by
Attorney Claro M. Recto in his motion dated February 20, 1952.
"It is understood that, after said fees had been finally determined
and paid, this case will be completely dismissed as prayed for by the
defendants-appellants, without prejudice to considering the claim of the
receiver for compensation as stated in his urgent motion dated July 2, 1952.
"Pending the determination of the amount of fees claimed by Attorney Claro
M. Recto, the writ of preliminary injunction, the orders of contempt and
commitment, and all interlocutory orders which were issued in the course of
this case, are hereby lifted and vacated, and with regard to the receivership,
the same is hereby dissolved, only with respect to the 368,553 shares of the
Balatoc Mining Company. As to the rest of the properties, the receivership
shall be maintained."
In compliance with said resolution, the records of this case were remanded to the
lower court, which, on September 2, 1952, designated a commissioner to receive evidence on
the amount of the fees collectible by herein appellee and to report thereon. After due hearing,

said commissioner submitted, on February 6, 1953, a report of about one hundred (100) pages
of the printed record on appeal, setting forth, in detail, the evidence introduced by both parties,
and his findings of fact, with the following conclusion and recommendation:
"Taking into consideration the value of the properties involved in
this litigation, the length of time in which claimant had handled the same for
Esperanza Harden, the volume and quality of the work performed, the
complicated legal questions involved, the responsibility assumed by the
claimant as counsel, his reputation in the bar, the difficulties encountered by
him while handling the same in which he had to work hard every inch of the
way because of the stiff oppositions filed by adverse counsel, the diligence he
employed not only in the preservation of the records in his possession during
the days of enemy occupation but also in the protection of the interests of
Esperanza Harden, his successful handling of said case and those cases
growing out of it which reached the Supreme Court, and the extra services he
rendered in her behalf in the tax and other court cases, the undersigned
Commissioner concludes that claimant is entitled to the full amount of 20%
of Esperanza Harden's share of the conjugal properties, as provided in
paragraph 3 of the Contract of Professional Services, Exhibit JJJ.
"WHEREFORE, the undersigned Commissioner respectfully
recommends that Atty. Claro M. Recto be paid the equivalent amount of 20%
of Esperanza P. de Harden's share of the conjugal properties or the sum of
P369,410.04 as his contingent fee for services rendered in her behalf."
After appropriate proceedings, the lower court rendered a decision dated April 30,
1953, adopting substantially said report of the commissioner, but increasing the contingent
fee of appellee herein from P369,410.04, the sum recommended in the report, to P384,110.97.
Hence, this appeal taken by Mr. and Mrs. Harden.
The first question for determination therein is the validity of the above-quoted
contract of services, which the appellants assail as void, mainly, upon the ground: (1) that Mrs.
Harden cannot bind the conjugal partnership without her husband's consent; (2) that Article
1491 of the Civil Code of the Philippines in effect prohibits contingent fees; (3) that the
contract in question has for its purpose to secure a decree of divorce, allegedly in violation of
Articles 1305, 1352 and 1409 of the Civil Code of the Philippines; and (4) that the terms of
said contract are harsh, inequitable and oppressive.
The first objection has no foundation in fact, for the contract in dispute does not seek
to bind the conjugal partnership. By virtue of said contract, Mrs. Harden merely
bound herself — or assumed the personal obligation — to pay, by way of contingent fees, 20%
of her share in said partnership. The contract neither gives, nor purports to give, to the
appellee any right whatsoever, personal or real, in and to her aforesaid share. The amount
thereof is simply a basis for the computation of said fees.
For the same reason, the second objection is, likewise, untenable. Moreover, it has
already been held that contingent fees are not prohibited in the Philippines and are impliedly
sanctioned by our Canons (No. 13) of Professional Ethics. (see, also, Ulanday vs. Manila
86
Railroad Co., 45 Phil., 540, 554.) Such is, likewise, the rule in the United States (Legal Ethics
by Henry S. Drinker, p. 176).
". . . in the United States, the great weight of authority recognizes the
validity of contracts for contingent fees, provided such contracts are not in
contravention of public policy, and it is only when the attorney has taken an
unfair or unreasonable advantage of his client that such a claim is
condemned." (See 5 Am. Jur. 359 et seq.; Ballentine, Law Dictionary, 2nd ed.,
p. 276.)
Needless to say, there is absolutely nothing in the records before us to show that
appellee herein had, in any manner, taken an unfair or unreasonable advantage of his client
Mrs. Harden.
The third objection is not borne out, either by the language of the contract between
them, or by the intent of the parties thereto. Its purpose was not to secure a divorce, or to
facilitate or promote the procurement of a divorce. It merely sought to protect the interest of
Mrs. Harden in the conjugal partnership, during the pendency of a divorce suit she intended
to file in the United States. What is more, inasmuch as Mr. and Mrs. Harden are admittedly
citizens of the United States, their status and the dissolution thereof are governed — pursuant
to Article 9 of the Civil Code of Spain (which was in force in the Philippines at the time of the
execution of the contract in question) and Article 15 of the Civil Code of the Philippines — by
the laws of the United States, which sanction divorce. In short, the contract of services,
between Mrs. Harden and herein appellee, is not contrary to law, morals, good customs,
public order or public policy.
The last objection is based upon principles of equity, but, pursuant thereto, one who
seeks equity must come with clean hands (Bastida, et al., vs. Dy Buncio & Co., 93 Phil., 195;
30 C. J. S. 475), and appellants have not done so, for the circumstances surrounding the case
show, to our satisfaction, that their aforementioned agreements, ostensibly for the settlement
of the differences between husband and wife, were made for the purpose of circumventing or
defeating the rights of herein appellee, under his above-quoted contract of services with Mrs.
Harden. Indeed, having secured a judgment in her favor, acknowledging her rights to the
assets of the conjugal partnership, which turned out to be worth almost P4,000,000 in
addition to litis expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would
have waived such rights, as well as the benefits of all orders and judgments in her favor, in
consideration of the paltry sum of $5,000 allegedly paid to her by Mr. Harden and the
additional sum of $20,000 to be paid by him in installments, at the rate of $500 a month. In
fact, no explanation has been given for this most unusual avowed settlement between Mr. and
Mrs. Harden. One can not even consider the possibility of a reconciliation between the
spouses, the same being inconsistent with the monetary consideration for said alleged
settlement. What is more, the records show that the relations between said spouses — which
were bad indeed, not only in July, 1941, when Mrs. Harden engaged the services of the
appellee, but, even, before, for Mr. and Mrs. Harden were separated since 1938 — had
worsened considerably thereafter, as evidence by an action for divorce filed by Mr. Harden in
New Jersey, in July 1948, upon the ground of repeated acts of infidelity allegedly committed
by Mrs. Harden in 1940 and 1941.
 87

Again, it appears that appellee had rendered, under the contract in question, the suspension of this order, which was immediately objected to by the appellee and then denied
following services, for the benefit of Mrs. Harden: by the Court.
1. He succeeded in defeating defendants' motion for the dissolution of the writ of 6. Inasmuch as said order of November 13, 1947 had not been complied with,
preliminary injunction, issued by the Court on July 12, 1941, and amended on July 19, 1941. appellee filed on November 27, 1947, a motion praying that Mr. Harden be declared in
contempt of court and punished accordingly. Meanwhile, or on November 24, 1947, Mr.
2. On November 12, 1946, appellee moved for the appointment of a receiver, upon
Harden had instituted case G. R. No. L-1816 of this Court against Hon. Emilio Peña, as Judge
the ground that, despite said writ of preliminary injunction, the defendants had been
of the Court of First Instance of Manila, and Mrs. Harden. In the petition therein filed, Mr.
disposing of the properties of the conjugal partnership for the purpose of defrauding Mrs.
Harden applied for a writ of certiorari annulling said orders of Judge Peña of October 7 and
Harden. After due hearing, the court, by an order dated November 20, 1946, directed the
November 13, 1947, and prayed that, pending disposition of the case, a writ of preliminary
appointment of Abelardo Perez as receiver of said properties, upon the filing of a P10,000
injunction be issued restraining the respondents therein from enforcing said orders,
bond. Defendants asked, on February 13, 1947, that the receivership be suspended, or else,
particularly through contempt proceedings. Hence, the lower court deferred action on the
that they be allowed to file a bond for the discharge of the receivership. Appellee replied
aforementioned motion of November 27, 1947. After due hearing, this Court, in a resolution
objecting thereto, unless the defendants posted a P4,000,000 bond. Subsequently or on
dated February 12, 1948, refused to issue the writ of preliminary injunction prayed for.
March 5, 1947, the defendants sought a reconsideration of the order of November 20, 1946,
Subsequently, or on November 21, 1950, decision was rendered denying the petition for a writ
and the discharge of the receiver. By an order dated March 21, 1947, the Court authorized said
of certiorari.
discharged upon the filing, by the defendants, of a bond in the sum of P500,000, provided
that Mr. Harden "should bring back all the 368,553 shares of the Balatoc Mining Co., in his 7. Soon after the issuance of our resolution in said case G. R. No. 1816, dated
name to the Philippines for deposit with the Clerk of Court, or with the Chartered Bank of February 12, 1948, or to be exact on March 27, 1948, the lower court issued an order directing
India, Australia and China, at Manila . . . Mr. Harden to comply, within five (5) days from notice, with the order of October 7, 1947. On
April 6, 1948, appellee filed with the lower court the corresponding formal charges against
"3. On motion of the appellee dated March 4, 1947, the Court, by an order dated April
Mr. Harden for contempt of court. After due hearing, Mr. Harden was, by an order of April
5, 1947, directed Mr. Harden to remit to Mrs. Harden the sum of $2,500, to be charged against
28, 1948, found guilty as charged and ordered confined "until he complies with the
her litis expensae. Upon similar motion, filed by appellee on or about April 26, 1947, the Court
aforementioned orders" of October 7, 1947 and March 27, 1948. On motion of Mr. Harden,
ordered Mr. Harden, on May 13, 1947, to furnish Mrs. Harden the sum of $5,000, under the
said order of April 28, 1948 was suspended until May 4, 1948, on which date he was arrested
same conditions.
and placed in confinement at the New Bilibid Prison, in Muntinglupa, Rizal. On July 10, 1948,
4. On June 21, 1947, the defendants instituted Civil Case No. G. R. No. L-1499 of this he filed with this Court a petition for a writ of habeas corpus against the Director of Prisons,
Court, entitled "Fred M. Harden and Jose Salumbides vs. Emilio Peña, Abelardo Perez and (G. R. No. L-2349, entitled "Fred M. Harden vs. The Director of Prisons"), which, in due
Esperanza P. Harden" for the purpose of annulling and setting aside, by writ of certiorari, the course was denied in a decision promulgated on October 22, 1948.
aforementioned orders of the lower court dated July 12, 1941, November 20, 1946, and April
8. During the military occupation of the Philippines by the Japanese, the appellee
5 and May 13, 1947, and to restrain, in the meantime, the enforcement thereof. After
made representations with the Japanese Government to prevent the commandeering of a
appropriate proceedings, in the course of which appellee appeared as counsel for Mrs. Harden,
business establishment belonging to Mr. and Mrs. Harden. Moreover, he succeeded in
and like counsel for the petitioners therein, filed several lengthy, detailed pleadings and
persuading the Japanese to refrain from interning Mrs. Harden and her daughter and to allow
memoranda, decision was rendered on November 21, 1950, denying the writ of certiorari
her to withdraw, from the former's deposit in a local bank, from P200 to P250 a month, for
prayed for.
their subsistence. He, likewise, lent her money to meet her needs and spent the sum of
5. On or about September 9, 1947, appellee filed a motion alleging that despite the P55,000 in the preservation of the records and papers pertaining to the business and other
writ of preliminary injunction above mentioned, the defendants had, fraudulently and properties of the conjugal partnership of Mr. and Mrs. Harden.
without judicial consent, remitted abroad several sums of money aggregating P1,000,608.66,
9. Appellee assisted, also, the receiver, as his counsel and, in such capacity, took all
and praying that Mr. Harden be ordered to return this sum to the Philippines, within a stated
steps essential for the proper discharge of the duties of the former. Among other things,
period, said sum to be deposited with the account of the Plaza Lunch at the Manila Branch of
appellee sought and obtained judicial authority for some important acts of administration of,
the Chartered Bank of India, Australia and China. Mr. Harden objected to said motion.
and disposition by, the receiver. He (appellee) secured judicial intervention for the protection
Appellee filed a rejoinder, to which Mr. Harden replied. Appellee filed a rejoinder to the
and preservation of the assets of the conjugal partnership, including orders for the delivery of
rejoinder. On October 7, 1947, the Court granted appellee's motion. Mr. Harden sought a
certificates of stock, the return thereof and/or its deposit with the clerk of court. He, likewise,
reconsideration, which was opposed by the appellee on October 27, 1947, and denied by an
represented the receiver in seeking war damage payments.
order dated November 13, 1947. Mr. Harden moved, on November 18, 1947, for the

10. In civil case No. 6222 of the Court of First Instance of Manila, entitled "Francisco
Dalupan vs. Fred M. Harden" for the recovery of P113,837.17, it was decided, through
appellee's intervention, that the conjugal assets would bear the payment of P22,767.43 only,
the balance to be chargeable exclusively against Mr. Harden's share of the conjugal
partnership.
11. Appellee instituted civil case No. 6940 of the Court of First Instance of Manila,
entitled "Abelardo Perez vs. Chartered Bank of India, Australia and China and Fred M.
Harden", for the recovery of P1,000,608.66 and the return of stock certificates of the Balatoc
Mining Co., which had been sent abroad.
12. He (appellee) represented Mrs. Harden in connection with a million-peso federal
tax case against Mr. and Mrs. Harden.
13. Appellee successfully blocked Mr. Harden's attempts to withdraw: (1) $53,000
and forward the same to the Collector of Internal Revenue of Los Angeles, California; (2)
$50,000.00, allegedly to defray expenses in resisting a new tax assessment against him in the
United States; and (3) P65,000 for his expenses.
Then too, the conjugal partnership had varried and extensive business interests and
its assets were worth almost P4,000,000. The pleadings, motions, oppositions, rejoinders,
and memoranda filed, and the evidence introduced, in the aforementioned cases — in which
appellee was pitted against one of the most experienced and able members of the Philippine
Bar — were numerous, extensive and exhaustive. For instance, the record on appeal in one of
those cases, namely, G. R. No. L-3687, consisted of 966 pages.
In short, considering the character of the services rendered by the appellee, the
nature and importance of the issues in said litigations, the amount of labor, time (1941 to 1952)
and trouble involved therein, the skill displayed in connection with said cases, the value of the
property affected by the controversy, the professional character and standing of the appellee,
the risks assumed and the results obtained, we are of the opinion, and so hold, that the
contract of services in question is neither harsh nor oppressive or inequitable.
Under their second assignment of error, appellants maintain that:
"The lower court erred in failing to find as a fact borne out by the
evidence that the legal services of Attorney Claro M. Recto to Mrs. Esperanza
P. de Harden, payment, for which is sought by him in this case, have already
been paid by his immediate execution pending appeal of the decision in Civil
Case No. CFI-R-59634 (SC-G.R. No. L- 3687), wherein he collected the sum
of P176,000.00 for all such legal services."
Said decision, however, states clearly that the aforementioned sum of P175,000
represents litis expensae, and the contract between the appellee and Mrs. Harden explicitly
declares that said litis expensae shall be "in addition to" appellee's share of 25% of the
increase in the allowance of Mrs. Harden and his attorney's fees of 20% of her share in the
conjugal partnership. The second assignment of error is, therefore, devoid of merit.
Appellants, further contend, that:
88
3. The lower court erred in holding that the inchoate share of the
wife, Esperanza P. de Harden, in the undissolved and unliquidated conjugal
partnership properties of the Harden spouses, is capable of certain valuation
before such dissolution and liquidation, and summarily assessing the value of
Mrs. Harden's share in such conjugal properties without proper evidence.
4. "The lower court erred in awarding 20% of such inchoate share to
Attorney Claro M. Recto from Mrs. Harden's interests in the Harden conjugal
properties, summarily assessing such 20% inchoate share as of a value of
P384,110.97, and ordering the payment of said sum to Attorney Recto in
pursuance of the provisions of paragraph 3 of the Contract of Professional
Services."
Appellants' arguments in support thereof may be summarized as follows: The
contract of services in question provides that appellee's contingent fees shall be 20% of the
share of Mrs. Harden in the conjugal partnership. Pursuant to law, the share of Mrs. Harden
shall be determined upon the liquidation of said partnership, which has not taken place, as
yet. What is more, it cannot be effected until the dissolution of the marriage relation between
Mr. and Mrs. Harden. Inasmuch as this relation subsists, it follows that the amount of
attorney's fees due to appellee herein should not have been determined in the decision
appealed from.
This line of argument overlooks the fact that said contract of services was made,
principally, in contemplation of a suit for divorce that, according to Mrs. Harden, she intended
to file before a competent court in California, "and of the liquidation of the conjugal
partnership between" her and Mr. Harden. Had she filed said action for divorce and secured
a decree of divorce, said conjugal partnership would have been dissolved and then liquidated,
and the share of Mrs. Harden therein would have been fixed. However, this cannot take place,
either now, or in the foreseeable future, owing to the aforementioned agreements between Mr.
and Mrs. Harden, which were made for the evident purpose of defeating appellee's claim for
attorney's fees. In other words, the occurrence, within the time contemplated by the parties
— bearing in mind the nature of, and the circumstances under which they entered into, said
contract of services — of the event upon which the amount of said fees depended, was
rendered impossible by Mrs. Harden. Hence, whether such event be regarded as a condition
or as a period, she may not insist upon its occurrence, prior to the enforcement of the rights
of the herein appellee, for "the condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment" (Art. 1186, Civil Code) and "the debtor shall lose every right to make
use of the period" when he "violates any undertaking, in consideration of which the creditor
agreed to the period." (Art. 1198, Civil Code.)
It should be noted, also, that the compensation agreed upon for appellee's services,
consists of three (3) parts, namely: (a) 25% of the increase in the allowance of Mrs. Harden;
(b) litis expensae; and (c) 20% of her share in the conjugal partnership. The first part was
dealt with in the first paragraph of their contract of services. The second and third parts were
the object of the second and third paragraphs, respectively. The first paragraph limited the
rights of appellee thereunder to two (2) years, in the event of termination of the case or
amicable settlement thereof within two (2) years from the filing of the complaint. No such
 89

limitation appears in the second and third paragraphs of said contract. Hence, the same were
intended by the parties to be fully operative under any and all conditions.
It may not be amiss to add that the value of the properties involved has been assessed,
not summarily, but after due notice and full dress hearing, in the course of which both parties
introduced testimonial and documentary evidence. Appellants presented Exhibits 1 to 58,
whereas those of the appellee were so numerous that, having begun with Exhibit A, his last
piece of documentary evidence was marked Exhibit 26 Y's. The transcript of the hearing,
which lasted ten (10) days, covers over 220 pages.
The other assignments of error made by appellants herein are mere corollaries of
those already disposed of, and, hence, no further discussion thereof is necessary.
In conclusion, it appears that the assets of the conjugal partnership between Mr. and
Mrs. Harden are reasonably valued at P3,841,109.70. One-half (1/2) thereof, representing the
share of Mrs. Harden, is therefore, worth P1,920,554.85. Twenty percentum (20%) of this
sum is P384,110.97, which is the contingent fee due to the appellee, apart from the litis
expensae already paid to him. Inasmuch as the appellee has collected, also, the sum of
P80,000.00, on account of said contingent fees, there results in his favor a balance of
P304,110.97.
Subject to this qualification, the decision appealed from is hereby affirmed, therefore,
with costs against the appellants. So ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Reyes, J.
B. L., Endencia and Felix, JJ., concur.
||| (In re Recto v. De Harden, G.R. No. L-6897, [November 29, 1956], 100 PHIL 427-447)

THIRD DIVISION
[G.R. No. 154830. June 8, 2007.]
PIONEER CONCRETE PHILIPPINES, INC., PIONEER
PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG, petitioners, vs.
ANTONIO D. TODARO,respondent.
DECISION
AUSTRIA-MARTINEZ, J p:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the
Decision 1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its
Resolution 2 of August 21, 2002 denying petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial
Court (RTC) of Makati City, a complaint for Sum of Money and Damages with Preliminary
Attachment against Pioneer International Limited (PIL), Pioneer Concrete Philippines, Inc.
(PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J.
Klepzig (Klepzig). 3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the
laws of Australia and is principally engaged in the ready-mix concrete and concrete aggregates
business; PPHI is the company established by PIL to own and hold the stocks of its operating
company in the Philippines; PCPI is the company established by PIL to undertake its business of
ready-mix concrete, concrete aggregates and quarrying operations in the Philippines; McDonald
is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing
Director of PPHI and PCPI; Todaro has been the managing director of Betonval Readyconcrete,
Inc. (Betonval), a company engaged in pre-mixed concrete and concrete aggregate production; he
resigned from Betonval in February 1996; in May 1996, PIL contacted Todaro and asked him if he
was available to join them in connection with their intention to establish a ready-mix concrete
plant and other related operations in the Philippines; Todaro informed PIL of his availability and
interest to join them; subsequently, PIL and Todaro came to an agreement wherein the former
consented to engage the services of the latter as a consultant for two to three months, after which,
he would be employed as the manager of PIL's ready-mix concrete operations should the company
decide to invest in the Philippines; subsequently, PIL started its operations in the Philippines;
however, it refused to comply with its undertaking to employ Todaro on a permanent basis. 4
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint
on the grounds that the complaint states no cause of action, that the RTC has no jurisdiction over
the subject matter of the complaint, as the same is within the jurisdiction of the NLRC, and that
90
the complaint should be dismissed on the basis of the doctrine of forum non
conveniens. 5 TIDcEH
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners'
respective motions to dismiss. 6 Herein petitioners, as defendants, filed an Urgent Omnibus
Motion 7 for the reconsideration of the trial court's Order of January 4, 1999 but the trial court
denied it via its Order 8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA. 9 On October 31,
2000, the CA rendered its presently assailed Decision denying herein petitioners' Petition
for Certiorari. Petitioners filed a Motion for Reconsideration but the CA denied it in its Resolution
dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT
STATES A CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT ANY
LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE
THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT
BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS
OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF
THE TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT
INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN ALLEGED
BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN
THE EXCLUSIVE JURISDICTION OF THE NATIONAL LABOR
RELATIONS COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER
THE PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND
FOR DISMISSING A COMPLAINT. 10
In their first assigned error, petitioners contend that there was no perfected employment contract
between PIL and herein respondent. Petitioners assert that the annexes to respondent's complaint
show that PIL's offer was for respondent to be employed as the manager only of its pre-mixed
concrete operations and not as the company's managing director or CEO. Petitioners argue that
when respondent reiterated his intention to become the manager of PIL's overall business venture
in the Philippines, he, in effect did not accept PIL's offer of employment and instead made a
counter-offer, which, however, was not accepted by PIL. Petitioners also contend that under
Article 1318 of the Civil Code, one of the requisites for a contract to be perfected is the consent of

the contracting parties; that under Article 1319 of the same Code, consent is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract; that the offer must be certain and the acceptance absolute; that a qualified acceptance
constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's counter-
offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of Articles
19 and 21 of the Civil Code is baseless because it was shown that there was no perfected
employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract,
petitioners contend that PCPI and PPHI, may not also be held liable because they are juridical
entities with personalities which are separate and distinct from PIL, even if they are subsidiary
corporations of the latter. Petitioners also aver that the annexes to respondent's complaint show
that the negotiations on the alleged employment contract took place between respondent and PIL
through its office in Hongkong. In other words, PCPI and PPHI were not privy to the negotiations
between PIL and respondent for the possible employment of the latter; and under Article 1311 of
the Civil Code, a contract is not binding upon and cannot be enforced against one who was not a
party to it even if he be aware of such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting
in his capacity as president of PCPI and PPHI and settled is the rule that an officer of a corporation
is not personally liable for acts done in the performance of his duties and within the bounds of the
authority conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held
liable, respondent still has no cause of action against Klepzig because PCPI and PPHI have
personalities which are separate and distinct from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims for
actual, moral and exemplary damages are solely premised on the alleged breach of employment
contract, the present case should be considered as falling within the exclusive jurisdiction of the
NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisdiction is authorized by law, courts may refuse
to entertain a case involving a foreign element where the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there and the plaintiff sought the forum merely to secure
procedural advantage or to annoy or harass the defendant. Petitioners also argue that one of the
factors in determining the most convenient forum for conflicts problem is the power of the court
to enforce its decision. Petitioners contend that since the majority of the defendants in the present
case are not residents of the Philippines, they are not subject to compulsory processes of the
Philippine court handling the case for purposes of requiring their attendance during trial. Even
assuming that they can be summoned, their appearance would entail excessive costs. Petitioners
further assert that there is no allegation in the complaint from which one can conclude that the
evidence to be presented during the trial can be better obtained in the Philippines. Moreover, the
events which led to the present controversy occurred outside the Philippines. Petitioners conclude
91
that based on the foregoing factual circumstances, the case should be dismissed under the
principle of forum non conveniens. IaHCAD
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the
factual allegations in the complaint determine whether or not the complaint states a cause of
action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not based
on a contract of employment. Rather, it was based on petitioners' unwarranted breach of their
contractual obligation to employ respondent. This breach, respondent argues, gave rise to an
action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the NLRC to
acquire jurisdiction, the claim for damages must have a reasonable causal connection with the
employer-employee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and petitioners as they
both agreed that the latter shall employ him to manage and operate their ready-mix concrete
operations in the Philippines. Even assuming that there was no perfected contract, respondent
contends that his complaint alleges an alternative cause of action which is based on the provisions
of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the question
of whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniens depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial judge, who is in the best position to determine whether special circumstances
require that the court desist from assuming jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission
by which a party violates a right of another. A cause of action exists if the following elements are
present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or
is created; (2) an obligation on the part of the named defendant to respect or not to violate such
right; and, (3) an act or omission on the part of such defendant violative of the right of the plaintiff
or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages. 11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan, 12 this Court held:
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded. Stated
otherwise, may the court render a valid judgment upon the facts alleged
therein? The inquiry is into the sufficiency, not the veracity of the material
allegations. If the allegations in the complaint furnish sufficient basis on

which it can be maintained, it should not be dismissed regardless of the
defense that may be presented by the defendants. 13
Moreover, the complaint does not have to establish or allege facts proving the existence of a
cause of action at the outset; this will have to be done at the trial on the merits of the
case. 14 To sustain a motion to dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist, rather than that a claim has been defectively stated, or
is ambiguous, indefinite or uncertain. 15
Hence, in resolving whether or not the Complaint in the present case states a cause of action, the
trial court correctly limited itself to examining the sufficiency of the allegations in the Complaint
as well as the annexes thereto. It is proscribed from inquiring into the truth of the allegations in
the Complaint or the authenticity of any of the documents referred or attached to the Complaint,
since these are deemed hypothetically admitted by the respondent.
This Court has reviewed respondent's allegations in its Complaint. In a nutshell, respondent
alleged that herein petitioners reneged on their contractual obligation to employ him on a
permanent basis. This allegation is sufficient to constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between petitioners and respondent
is a matter which is not ripe for determination in the present case; rather, this issue must be taken
up during trial, considering that its resolution would necessarily entail an examination of the
veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as
defendants.
The Court does not agree with petitioners' contention that they were not privy to the negotiations
for respondent's possible employment. It is evident from paragraphs 24 to 28 of the
Complaint 16 that, on various occasions, Klepzig conducted negotiations with respondent
regarding the latter's possible employment. In fact, Annex "H" 17 of the complaint shows that it
was Klepzig who informed respondent that his company was no longer interested in employing
respondent. Hence, based on the allegations in the Complaint and the annexes attached thereto,
respondent has a cause of action against herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-
employee relationship exists between the parties and no issue is involved which may be resolved
by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is
the Regional Trial Court that has jurisdiction. 18 In the present case, no employer-employee
relationship exists between petitioners and respondent. In fact, in his complaint, private
respondent is not seeking any relief under the Labor Code, but seeks payment of damages on
account of petitioners' alleged breach of their obligation under their agreement to employ him. It
is settled that an action for breach of contractual obligation is intrinsically a civil dispute. 19 In
the alternative, respondent seeks redress on the basis of the provisions of Articles 19 and 21 of the
Civil Code. Hence, it is clear that the present action is within the realm of civil law, and jurisdiction
over it belongs to the regular courts. 20
With respect to the applicability of the principle of forum non conveniens in the present case, this
Court's ruling in Bank of America NT & SA v. Court of Appeals21 is instructive, to wit:
92
The doctrine of forum non conveniens, literally meaning 'the forum is
inconvenient', emerged in private international law to deter the practice of
global forum shopping, that is to prevent non-resident litigants from choosing
the forum or place wherein to bring their suit for malicious reasons, such as
to secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine,
a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are
not precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court. In the case of Communication
Materials and Design, Inc. vs. Court of Appeals, this Court held that ". . . [a]
Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court
is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is likely to have power to enforce its
decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs.
Court of Appeals, that the doctrine of forum non conveniens should
not be used as a ground for a motion to dismiss because Sec. 1, Rule
16 of the Rules of Court does not include said doctrine as a ground.
This Court further ruled that while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine
whether special circumstances require the court's desistance; and
that the propriety of dismissing a case based on this principle
of forum non conveniens requires a factual determination, hence
it is more properly considered a matter of defense. 22 (emphasis
supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the
application of the doctrine of forum non conveniens are matters of defense, the merits of which
should properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the
Court of Appeals are AFFIRMED. Costs against petitioners

FIRST DIVISION
[G.R. No. 125078. May 30, 2011.]
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ,
ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R. AFRICA,
BENJAMIN M. ALBAO, FELIPE ALCANTARA, NUMERIANO S. ALCARIA,
FERNANDO C. ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL,
ANTONIO B. ALVARADO, ELEANOR AMOLATA, RODOLFO P. ANCORDA,
TRIFINO F. ANDRADA, BERT B. ANOCHE, RAMON E. ANTECRISTO,
ISAGANI D. ANTINO, DOMINGO ANTOPINA, MANSUETO M. APARICIO,
HERMINIGILDO AQUINO, MARCELO S. AQUINO, JR., FELIPE P. ARANIA,
ULYSES M. ARAS, ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G.
ARINZOL, EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO, RONNIE
BACAYO, SOFRONIO BALINGIT, NELSON M. BALLENA, EMNIANO
BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI, HERMOGENES
T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR
BAYANI, BENIGNO BESARES, RUFINO BETITO, GERARDO A. BONIAO,
CARLO B. BUBUNGAN, FERNANDO B. BUENAVISTA, ALEJANDRINO H.
BUENO, TOMAS P. BUENO, LEONARDO M. BURDEOS, VICENTE P.
BURGOS, MARCELINO J. CABALUNA, DIOSDADO CABILING, EMETRIO
C. CACHUELA, BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B.
CAJURAO, REY A. CALISO, NORBERTO F. CALUMPAG, CELESTINO
CALUMPAG, LORETO CAMACHO, VICTORIANO CANETE, DOMINADOR
P. CANTILLO, FRUCTUSO P. CARBAJOSA, VICTORINO S. CARLOS,
VICTOR CARLOS, GEORGE M. CASSION, JAIME S. CASTAÑARES,
FLAVIANO C. CASTAÑARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA,
SR., CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO,
CESAR CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A.
CRESENCIO, ALEX CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO M.
DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN, ELISEO DAPROZA,
VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS, GAMALLER P. DEANG,
CARMELINO P. DEANG, DIOSDADO P. DEANG, DOMINGO A. DEANG,
FELIPE R. DEANG, JR., JULIETO S. DELA CRUZ, ELIEZER R. DELA
TORRE, JEFFREY R. DELA TORRE, RAUL DEMONTEVERDE, FELIPE P.
DENOLAN, RUBENCIO P. DENOY, RODRIGO M. DERMIL, ROLANDO B.
DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO,
GREGORIO DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M.
DOMANTAY, LEO S. DONATO, DOMINADOR L. DOSADO, NESTOR
DUMALAG, FREDDIE DURAN, SR., MARIO C. ECHIVERE, AQUILLO M.
EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS, EFRAIM ENGLIS,
ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A.
ESPAÑOLA, EULOGIO M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO
D. FERNANDO, GREGORIO S. FERNANDO, VICENTE P. FERRER,
MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T. FLOREZA,
93
NORBERTO J. FUENTES, RICARDO C. GABUTAN, PEDRO D.V. GALEOS,
ARNULFO F. GALEOS, EDGARDO V. GARCESA, BERNARDO P. GENTOBA,
EDUARDO P. GENTOBA, VICTORIO B. GIDO, ROLANDO V. GIMENA,
EARLWIN L. GINGOYO, ERNESTO GOLEZ, JUANITO G. GONZAGA,
ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M. GUSTO,
ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO,
CLAUDIO HIPOLITO, TORIBIO S. ILLUSORIO, TEODURO G. IMPANG, JR.,
GIL A. JALBUNA, HERMIE L. JALICO, ARMANDO B. JAMERLAN,
NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDRO S. JIMENEZ,
FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L. LAFORTEZA,
LOE LAGUMBAY, NORBETO D. LAMPERNIS, ROLANDO J. LAS PEÑAS,
ISMAEL LASDOCE, RENOLO L. LEBRILLA, CAMILO G. LEDRES,
ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON
LOS BAÑEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA,
RODOLFO C. LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA,
JR., JUANITO A. MACALISANG, TEOTIMO L. MADULIN, JOSEPH D.
MAGALLON, PEDRO P. MAGLASANG, MARIO G. MALAGAMBA, JAIME B.
MAMARADLO, PANFILO A. MANADA, SR., RICARDO S. MANDANI,
CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A.
MANSANES, RUFINO T. MANSANES, EUTIQUIO P. MANSANES, ALCIO P.
MARATAS, AGAPITO D. MARQUEZ, RICARDO R. MASIGLAT, DENDERIA
MATABANG, ARNELO N. MATILLANO, HERNANI C. MEJORADA,
ROSITA MENDOZA, GREGORIO R. MESA, RENATO N. MILLADO,
ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P.
MONDIA, JUANITO P. MONDIA, RICARDO MONTAÑO, RAUL T.
MONTEJO, ROGELIO MUNAR, RODOLFO E. MUÑEZ, CRESENCIO
NARCISO, PANFILO C. NARCISO, BRICS P. NECOR, MOISES P. NICOLAS,
NEMESIO G. NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO
P. OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E. ORANAS,
ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J. PADILLA,
NELSON G. PADIOS, SR., FRNACISCO G. PAGUNTALAN, RENE B.
PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO, NOLITO
C. PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q.
PEDAZO, EDGAR M. PEÑARANDA, ILUMINIDO B. PERACULLO,
ANTONIO C. PEREZ, DOMINGO PEREZ, OSCAR C. PLEÑOS, ANTONIETO
POLANCOS, SERAFIN G. PRIETO, ZENAIDA PROVIDO, FERNANDO Y.
PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM U.
QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M.
RELIZAN, RAUL A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR,
EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C. ROMANCA,
JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO
L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN G. SALIGONAN,
VICTORINO SALOMON, GENEROSO J. SALONGKONG, RODOLFO E.
SALVANI, JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES A.
SAMELIN, GEORGE SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S.
SARMIENTO, CIRILO SAYAANG, JARLO SAYSON, LEONCIO
SERDONCILLO, RODOLFO C. SERRANO, NESTOR G. SEVILLA, SIMEON
F. SIMBA, CATALINO S. SIMTIM, SERAFIN T. SINSUANGCO, EDUARDO
A. SOLA, VICTORINO M. SOLOMON, JAIME B. SUFICIENCIA, LYNDON

SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO L. SUMAJIT, PEDRO A.
SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY, MANUEL T.
SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD,
EUFROCINO A. TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T.
TAMASE, ERNESTO TARRE, MAGNO E. TATOY, AVELINO TAYAPAD,
SAMUEL S. TERRADO, APOLINARIO B. TICO, ORLANDO TINACO,
ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M. TORREGOSA,
ISABELO TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD,
JACINTO UDAL, RICARDO M. URBANO, ERNESTO G. VAFLOR,
FILOMENO E. VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL,
WALTER VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN,
JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA,
HENRY C. VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R.
YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA and
GRACIANO ZAMORA, petitioners, vs. HON. TEODORO A. DIZON, JR.,
Presiding Judge, Regional Trial Court, Branch 37, General Santos City,
SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL CHEMICAL CORP.,
STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP CO., DOLE
FOOD CO., INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE
N.A., DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS
INTERNATIONAL, INC. and CHIQUITA BRANDS, INC., respondents.
[G.R. No. 125598. May 30, 2011.]
THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL
CORPORATION, petitioners, vs. BERNABE L. NAVIDA, JOSE P. ABANGAN,
JR., CEFERINO P. ABARQUEZ, ORLANDITO A. ABISON, FELIPE ADAYA,
ALBERTO R. AFRICA, BENJAMIN M. ALBAO, FELIPE ALCANTARA,
NUMERIANO S. ALCARIA, FERNANDO C. ALEJADO, LEOPOLDO N.
ALFONSO, FLORO I. ALMODIEL, ANTONIO B. ALVARADO, ELEANOR
AMOLATA, RODOLFO P. ANCORDA, TRIFINO F. ANDRADA, BERT B.
ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO, DOMINGO
ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO AQUINO,
MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M. ARAS,
ARSENIO ARCE, RUPERTO G. ARINZOL, MIGUEL G. ARINZOL,
EDGARADO P. ARONG, RODRIGO D.R. ASTRALABIO, RONNIE BACAYO,
SOFRONIO BALINGIT, NELSON M. BALLENA, EMNIANO BALMONTE,
MAXIMO M. BANGI, SALVADOR M. BANGI, HERMOGENES T.
BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO, VIRGILIO
BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR
BAYANI, BENIGNO BESARES, RUFINO BETITO, GERARDO A. BONIAO,
CARLO B. BUBUNGAN, FERNANDO B. BUENAVISTA, ALEJANDRINO H.
BUENO, TOMAS P. BUENO, LEONARDO M. BURDEOS, VICENTE P.
BURGOS, MARCELINO J. CABALUNA, DIOSDADO CABILING, EMETRIO
C. CACHUELA, BRAULIO B. CADIVIDA, JR., SAMSON C. CAEL, DANIEL B.
CAJURAO, REY A. CALISO, NORBERTO F. CALUMPAG, CELESTINO
CALUMPAG, LORETO CAMACHO, VICTORIANO CANETE, DOMINADOR
94
P. CANTILLO, FRUCTUSO P. CARBAJOSA, VICTORINO S. CARLOS,
VICTOR CARLOS, GEORGE M. CASSION, JAIME S. CASTAÑARES,
FLAVIANO C. CASTAÑARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA,
SR., CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO,
CESAR CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A.
CRESENCIO, ALEX CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO M.
DADULA, ROMEO L. DALDE, ZACARIAS DAMBAAN, ELISEO DAPROZA,
VIRGILIO P. DAWAL, TESIFREDO I. DE TOMAS, GAMALLER P. DEANG,
CARMELINO P. DEANG, DIOSDADO P. DEANG, DOMINGO A. DEANG,
FELIPE R. DEANG, JR., JULIETO S. DELA CRUZ, ELIEZER R. DELA
TORRE, JEFFREY R. DELA TORRE, RAUL DEMONTEVERDE, FELIPE P.
DENOLAN, RUBENCIO P. DENOY, RODRIGO M. DERMIL, ROLANDO B.
DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO,
GREGORIO DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M.
DOMANTAY, LEO S. DONATO, DOMINADOR L. DOSADO, NESTOR
DUMALAG, FREDDIE DURAN, SR., MARIO C. ECHIVERE, AQUILLO M.
EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS, EFRAIM ENGLIS,
ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D. ENTECOSA,
AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A.
ESPAÑOLA, EULOGIO M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO
D. FERNANDO, GREGORIO S. FERNANDO, VICENTE P. FERRER,
MARCELO T. FLOR, ANTONIO M. FLORES, REDENTOR T. FLOREZA,
NORBERTO J. FUENTES, RICARDO C. GABUTAN, PEDRO D.V. GALEOS,
ARNULFO F. GALEOS, EDGARDO V. GARCESA, BERNARDO P. GENTOBA,
EDUARDO P. GENTOBA, VICTORIO B. GIDO, ROLANDO V. GIMENA,
EARLWIN L. GINGOYO, ERNESTO GOLEZ, JUANITO G. GONZAGA,
ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M. GUSTO,
ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO,
CLAUDIO HIPOLITO, TORIBIO S. ILLUSORIO, TEODURO G. IMPANG, JR.,
GIL A. JALBUNA, HERMIE L. JALICO, ARMANDO B. JAMERLAN,
NARCISO JAPAY, LIBURO C. JAVINAS, ALEJANDO S. JIMENEZ,
FEDERICO T. JUCAR, NAPOLEON T. JUMALON, OSCAR JUNSAY,
ANASTACIO D. LABANA, CARLOS C. LABAY, AVELINO L. LAFORTEZA,
LOE LAGUMBAY, NORBETO D. LAMPERNIS, ROLANDO J. LAS PEÑAS,
ISMAEL LASDOCE, RENOLO L. LEBRILLA, CAMILO G. LEDRES,
ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON
LOS BAÑEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA,
RODOLFO C. LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA,
JR., JUANITO A. MACALISANG, TEOTIMO L. MADULIN, JOSEPH D.
MAGALLON, PEDRO P. MAGLASANG, MARIO G. MALAGAMBA, JAIME B.
MAMARADLO, PANFILO A. MANADA, SR., RICARDO S. MANDANI,
CONCHITA MANDANI, ALBERTO T. MANGGA, ALEJANDRO A.
MANSANES, RUFINO T. MANSANES, EUTIQUIO P. MANSANES, ALCIO P.
MARATAS, AGAPITO D. MARQUEZ, RICARDO R. MASIGLAT, DENDERIA
MATABANG, ARNELO N. MATILLANO, HERNANI C. MEJORADA,
ROSITA MENDOZA, GREGORIO R. MESA, RENATO N. MILLADO,
ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P.
MONDIA, JUANITO P. MONDIA, RICARDO MONTAÑO, RAUL T.
MONTEJO, ROGELIO MUNAR, RODOLFO E. MUÑEZ, CRESENCIO

NARCISO, PANFILO C. NARCISO, BRICS P. NECOR, MOISES P. NICOLAS,
NEMESIO G. NICOLAS, ALFREDO NOFIEL, FELIX T. NOVENA, MARCELO
P. OBTIAL, SR., TEODORO B. OCRETO, BIBIANO C. ODI, ALFREDO M.
OPERIO, TEOTISTO B. OPON, IZRO M. ORACION, ALAN E. ORANAS,
ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J. PADILLA,
NELSON G. PADIOS, SR., FRANCISCO G. PAGUNTALAN, RENE B.
PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO, NOLITO
C. PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q.
PEDAZO, EDGAR M. PEÑARANDA, ILUMINIDO B. PERACULLO,
ANTONIO C. PEREZ, DOMINGO PEREZ, OSCAR C. PLEÑOS, ANTONIETO
POLANCOS, SERAFIN G. PRIETO, ZENAIDA PROVIDO, FERNANDO Y.
PROVIDO, ERNESTO QUERO, ELEAZAR QUIJARDO, WILLIAM U.
QUINTOY, LAURO QUISTADIO, ROGELIO RABADON, MARCELINO M.
RELIZAN, RAUL A. REYES, OCTAVIO F. REYES, EDDIE M. RINCOR,
EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C. ROMANCA,
JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO, ROMEO
L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN B. SALIGONAN,
VICTORINO SALOMON, GENEROSO M. SALONGKONG, RODOLFO E.
SALVANI, JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES A.
SAMELIN, GEORGE SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S.
SARMIENTO, CIRILO SAYAANG, JARLO SAYSON, LEONCIO
SERDONCILLO, RODOLFO C. SERRANO, NESTOR G. SEVILLA, SIMEON
F. SIMBA, CATALINO S. SIMTIM, SERAFIN T. SINSUANGCO, EDUARDO
A. SOLA, VICTORINO M. SOLOMON, JAIME B. SUFICIENCIA, LYNDON
SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO L. SUMAJIT, PEDRO A.
SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY, MANUEL T.
SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD,
EUFROCINO A. TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T.
TAMASE, ERNESTO TARRE, MAGNO E. TATOY, AVELINO TAYAPAD,
SAMUEL S. TERRADO, APOLINARIO B. TICO, ORLANDO TINACO,
ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M. TORREGOSA,
ISABELO TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD,
JACINTO UDAL, RICARDO M. URBANO, ERNESTO G. VAFLOR,
FILOMENO E. VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL,
WALTER VILLAFAÑE, DANTE VILLALVA, PERIGRINO P. VILLARAN,
JESUS L. VILLARBA, ELEAZAR D. VILLARBA, JENNY T. VILLAVA,
HENRY C. VILLEGAS, DELFIN C. WALOG, RODOLFO YAMBAO, EDGAR A.
YARE, MANSUETO M. YBERA, EDUARDO G. YUMANG, HENRY R.
YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N. ZABALA, and
GRACIANO ZAMORA, respondents.
[G.R. No. 126654. May 30, 2011.]
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA,
ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO
AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO, MARCELINO
ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA, GREGOTIO
APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS, JERSON
95
ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR,
DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL,
MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO,
CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO
BRINA, LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA,
RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A. CAINDOC,
CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R. CAPAROSO,
DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F.
COLLAMAT, BERNARDO M. COMPENDIO, CORNELIO COSTILLAS,
ENERIO R. DAGAME, FELIMON DEBUMA, JR., RICADO C. DEIPARIME,
GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ,
QUINTINO DISIPULO, JR., CESAR G. DONAYRE, JOSE DULABAY, JAIRO
DUQUIZA, ANTONIO ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG,
JAIME FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO GONZAGA,
ROLANDO GONZALES, MODESTO M. GODELOSAO, HECTOR GUMBAN,
CAMILO HINAG, LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO
INTOD, OLEGARIO IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO
JARGUE, ROLANDO A. LABASON, ROLANDO LACNO, VIRGILIO A.
LADURA, CONSTANCIO M. LAGURA, FRANCISCO LAMBAN, ENRIQUE
LAQUERO, LUCIO B. LASACA, SISINO LAURDEN, VIVENCIO
LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO
LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD,
DIOSDADO MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G.
MALINAO, CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R.
MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO MONTAJES,
CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS,
EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO NASAKA,
TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P. OLOY, DOROTEO S.
OMBRETE, TEOFILIO OMOSURA, MIGUEL ORALO, SUSANTO C. OTANA,
JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS, CATALINO C. PANA,
ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION PENOS,
PEDRO PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO
QUIBOL, JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS,
MAMERTO RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN,
ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G.
SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO SIVA,
PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO,
RENATO TAYCO, CONRADO TECSON, AGAPITO TECSON, ROMAN E.
TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA, HERMONEGES
TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO B. TURCAL,
VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, petitioners, vs. THE
HON. ROMEO D. MARASIGAN, Presiding Judge of Regional Trial Court,
Branch 16, Davao City, SHELL OIL CO., DOW CHEMICAL CO.,
OCCIDENTAL CHEMICAL CORP., STANDARD FRUIT CO., STANDARD
FRUIT & STEAMSHIP CO., DOLE FOOD CO., INC., DOLE FRESH FRUIT
CO., DEL MONTE FRESH PRODUCE N.A., DEL MONTE TROPICAL FRUIT
CO., CHIQUITA BRANDS INTERNATIONAL, INC. and CHIQUITA BRANDS,
INC., respondents.
 96

[G.R. No. 127856. May 30, 2011.] TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO
TIRO, PASTOR T. TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA,
VICENTE VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and
DEL MONTE FRESH PRODUCE N.A. and DEL MONTE TROPICAL FRUIT SAMUEL M. VILLEGAS, respondents.
CO., petitioners, vs. THE REGIONAL TRIAL COURT OF DAVAO CITY,
BRANCHES 16 AND 13, CORNELIO ABELLA, JR., IRENEO AGABATU,
PRUDENCIO ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA,
[G.R. No. 128398. May 30, 2011.]
DOMINGO ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO
AMORADO, MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R.
ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO, BONIFACIO L.
CHIQUITA BRANDS, INC., and CHIQUITA BRANDS INTERNATIONAL,
ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY,
INC., petitioners, vs. HON. ANITA ALFELOR-ALAGABAN, in her capacity as
JULIAN J. BAHALLA, REYNALDO BAHAYA, ANTONIO L. BALDAGO,
Presiding Judge of the Regional Trial Court, Davao City, Branch 13,
CESAR N. BALTAZAR, DOMINADO A. BARING, ANTIPAS A. BATINGAL,
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA,
MARCIANO NATINGAL, MARINO BIBANCO, LEANDRO BILIRAN,
ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO
MARGARITO BLANCO, CATALINO BONGO, MELCHOR BRIGOLE,
AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO, MARCELINO
ELISEO BRINA, ROBERTO BRINA, LUIS BUGHAO, EDUARDO L.
ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA, GREGOTIO
BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE, RICARADO C.
APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS, JERSON
CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR., PEDRITO
ASUAL, SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA,
CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO M.
REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR,
CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M.
DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO NATINGAL,
COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON
MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO,
DEBUMA, JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE
CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO
G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR G.
BRINA, LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA,
DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO,
RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A. CAINDOC,
ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R. CAPAROSO,
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M.
COLLAMAT, BERNARDO M. COMPENDIO, CORNELIO COSTILLAS,
GODELOSAO, HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC,
ENERIO R. DAGAME, FELIMON DEBUMA, JR., RICADO C. DEIPARIME,
SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA,
GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ,
DOMINGO B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
QUINTINO DISIPULO, JR., CESAR G. DONAYRE, JOSE DULABAY, JAIRO
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA,
DUQUIZA, ANTONIO ENGBINO, ALFREDO ESPINOSA, ALONZO FAILOG,
FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO
JAIME FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
LAURDEN, VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P.
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO GONZAGA,
LAYAO, MARDENIO LAYAO, NEMENCIO C. LINAO, PEDRO LOCION,
ROLANDO GONZALES, MODESTO M. GODELOSAO, HECTOR GUMBAN,
ENERIO LOOD, DIOSDADO MADATE, RAMON MAGDOSA, NILO
CAMILO HINAG, LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO
MAGLINTE, MARINO G. MALINAO, CARLITO MANACAP, AURELIO A.
INTOD, OLEGARIO IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO
MARO, CRISOSTOMO R. MIJARES, CESAR MONAPCO, SILVANO
JARGUE, ROLANDO A. LABASON, ROLANDO LACNO, VIRGILIO A.
MONCANO, EMILIO MONTAJES, CESAR B. MONTERO, CLEMENTE
LADURA, CONSTANCIO M. LAGURA, FRANCISCO LAMBAN, ENRIQUE
NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN, JUANITO B.
LAQUERO, LUCIO B. LASACA, SISINO LAURDEN, VIVENCIO
NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M. OLORVIDA,
LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO
CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA,
LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD,
MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA,
DIOSDADO MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G.
ALFREDO P. PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL,
MALINAO, CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R.
BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO PILAGO, ROMEO
MIJARES, CESAR MONAPCO, SILVANO MONCANO, EMILIO MONTAJES,
PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL,
CESAR B. MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS,
MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
EMELIANO C. NAPITAN, JUANITO B. NARON, JR., LUCIO NASAKA,
REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE,
TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P. OLOY, DOROTEO S.
GLICERIO V. ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA,
OMBRETE, TEOFILIO OMOSURA, MIGUEL ORALO, SUSANTO C. OTANA,
SILVERIO SILANGAN, ROBERTO SIVA, PACITA SUYMAN, CANILO
JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS, CATALINO C. PANA,
TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO TAYCO,
ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION PENOS,
CONRADO TECSON, AGAPITO TECSON, ROMAN E. TEJERO, ALFREDO

PEDRO PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO
QUIBOL, JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO RAMOS,
MAMERTO RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN,
ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G.
SABINO, MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO SIVA,
PACITA SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO,
RENATO TAYCO, CONRADO TECSON, AGAPITO TECSON, ROMAN E.
TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA, HERMONEGES
TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO B. TURCAL,
VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, respondents.
DECISION
LEONARDO-DE CASTRO, J p:
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45
of the Rules of Court, which arose out of two civil cases that were filed in different courts but
whose factual background and issues are closely intertwined.
The petitions in G.R. Nos. 125078 1 and 125598 2 both assail the Order 3 dated
May 20, 1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil
Case No. 5617. The said Order decreed the dismissal of the case in view of the perceived lack
of jurisdiction of the RTC over the subject matter of the complaint. The petition in G.R. No.
125598 also challenges the Orders dated June 4, 1996 4 and July 9, 1996, 5 which held that
the RTC of General Santos City no longer had jurisdiction to proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos.
126654, 6 127856, 7 and 128398 8 seek the reversal of the Order 9 dated October 1, 1996
of the RTC of Davao City, Branch 16, in Civil Case No. 24,251-96, which also dismissed the
case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the
Resolutions dated February 10, 1997, 10 April 28, 1997 11 and March 10, 1999. 12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state
courts by citizens of twelve foreign countries, including the Philippines. The thousands of
plaintiffs sought damages for injuries they allegedly sustained from their exposure
to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while working
on farms in 23 foreign countries. The cases were eventually transferred to, and consolidated
in, the Federal District Court for the Southern District of Texas, Houston Division. The cases
therein that involved plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v.
Shell Oil Co., et al.," which was docketed as Civil Action No. H-94-1359, and "Juan Ramon
97
Valdez, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action No. H-95-1356. The
defendants in the consolidated cases prayed for the dismissal of all the actions under the
doctrine of forum non conveniens. DEScaT
In a Memorandum and Order dated July 11, 1995, the Federal District Court
conditionally granted the defendants' motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days
after the entry of this Memorandum and Order provided that defendants and
third- and fourth-party defendants have:
(1) participated in expedited discovery in the United States . . .;
(2) either waived or accepted service of process and waived any
other jurisdictional defense within 40 days after the entry
of this Memorandum and Order in any action commenced
by a plaintiff in these actions in his home country or the
country in which his injury occurred. Any plaintiff desiring
to bring such an action will do so within 30 days after the
entry of this Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and
Order any limitations-based defense that has matured
since the commencement of these actions in the courts of
Texas;
(4) stipulated within 40 days after the entry of this Memorandum
and Order that any discovery conducted during the
pendency of these actions may be used in any foreign
proceeding to the same extent as if it had been conducted
in proceedings initiated there; and
(5) submitted within 40 days after the entry of this Memorandum
and Order an agreement binding them to satisfy any final
judgment rendered in favor of plaintiffs by a foreign court.
xxx xxx xxx
Notwithstanding the dismissals that may result from this Memorandum and
Order, in the event that the highest court of any foreign country finally affirms
the dismissal for lack of jurisdiction of an action commenced by a plaintiff in
these actions in his home country or the country in which he was injured, that
plaintiff may return to this court and, upon proper motion, the court will
resume jurisdiction over the action as if the case had never been dismissed
for [forum non conveniens]. 13

Civil Case No. 5617 before the RTC of General Santos City and G.R.
Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from
General Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et
al.) filed a Joint Complaint 14 in the RTC of General Santos City on August 10, 1995. The
case was docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co.
(SHELL); Dow Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food
Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co.
(hereinafter collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands
International, Inc. (CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte Tropical Fruit
Co. (hereinafter collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.;
Ameribrom, Inc.; Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The
aforementioned defendants are hereinafter collectively referred to as defendant companies.)
NAVIDA, et al., prayed for the payment of damages in view of the illnesses and
injuries to the reproductive systems which they allegedly suffered because of their exposure
to DBCP. They claimed, among others, that they were exposed to this chemical during the
early 1970's up to the early 1980's when they used the same in the banana plantations where
they worked at; and/or when they resided within the agricultural area where such chemical
was used. NAVIDA, et al., claimed that their illnesses and injuries were due to the fault or
negligence of each of the defendant companies in that they produced, sold and/or otherwise
put into the stream of commerce DBCP-containing products. According to NAVIDA, et
al., they were allowed to be exposed to the said products, which the defendant companies
knew, or ought to have known, were highly injurious to the former's health and well-being.
Instead of answering the complaint, most of the defendant companies respectively
filed their Motions for Bill of Particulars. 15 During the pendency of the motions, on March
13, 1996, NAVIDA, et al., filed an Amended Joint Complaint, 16 excluding Dead Sea
Bromine Co., Ltd., Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp.
as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of
Particulars. 17 On May 15, 1996, DOW filed an Answer with Counterclaim. 18
On May 20, 1996, without resolving the motions filed by the parties, the RTC of
General Santos City issued an Order dismissing the complaint. First, the trial court
determined that it did not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES
FILED WITH THE REGIONAL TRIAL
COURT SHOULD BE DISMISSED FOR
LACK OF JURISDICTION
xxx xxx xxx
98
The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place
abroad and had occurred outside and beyond the territorial domain of the
Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
through sale or other disposition, resulting in their becoming part of the
stream of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely
particular to the present case, consisted of activity or course of conduct
engaged in by foreign defendants outside Philippine territory, hence, outside
and beyond the jurisdiction of Philippine Courts, including the present
Regional Trial Court.19
Second, the RTC of General Santos City declared that the tort alleged by NAVIDA, et
al., in their complaint is a tort category that is not recognized in Philippine laws. Said the trial
court: IcaEDC
THE TORT ASSERTED IN THE
PRESENT COMPLAINT AGAINST
DEFENDANT FOREIGN COMPANIES IS
NOT WITHIN THE SUBJECT MATTER
JURISDICTION OF THE REGIONAL
TRIAL COURT, BECAUSE IT IS NOT A
TORT CATEGORY WITHIN THE
PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present
complaint is product liability tort. When the averments in the present
complaint are examined in terms of the particular categories of tort
recognized in the Philippine Civil Code, it becomes stark clear that such
averments describe and identify the category of specific tort known as product
liability tort. This is necessarily so, because it is the product manufactured by
defendant foreign companies, which is asserted to be the proximate cause of
the damages sustained by the plaintiff workers, and the liability of the
defendant foreign companies, is premised on being the manufacturer of the
pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the
present case, if and only if the Civil Code of the Philippines, or a suppletory
special law prescribes a product liability tort, inclusive of and comprehending
the specific tort described in the complaint of the plaintiff workers. 20

Third, the RTC of General Santos City adjudged that NAVIDA, et al., were coerced
into submitting their case to the Philippine courts, viz.:
FILING OF CASES IN THE PHILIPPINES
— COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant
action, but rather were coerced to do so, merely to comply with the U.S.
District Court's Order dated July 11, 1995, and in order to keep open to the
plaintiffs the opportunity to return to the U.S. District Court. 21
Fourth, the trial court ascribed little significance to the voluntary appearance of the
defendant companies therein, thus:
THE DEFENDANTS' SUBMISSION TO
JURISDICTION IS CONDITIONAL AS IT
IS ILLUSORY
Defendants have appointed their agents authorized to accept service of
summons/processes in the Philippines pursuant to the agreement in the U.S.
court that defendants will voluntarily submit to the jurisdiction of this court.
While it is true that this court acquires jurisdiction over persons of the
defendants through their voluntary appearance, it appears that such
voluntary appearance of the defendants in this case is conditional. Thus in the
"Defendants' Amended Agreement Regarding Conditions of Dismissal for
Forum Non Conveniens" (Annex to the Complaint) filed with the U.S. District
Court, defendants declared that "(t)he authority of each designated
representative to accept service of process will become effective upon final
dismissal of these actions by the Court". The decision of the U.S. District
Court dismissing the case is not yet final and executory since both the
plaintiffs and defendants appealed therefrom (par. 3(h), 3(i), Amended
Complaint). Consequently, since the authority of the agent of the defendants
in the Philippines is conditioned on the final adjudication of the case pending
with the U.S. courts, the acquisition of jurisdiction by this court over the
persons of the defendants is also conditional. . . . .
The appointment of agents by the defendants, being subject to a suspensive
condition, thus produces no legal effect and is ineffective at the moment. 22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing
the case in the Philippine courts violated the rules on forum shopping and litis pendencia. The
trial court expounded:
THE JURISDICTION FROWNS UPON
AND PROHIBITS FORUM SHOPPING
99
This court frowns upon the fact that the parties herein are both vigorously
pursuing their appeal of the decision of the U.S. District court dismissing the
case filed thereat. To allow the parties to litigate in this court when they are
actively pursuing the same cases in another forum, violates the rule on 'forum
shopping' so abhorred in this jurisdiction. . . . .
xxx xxx xxx
THE FILING OF THE CASE IN U.S.
DIVESTED THIS COURT OF ITS OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own
jurisdiction. This court takes note that the U.S. District Court did not decline
jurisdiction over the cause of action. The case was dismissed on the ground
of forum non conveniens, which is really a matter of venue. By taking
cognizance of the case, the U.S. District Court has, in essence, concurrent
jurisdiction with this court over the subject matter of this case. It is settled
that initial acquisition of jurisdiction divests another of its own
jurisdiction. . . . .
xxx xxx xxx
THIS CASE IS BARRED BY THE RULE
OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties, same
rights and interests, as in this case. There exists litis pendencia since there are
two cases involving the same parties and interests. The court would like to
emphasize that in accordance with the rule on litis pendencia . . .; the
subsequent case must be dismissed. Applying the foregoing [precept] to the
case-at-bar, this court concludes that since the case between the parties in the
U.S. is still pending, then this case is barred by the rule on "litis
pendencia." 23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with these
proceedings, would be violative of the constitutional provision on the Bill of
Rights guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III,
Constitution). The court has no other choice. To insist on further proceedings
with this case, as it is now presented, might accord this court a charming
appearance. But the same insistence would actually thwart the very ends of
justice which it seeks to achieve. DcCEHI

This evaluation and action is made not on account of but rather with due
consideration to the fact that the dismissal of this case does not necessarily
deprive the parties — especially the plaintiffs — of their possible remedies.
The court is cognizant that the Federal Court may resume proceedings of that
earlier case between the herein parties involving the same acts or omissions
as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now
considered DISMISSED. 24
On June 4, 1996, the RTC of General Santos City likewise issued
an Order, 25 dismissing DOW's Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration 26 of
the RTC Order dated May 20, 1996, while DOW filed a motion for reconsideration 27 of the
RTC Order dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint
Motion for Reconsideration 28 of the RTC Order dated May 20, 1996.
In an Order 29 dated July 9, 1996, the RTC of General Santos City declared that it
had already lost its jurisdiction over the case as it took into consideration the Manifestation
of the counsel of NAVIDA, et al., which stated that the latter had already filed a petition for
review on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration 30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order
to assail the RTC Order dated May 20, 1996, which was docketed asG.R. No. 125078.
The RTC of General Santos City then issued an Order 31 dated August 14, 1996,
which merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no
longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review
on Certiorari, 32 challenging the orders of the RTC of General Santos City dated May 20,
1996, June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City
erred in ruling that it has no jurisdiction over the subject matter of the case as well as the
persons of the defendant companies.
In a Resolution 33 dated October 7, 1996, this Court resolved to consolidate G.R.
No. 125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari, 34 which sought the reversal
of the RTC Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was
docketed as G.R. No. 126018. In a Resolution 35 dated November 13, 1996, the Court
dismissed the aforesaid petition for failure of CHIQUITA to show that the RTC committed
grave abuse of discretion. CHIQUITA filed a Motion for Reconsideration, 36 but the same
was denied through a Resolution 37dated January 27, 1997.
100
Civil Case No. 24,251-96 before the
RTC of Davao City and G.R. Nos.
126654, 127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE,
DEL MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155
plaintiffs from Davao City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs
(the petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.) amended their
Joint-Complaint on May 21, 1996. 38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers
in the banana plantation and/or as residents near the said plantation, they were made to use
and/or were exposed to nematocides, which contained the chemical DBCP. According to
ABELLA, et al., such exposure resulted in "serious and permanent injuries to their health,
including, but not limited to, sterility and severe injuries to their reproductive
capacities." 39 ABELLA, et al.,claimed that the defendant companies manufactured,
produced, sold, distributed, used, and/or made available in commerce, DBCP without
warning the users of its hazardous effects on health, and without providing instructions on its
proper use and application, which the defendant companies knew or ought to have known,
had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective motions for
bill of particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed
their respective Answers dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated
October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint for:
Damages filed by the plaintiffs against the defendants Shell Oil Company,
DOW Chemicals Company, Occidental Chemical Corporation, Standard Fruit
Company, Standard Fruit and Steamship, DOLE Food Company, DOLE Fresh
Fruit Company, Chiquita Brands, Inc., Chiquita Brands International, Del
Monte Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all foreign
corporations with Philippine Representatives, the Court, as correctly pointed
out by one of the defendants, is convinced that plaintiffs "would have this
Honorable Court dismiss the case to pave the way for their getting an
affirmance by the Supreme Court" (#10 of Defendants' Del Monte Fresh
Produce, N.A. and Del Monte Tropical Fruit Co., Reply to Opposition dated
July 22, 1996). Consider these:
1) In the original Joint Complaint, plaintiffs state that: defendants
have no properties in the Philippines; they have no agents as well
(par. 18); plaintiffs are suing the defendants for tortuous acts
committed by these foreign corporations on their respective
countries, as plaintiffs, after having elected to sue in the place of

defendants' residence, are now compelled by a decision of a Texas
District Court to file cases under torts in this jurisdiction for causes
of actions which occurred abroad (par. 19); a petition was filed by
same plaintiffs against same defendants in the Courts of Texas, USA,
plaintiffs seeking for payment of damages based on negligence, strict
liability, conspiracy and international tort theories (par. 27); upon
defendants' Motion to Dismiss on Forum non [conveniens], said
petition was provisionally dismissed on condition that these cases be
filed in the Philippines or before 11 August 1995 (Philippine date;
Should the Philippine Courts refuse or deny jurisdiction, the U. S.
Courts will reassume jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the
Federal District Court issued a Memorandum and Order
conditionally dismissing several of the consolidated actions
including those filed by the Filipino complainants. One of the
conditions imposed was for the plaintiffs to file actions in their home
countries or the countries in which they were injured . . . .
Notwithstanding, the Memorandum and [O]rder further provided
that should the highest court of any foreign country affirm the
dismissal for lack of jurisdictions over these actions filed by the
plaintiffs in their home countries [or] the countries where they were
injured, the said plaintiffs may return to that court and, upon proper
motion, the Court will resume jurisdiction as if the case had never
been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely on the
basis of the above but because it shares the opinion of legal experts given in
the interview made by the Inquirer in its Special report "Pesticide Cause Mass
Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995
opinion said: The Philippines should be an inconvenient
forum to file this kind of damage suit against foreign
companies since the causes of action alleged in the petition
do not exist under Philippine laws. There has been no
decided case in Philippine Jurisprudence awarding to
those adversely affected by DBCP. This means there is no
available evidence which will prove and disprove the
relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham Sarmiento opined that
while a class suit is allowed in the Philippines the device
has been employed strictly. Mass sterility will not qualify as
a class suit injury within the contemplation of Philippine
statute.
101
3. Retired High Court Justice Rodolfo Nocom stated that there is
simply an absence of doctrine here that permits these
causes to be heard. No product liability ever filed or tried
here.
Case ordered dismissed. 40
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996
by ABELLA, et al., assails before this Court the above-quoted order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No.
24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject
matter of the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover
the acts complained of and to support their claims for damages. CaEIST
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of
legal luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis.
According to them, their cause of action is based on quasi-delict under Article 2176 of the
Civil Code.They also maintain that the absence of jurisprudence regarding the award of
damages in favor of those adversely affected by the DBCP does not preclude them from
presenting evidence to prove their allegations that their exposure to DBCP caused their
sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for
reconsideration of the Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE
also filed its motion for reconsideration, which contained an additional motion for the
inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order 41 dated December 2, 1996,
voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13
of the RTC of Davao City.
In an Order 42 dated December 16, 1996, the RTC of Davao City affirmed the Order
dated October 1, 1996, and denied the respective motions for reconsideration filed by
defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning
the Orders dated October 1, 1996 and December 16, 1996 of the RTC of Davao City. This case
was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the
case motu proprio as it acquired jurisdiction over the subject matter of the case as well as over
the persons of the defendant companies which voluntarily appeared before it. CHIQUITA also
claims that the RTC of Davao City cannot dismiss the case simply on the basis of opinions of
alleged legal experts appearing in a newspaper article.

Initially, this Court in its Resolution 43 dated July 28, 1997, dismissed the petition
filed by CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA,
however, filed a motion for reconsideration, which was granted by this Court in the
Resolution 44 dated October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before
this Court assailing the above-mentioned orders of the RTC of Davao City. Its petition was
docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No.
24,251-96, as defined under the law and that the said court already obtained jurisdiction over
its person by its voluntary appearance and the filing of a motion for bill of particulars and,
later, an answer to the complaint. According to DEL MONTE, the RTC of Davao City,
therefore, acted beyond its authority when it dismissed the case motu proprio or without any
motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this
Court consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop
DOW, OCCIDENTAL, and SHELL
as Party-Respondents filed by
NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court
a Consolidated Motion (to Drop Party-Respondents). 45 The plaintiff claimants alleged that
they had amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July
1997. This settlement agreement was evidenced by facsimiles of the "Compromise Settlement,
Indemnity, and Hold Harmless Agreement," which were attached to the said motion.
Pursuant to said agreement, the plaintiff claimants sought to withdraw their petitions as
against DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the
settlement entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties, this
Court, in a Resolution dated June 22, 1998, 46 required all the parties to submit their
respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998; 47 SHELL asked to be
excused from the filing of a memorandum alleging that it had already executed a compromise
agreement with the plaintiff claimants. 48 DOLE filed its Memorandum on October 12,
1998 49 while DEL MONTE filed on October 13, 1998. 50 NAVIDA, et al., and ABELLA, et
102
al., filed their Consolidated Memorandum on February 3, 1999; 51 and DOW and
OCCIDENTAL jointly filed a Memorandum on December 23, 1999. 52
The Motion to Withdraw Petition for
Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for
Review in G.R. No. 125598, 53 explaining that the said petition "is already moot and academic
and no longer presents a justiciable controversy" since they have already entered into an
amicable settlement with NAVIDA, et al.DOW and OCCIDENTAL added that they have fully
complied with their obligations set forth in the 1997 Compromise Agreements.
DOLE filed its Manifestation dated September 6, 2004, 54 interposing no objection
to the withdrawal of the petition, and further stating that they maintain their position that
DOW and OCCIDENTAL, as well as other settling defendant companies, should be retained
as defendants for purposes of prosecuting the cross-claims of DOLE, in the event that the
complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004, 55 stating that
they agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has
become moot and academic because Civil Case No. 5617 had already been amicably settled by
the parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw
Petition for Review Filed by Petitioners in G.R. No. 125598, 56 stating that it has no
objections to the withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No.
125598.
In a Resolution 57 dated October 11, 2004, this Court granted, among others, the
motion to withdraw petition for review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented
the following issues for our consideration:
IN REFUTATION
I. THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.
a) The court did not simply dismiss the case because it was filed in
bad faith with petitioners intending to have the same
dismissed and returned to the Texas court.
b) The court dismissed the case because it was convinced that it did
not have jurisdiction.
IN SUPPORT OF THE PETITION

II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
MATTER OF THE CASE.
a. The acts complained of occurred within Philippine territory.
b. Art. 2176 of the Civil Code of the Philippines is broad enough to
cover the acts complained of.
c. Assumption of jurisdiction by the U.S. District Court over
petitioner[s'] claims did not divest Philippine [c]ourts of
jurisdiction over the same. cICHTD
d. The Compromise Agreement and the subsequent Consolidated
Motion to Drop Party Respondents Dow, Occidental and
Shell does not unjustifiably prejudice remaining
respondents Dole, Del Monte and Chiquita. 58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of
General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and
24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft
of jurisdiction to determine and resolve the above-stated cases. All parties contend that the
RTC of General Santos City and the RTC of Davao City have jurisdiction over the action for
damages, specifically for approximately P2.7 million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Specifically, the use
of and exposure to DBCP that was manufactured, distributed or otherwise put into the stream
of commerce by defendant companies happened in the Philippines. Said fact allegedly
constitutes reasonable basis for our courts to assume jurisdiction over the case. Furthermore,
NAVIDA, et al.,and ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary
Title of the Civil Code, as well as Article 2176 thereof, are broad enough to cover their claim
for damages. Thus, NAVIDA, et al., and ABELLA, et al., pray that the respective rulings of the
RTC of General Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96
be reversed and that the said cases be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute
a quasi-delict, which falls under Article 2176 of the Civil Code.In addition, DOLE states that
if there were no actionable wrongs committed under Philippine law, the courts a quo should
have dismissed the civil cases on the ground that the Amended Joint-Complaints of
NAVIDA, et al., and ABELLA, et al., stated no cause of action against the defendant
companies. DOLE also argues that if indeed there is no positive law defining the alleged acts
of defendant companies as actionable wrong, Article 9 of the Civil Code dictates that a judge
may not refuse to render a decision on the ground of insufficiency of the law. The court may
103
still resolve the case, applying the customs of the place and, in the absence thereof, the general
principles of law. DOLE posits that the Philippines is the situs of the tortious acts allegedly
committed by defendant companies as NAVIDA, et al., and ABELLA, et al., point to their
alleged exposure to DBCP which occurred in the Philippines, as the cause of the sterility and
other reproductive system problems that they allegedly suffered. Finally, DOLE adds that the
RTC of Davao City gravely erred in relying upon newspaper reports in dismissing Civil Case
No. 24,251-96 given that newspaper articles are hearsay and without any evidentiary value.
Likewise, the alleged legal opinions cited in the newspaper reports were taken judicial notice
of, without any notice to the parties. DOLE, however, opines that the dismissal of Civil Case
Nos. 5617 and 24,251-96 was proper, given that plaintiff claimants merely prosecuted the
cases with the sole intent of securing a dismissal of the actions for the purpose of convincing
the U.S. Federal District Court to re-assume jurisdiction over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the
subject matter of the cases filed before them. The Amended Joint-Complaints sought
approximately P2.7 million in damages for each plaintiff claimant, which amount falls within
the jurisdiction of the RTC. CHIQUITA avers that the pertinent matter is the place of the
alleged exposure to DBCP, not the place of manufacture, packaging, distribution, sale, etc., of
the said chemical. This is in consonance with the lex loci delicti commisi theory in
determining the situs of a tort, which states that the law of the place where the alleged wrong
was committed will govern the action. CHIQUITA and the other defendant companies also
submitted themselves to the jurisdiction of the RTC by making voluntary appearances and
seeking for affirmative reliefs during the course of the proceedings. None of the defendant
companies ever objected to the exercise of jurisdiction by the courts a quo over their persons.
CHIQUITA, thus, prays for the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of
General Santos City and the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction
over Civil Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by
law and is determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the plaintiffs are entitled to all or some of the claims asserted
therein. 59 Once vested by law, on a particular court or body, the jurisdiction over the subject
matter or nature of the action cannot be dislodged by anybody other than by the legislature
through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases
under Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxx xxx xxx
(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs or the value of
the property in controversy exceeds One hundred thousand pesos

(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the abovementioned items exceeds Two hundred thousand pesos
(P200,000.00). 60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2. The exclusion of the term "damages of whatever kind" in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129,
as amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one of the causes
of action, the amount of such claim shall be considered in determining the
jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded
Amended Joint-Complaints filed before the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that after
hearing, judgment be rendered in favor of the plaintiffs ordering the
defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million
Five Hundred Thousand Pesos (P1,500,000.00);
b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four
Hundred Thousand Pesos (P400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six
Hundred Thousand Pesos (P600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand
Pesos (P200,000.00); and
e) TO PAY THE COSTS of the suit. 61
From the foregoing, it is clear that the claim for damages is the main cause of action
and that the total amount sought in the complaints is approximately P2.7 million for each of
the plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases filed in
General Santos City and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall
within the purview of the definition of the jurisdiction of the RTC under Batas Pambansa Blg.
129.EaIDAT
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
104
4. The Defendants manufactured, sold, distributed, used, AND/OR MADE
AVAILABLE IN COMMERCE nematocides containing the chemical
dibromochloropropane, commonly known as DBCP. THE CHEMICAL WAS
USED AGAINST the parasite known as the nematode, which plagued banana
plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT,
DBCP not only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON
THE HEALTH OF PERSONS EXPOSED TO IT AFFECTING the human
reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early
1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such exposure,
the plaintiffs suffered serious and permanent injuries TO THEIR HEALTH,
including, but not limited to, STERILITY and severe injuries to their
reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN
THAT THEY MANUFACTURED, produced, sold, and/or USED
DBCP and/or otherwise, PUT THE SAME into the stream of
commerce, WITHOUT INFORMING THE USERS OF ITS
HAZARDOUS EFFECTS ON HEALTH AND/OR WITHOUT
INSTRUCTIONS ON ITS PROPER USE AND APPLICATION. THEY
allowed Plaintiffs to be exposed to, DBCP-containing materials which THEY
knew, or in the exercise of ordinary care and prudence ought to have known,
were highly harmful and injurious to the Plaintiffs' health and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM OF
COMMERCE were negligent OR AT FAULT in that they, AMONG OTHERS:
a. Failed to adequately warn Plaintiffs of the dangerous
characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to what should be
reasonably safe and sufficient clothing and proper
protective equipment and appliances, if any, to protect
plaintiffs from the harmful effects of exposure to DBCP, or
to cause their subsidiaries or affiliates to do so;
c. Failed to place adequate warnings, in a language understandable
to the worker, on containers of DBCP-containing materials
to warn of the dangers to health of coming into contact with
DBCP, or to cause their subsidiaries or affiliates to do so;

d. Failed to take reasonable precaution or to exercise reasonable care
to publish, adopt and enforce a safety plan and a safe
method of handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these products for sale, or to
cause their subsidiaries or affiliates to do so; and
f. Failed to reveal the results of tests conducted on DBCP to each
plaintiff, governmental agencies and the public, or to cause
their subsidiaries or affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT or
negligence of defendants Standard Fruit Company, Dole Fresh Fruit
Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita
Brands International, Inc. in that they failed to exercise reasonable care to
prevent each plaintiff's harmful exposure to DBCP-containing products which
defendants knew or should have known were hazardous to each plaintiff in
that they, AMONG OTHERS:
a. Failed to adequately supervise and instruct Plaintiffs in the safe
and proper application of DBCP-containing products;
b. Failed to implement proper methods and techniques of
application of said products, or to cause such to be
implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to said
products or to cause them to be so warned;
d. Failed to test said products for adverse health effects, or to cause
said products to be tested;
e. Concealed from Plaintiffs information concerning the observed
effects of said products on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said products;
g. Failed to place adequate labels on containers of said products to
warn them of the damages of said products; and
h. Failed to use substitute nematocides for said products or to cause
such substitutes to [be] used. 62 (Emphasis supplied and
words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et
al., and ABELLA, et al., attribute to defendant companies certain acts and/or omissions
which led to their exposure to nematocides containing the chemical DBCP. According to
105
NAVIDA, et al., and ABELLA, et al., such exposure to the said chemical caused ill effects,
injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff
claimants — a quasi-delict, which under the Civil Code is defined as an act, or omission
which causes damage to another, there being fault or negligence. To be precise, Article 2176
of the Civil Code provides:
Article 2176.Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and
ABELLA, et al., point to the acts and/or omissions of the defendant companies in
manufacturing, producing, selling, using, and/or otherwise putting into the stream of
commerce, nematocides which contain DBCP, "without informing the users of its hazardous
effects on health and/or without instructions on its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals, 64 this Court has always reminded that
jurisdiction of the court over the subject matter of the action is determined by the allegations
of the complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all
or some of the claims asserted therein. The jurisdiction of the court cannot be made to depend
upon the defenses set up in the answer or upon the motion to dismiss, for otherwise, the
question of jurisdiction would almost entirely depend upon the defendants. What determines
the jurisdiction of the court is the nature of the action pleaded as appearing from the
allegations in the complaint. The averments therein and the character of the relief sought are
the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies
constitute a quasi-delict which is the basis for the claim for damages filed by NAVIDA, et
al., and ABELLA, et al., with individual claims of approximately P2.7 million for each plaintiff
claimant, which obviously falls within the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et
al., allegedly suffered resulted from their exposure to DBCP while they were employed in the
banana plantations located in the Philippines or while they were residing within the
agricultural areas also located in the Philippines. The factual allegations in the Amended
Joint-Complaints all point to their cause of action, which undeniably occurred in the
Philippines. The RTC of General Santos City and the RTC of Davao City obviously have
reasonable basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases
on the ground of lack of jurisdiction on the mistaken assumption that the cause of action
narrated by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred outside
and beyond the territorial boundaries of the Philippines, i.e., "the manufacture of the
pesticides, their packaging in containers, their distribution through sale or other disposition,

resulting in their becoming part of the stream of commerce," 65 and, hence, outside the
jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of
the act complained of, would be determinative of jurisdiction and venue for trial of cases.
In personal civil actions, such as claims for payment of damages, the Rules of Court allow the
action to be commenced and tried in the appropriate court, where any of the plaintiffs or
defendants resides, or in the case of a non-resident defendant, where he may be found, at the
election of the plaintiff. 66 HCDAcE
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et
al., and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all
residents of the Philippines, either in General Santos City or in Davao City. Second, the
specific areas where they were allegedly exposed to the chemical DBCP are within the
territorial jurisdiction of the courts a quo wherein NAVIDA, et al., and ABELLA, et
al., initially filed their claims for damages. Third, the testimonial and documentary evidence
from important witnesses, such as doctors, co-workers, family members and other members
of the community, would be easier to gather in the Philippines. Considering the great number
of plaintiff claimants involved in this case, it is not far-fetched to assume that voluminous
records are involved in the presentation of evidence to support the claim of plaintiff claimants.
Thus, these additional factors, coupled with the fact that the alleged cause of action of
NAVIDA, et al., and ABELLA, et al., against the defendant companies for damages occurred
in the Philippines, demonstrate that, apart from the RTC of General Santos City and the
RTC of Davao City having jurisdiction over the subject matter in the instant civil cases, they
are, indeed, the convenient fora for trying these cases. 67
The RTC of General Santos City
and the RTC of Davao City validly
acquired jurisdiction over the
persons of all the defendant
companies
It is well to stress again that none of the parties claims that the courts a quo lack
jurisdiction over the cases filed before them. All parties are one in asserting that the RTC of
General Santos City and the RTC of Davao City have validly acquired jurisdiction over the
persons of the defendant companies in the action below. All parties voluntarily,
unconditionally and knowingly appeared and submitted themselves to the jurisdiction of the
courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he
defendant's voluntary appearance in the action shall be equivalent to service of summons." In
this connection, all the defendant companies designated and authorized representatives to
106
receive summons and to represent them in the proceedings before the courts a quo. All the
defendant companies submitted themselves to the jurisdiction of the courts a quo by making
several voluntary appearances, by praying for various affirmative reliefs, and by actively
participating during the course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan, 68 held that jurisdiction over the person of the defendant in civil cases is
acquired either by his voluntary appearance in court and his submission to its authority or by
service of summons. Furthermore, the active participation of a party in the proceedings is
tantamount to an invocation of the court's jurisdiction and a willingness to abide by the
resolution of the case, and will bar said party from later on impugning the court or body's
jurisdiction. 69
Thus, the RTC of General Santos City and the RTC of Davao City have validly
acquired jurisdiction over the persons of the defendant companies, as well as over the subject
matter of the instant case. What is more, this jurisdiction, which has been acquired and has
been vested on the courts a quo, continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the "exercise
of jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the
decision rendered therein. Accordingly, where a court has jurisdiction over the persons of the
defendants and the subject matter, as in the case of the courts a quo, the decision on all
questions arising therefrom is but an exercise of such jurisdiction. Any error that the court
may commit in the exercise of its jurisdiction is merely an error of judgment, which does not
affect its authority to decide the case, much less divest the court of the jurisdiction over the
case. 70
Plaintiffs' purported bad faith in
filing the subject civil cases in
Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad
faith merely to procure a dismissal of the same and to allow them to return to the forum of
their choice, this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are
unsupported by evidence on record. This Court does not rule on allegations which are
manifestly conjectural, as these may not exist at all. This Court deals with facts, not fancies;
on realities, not appearances. When this Court acts on appearances instead of realities, justice
and law will be short-lived. 71 This is especially true with respect to allegations of bad faith,
in line with the basic rule that good faith is always presumed and bad faith must be proved. 72
In sum, considering the fact that the RTC of General Santos City and the RTC of
Davao City have jurisdiction over the subject matter of the amended complaints filed by

NAVIDA, et al., and ABELLA, et al., and that the courts a quo have also acquired jurisdiction
over the persons of all the defendant companies, it therefore, behooves this Court to order the
remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC
of Davao City, respectively.
On the issue of the dropping of
DOW, OCCIDENTAL and SHELL
as respondents in view of their
amicable settlement with NAVIDA,
et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL
and SHELL be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil
Case Nos. 5617 and 24,251-96. The non-settling defendants allegedly manifested that they
intended to file their cross-claims against their co-defendants who entered into compromise
agreements. NAVIDA, et al., and ABELLA, et al., argue that the non-settling defendants did
not aver any cross-claim in their answers to the complaint and that they subsequently sought
to amend their answers to plead their cross-claims only after the settlement between the
plaintiff claimants and DOW, OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and
ABELLA, et al., therefore, assert that the cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of
NAVIDA, et al., and ABELLA, et al., since the latter's Amended Complaints cited several
instances of tortious conduct that were allegedly committed jointly and severally by the
defendant companies. This solidary obligation on the part of all the defendants allegedly gives
any co-defendant the statutory right to proceed against the other co-defendants for the
payment of their respective shares. Should the subject motion of NAVIDA, et al., and
ABELLA, et al., be granted, and the Court subsequently orders the remand of the action to the
trial court for continuance, CHIQUITA and DOLE would allegedly be deprived of their right
to prosecute their cross-claims against their other co-defendants. Moreover, a third party
complaint or a separate trial, according to CHIQUITA, would only unduly delay and
complicate the proceedings. CHIQUITA and DOLE similarly insist that the motion of
NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL and OCCIDENTAL as respondents
in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective
memoranda, DEL MONTE filed a Manifestation and Motion 73 before the Court, stating that
similar settlement agreements were allegedly executed by the plaintiff claimants with DEL
MONTE and CHIQUITA sometime in 1999. Purportedly included in the agreements were
Civil Case Nos. 5617 and 24,251-96. Attached to the said manifestation were copies of the
Compromise Settlement, Indemnity, and Hold Harmless Agreement between DEL MONTE
and the settling plaintiffs, as well as the Release in Full executed by the latter. 74DEL MONTE
specified therein that there were "only four (4) plaintiffs in Civil Case No. 5617 who are
claiming against the Del Monte parties" 75 and that the latter have executed amicable
settlements which completely satisfied any claims against DEL MONTE. In accordance with
107
the alleged compromise agreements with the four plaintiffs in Civil Case No. 5617, DEL
MONTE sought the dismissal of the Amended Joint-Complaint in the said civil case.
Furthermore, in view of the above settlement agreements with ABELLA, et al., in Civil Case
No. 24,251-96, DEL MONTE stated that it no longer wished to pursue its petition in G.R. No.
127856 and accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the
RTC of General Santos City and the RTC of Davao City, respectively, the Court deems that the
Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et
al., should likewise be referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced." Like any other contract, an extrajudicial compromise agreement is not excepted
from rules and principles of a contract. It is a consensual contract, perfected by mere consent,
the latter being manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. 76 Judicial approval is not required for its
perfection. 77 A compromise has upon the parties the effect and authority ofres
judicata 78 and this holds true even if the agreement has not been judicially approved. 79 In
addition, as a binding contract, a compromise agreement determines the rights and
obligations of only the parties to it. 80
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC
of Davao City should first receive in evidence and examine all of the alleged compromise
settlements involved in the cases at bar to determine the propriety of dropping any party as a
defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that
was filed by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and
SHELL in view of the latter companies' alleged compromise agreements with the plaintiff
claimants. However, in subsequent developments, DEL MONTE and CHIQUITA supposedly
reached their own amicable settlements with the plaintiff claimants, but DEL MONTE
qualified that it entered into a settlement agreement with only four of the plaintiff claimants
in Civil Case No. 5617. These four plaintiff claimants were allegedly the only ones who were
asserting claims against DEL MONTE. However, the said allegation of DEL MONTE was
simply stipulated in their Compromise Settlement, Indemnity, and Hold Harmless
Agreement and its truth could not be verified with certainty based on the records elevated to
this Court. Significantly, the 336 plaintiff claimants in Civil Case No. 5617 jointly filed a
complaint without individually specifying their claims against DEL MONTE or any of the
other defendant companies. Furthermore, not one plaintiff claimant filed a motion for the
removal of either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and
24,251-96. IaDcTC
There is, thus, a primary need to establish who the specific parties to the alleged
compromise agreements are, as well as their corresponding rights and obligations therein.
For this purpose, the courts a quo may require the presentation of additional evidence from
the parties. Thereafter, on the basis of the records of the cases at bar and the additional

evidence submitted by the parties, if any, the trial courts can then determine who among the
defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the same quasi-delict is solidary. A solidary obligation is one in
which each of the debtors is liable for the entire obligation, and each of the creditors is entitled
to demand the satisfaction of the whole obligation from any or all of the debtors. 81
In solidary obligations, the paying debtor's right of reimbursement is provided for
under Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already made.
If the payment is made before the debt is due, no interest for the intervening
period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share shall be
borne by all his co-debtors, in proportion to the debt of each.
The above right of reimbursement of a paying debtor, and the corresponding liability
of the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to
answer for an obligation actually delivers payment to the creditor. As succinctly held
in Lapanday Agricultural Development Corporation v. Court of Appeals, 82 "[p]ayment,
which means not only the delivery of money but also the performance, in any other manner,
of the obligation, is the operative fact which will entitle either of the solidary debtors to seek
reimbursement for the share which corresponds to each of the [other] debtors."83
In the cases at bar, there is no right of reimbursement to speak of as yet.
A trial on the merits must necessarily be conducted first in order to establish
whether or not defendant companies are liable for the claims for damages filed
by the plaintiff claimants, which would necessarily give rise to an obligation to
pay on the part of the defendants.
At the point in time where the proceedings below were prematurely halted, no cross-
claims have been interposed by any defendant against another defendant. If and when such a
cross-claim is made by a non-settling defendant against a settling defendant, it is within the
discretion of the trial court to determine the propriety of allowing such a cross-claim and if
the settling defendant must remain a party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of
Appeals, 84 the Court had the occasion to state that "where there are, along with the parties
to the compromise, other persons involved in the litigation who have not taken part in
concluding the compromise agreement but are adversely affected or feel prejudiced thereby,
108
should not be precluded from invoking in the same proceedings an adequate relief
therefor." 85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales, 86 the Court
upheld the ruling of the trial court that, in a joint and solidary obligation, the paying debtor
may file a third-party complaint and/or a cross-claim to enforce his right to seek contribution
from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above
situation, if proper, is not affected by the compromise agreements allegedly entered into by
NAVIDA, et al., and ABELLA, et al., with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review
on certiorari in G.R. Nos. 125078, 126654, and 128398. We REVERSE and SET ASIDEthe
Order dated May 20, 1996 of the Regional Trial Court of General Santos City, Branch 37, in
Civil Case No. 5617, and the Order dated October 1, 1996 of the Regional Trial Court of Davao
City, Branch 16, and its subsequent Order dated December 16, 1996 denying reconsideration
in Civil Case No. 24,251-96, and REMAND the records of this case to the respective Regional
Trial Courts of origin for further and appropriate proceedings in line with the ruling herein
that said courts have jurisdiction over the subject matter of the amended complaints in Civil
Case Nos. 5617 and 24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition
in G.R. No. 127856. In view of the previous grant of the motion to withdraw the petition in
G.R. No. 125598, both G.R. Nos. 127856 and 125598 are considered CLOSED AND
TERMINATED.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Velasco, Jr., Peralta * and Perez, JJ., concur.
||| (Navida v. Dizon, G.R. No. 125078, 125598, 126654, 127856 & 128398, [May 30, 2011], 664
PHIL 283-336)

THIRD DIVISION
[G.R. No. 149177. November 23, 2007.]
KAZUHIRO HASEGAWA and NIPPON ENGINEERING
CONSULTANTS CO., LTD., petitioners, vs. MINORU
KITAMURA, respondent.
DECISION
NACHURA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the April 18, 2001 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July
25, 2001 Resolution 2 denying the motion for reconsideration thereof.
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and management support in the infrastructure projects of
foreign governments, 3 entered into an Independent Contractor Agreement (ICA) with
respondent Minoru Kitamura, a Japanese national permanently residing in the Philippines. 4 The
agreement provides that respondent was to extend professional services to Nippon for a year
starting on April 1, 1999. 5 Nippon then assigned respondent to work as the project manager of
the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's
consultancy contract with the Philippine Government. 6
When the STAR Project was near completion, the Department of Public Works and Highways
(DPWH) engaged the consultancy services of Nippon, on January 28, 2000, this time for the
detailed engineering and construction supervision of the Bongabon-Baler Road Improvement
(BBRI) Project. 7 Respondent was named as the project manager in the contract's Appendix 3.1. 8
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its
International Division, informed respondent that the company had no more intention of
automatically renewing his ICA. His services would be engaged by the company only up to the
substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's
expiry. 9 cDSAEI
Threatened with impending unemployment, respondent, through his lawyer, requested a
negotiation conference and demanded that he be assigned to the BBRI project. Nippon insisted
that respondent's contract was for a fixed term that had already expired, and refused to negotiate
for the renewal of the ICA. 10
As he was not able to generate a positive response from the petitioners, respondent consequently
initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the
Regional Trial Court of Lipa City. 11
109
For their part, petitioners, contending that the ICA had been perfected in Japan and executed by
and between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They
asserted that the claim for improper pre-termination of respondent's ICA could only be heard and
ventilated in the proper courts of Japan following the principles of lex loci celebrationis and lex
contractus. 12
In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of
Kitamura by a certain Y. Kotake as project manager of the BBRI Project. 13
On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank 14 that matters
connected with the performance of contracts are regulated by the law prevailing at the place of
performance, 15 denied the motion to dismiss. 16 The trial court subsequently denied petitioners'
motion for reconsideration, 17prompting them to file with the appellate court, on August 14, 2000,
their first Petition for Certiorari under Rule 65 [docketed as CA-G.R. SP No. 60205]. 18 On
August 23, 2000, the CA resolved to dismiss the petition on procedural grounds — for lack of
statement of material dates and for insufficient verification and certification against forum
shopping. 19 An Entry of Judgment was later issued by the appellate court on September 20,
2000. 20
Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within
the reglementary period, a second Petition for Certiorari under Rule 65 already stating therein
the material dates and attaching thereto the proper verification and certification. This second
petition, which substantially raised the same issues as those in the first, was docketed as CA-G.R.
SP No. 60827. 21 DTESIA
Ruling on the merits of the second petition, the appellate court rendered the assailed April 18,
2001 Decision 22 finding no grave abuse of discretion in the trial court's denial of the motion to
dismiss. The CA ruled, among others, that the principle of lex loci celebrationis was not applicable
to the case, because nowhere in the pleadings was the validity of the written agreement put in issue.
The CA thus declared that the trial court was correct in applying instead the principle oflex loci
solutionis. 23
Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25,
2001 Resolution. 24
Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant
Petition for Review on Certiorari 25 imputing the following errors to the appellate court:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE
FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO
JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE
LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE
PRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENT
DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS. 26
The pivotal question that this Court is called upon to resolve is whether the subject matter
jurisdiction of Philippine courts in civil cases for specific performance and damages involving
contracts executed outside the country by foreign nationals may be assailed on the principles of lex
loci celebrationis, lex contractus, the "state of the most significant relationship rule," or forum
non conveniens.
However, before ruling on this issue, we must first dispose of the procedural matters raised by the
respondent.
Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has
already barred the filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally
raising the same issues as those in the first one) and the instant petition for review
thereof. cDEICH
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's
defective certification of non-forum shopping, it was a dismissal without prejudice. 27 The same
holds true in the CA's dismissal of the said case due to defects in the formal requirement of
verification 28 and in the other requirement in Rule 46 of the Rules of Court on the statement of
the material dates. 29 The dismissal being without prejudice, petitioners can re-file the petition,
or file a second petition attaching thereto the appropriate verification and certification — as they,
in fact did — and stating therein the material dates, within the prescribed period 30 in Section 4,
Rule 65 of the said Rules. 31
The dismissal of a case without prejudice signifies the absence of a decision on the merits and
leaves the parties free to litigate the matter in a subsequent action as though the dismissed action
had not been commenced. In other words, the termination of a case not on the merits does not bar
another action involving the same parties, on the same subject matter and theory. 32
Necessarily, because the said dismissal is without prejudice and has no res judicata effect, and
even if petitioners still indicated in the verification and certification of the
second certiorari petition that the first had already been dismissed on procedural
grounds, 33 petitioners are no longer required by the Rules to indicate in their certification of non-
forum shopping in the instant petition for review of the second certiorari petition, the status of
the aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum
shopping about any event that will not constitute res judicata and litis pendentia, as in the present
case, is not a fatal defect. It will not warrant the dismissal and nullification of the entire
proceedings, considering that the evils sought to be prevented by the said certificate are no longer
present. 34
The Court also finds no merit in respondent's contention that petitioner Hasegawa is only
authorized to verify and certify, on behalf of Nippon, the certioraripetition filed with the CA and
not the instant petition. True, the Authorization 35 dated September 4, 2000, which is attached
110
to the second certiorari petition and which is also attached to the instant petition for review, is
limited in scope — its wordings indicate that Hasegawa is given the authority to sign for and act
on behalf of the company only in the petition filed with the appellate court, and that authority
cannot extend to the instant petition for review. 36 In a plethora of cases, however, this Court has
liberally applied the Rules or even suspended its application whenever a satisfactory explanation
and a subsequent fulfillment of the requirements have been made. 37 Given that petitioners
herein sufficiently explained their misgivings on this point and appended to their Reply 38 an
updated Authorization 39 for Hasegawa to act on behalf of the company in the instant petition,
the Court finds the same as sufficient compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in the verification and
certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized
to act on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even
the subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief
executive officer, not by the company's board of directors. In not a few cases, we have ruled that
corporate powers are exercised by the board of directors; thus, no person, not even its officers, can
bind the corporation, in the absence of authority from the board. 40 Considering that Hasegawa
verified and certified the petition only on his behalf and not on behalf of the other petitioner, the
petition has to be denied pursuant to Loquias v. Office of the Ombudsman. 41 Substantial
compliance will not suffice in a matter that demands strict observance of the Rules. 42While
technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are
intended to effect the proper and orderly disposition of cases and effectively prevent the clogging
of court dockets. 43 CSTDIE
Further, the Court has observed that petitioners incorrectly filed a Rule 65 petition to question the
trial court's denial of their motion to dismiss. It is a well-established rule that an order denying a
motion to dismiss is interlocutory, and cannot be the subject of the extraordinary petition
for certiorari or mandamus. The appropriate recourse is to file an answer and to interpose as
defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision,
to elevate the entire case by appeal in due course. 44 While there are recognized exceptions to this
rule, 45 petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction
to hear and resolve the civil case for specific performance and damages filed by the respondent.
The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by Japanese
nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts
have no substantial relationship to the parties 46 following the [state of the] most significant
relationship rule in Private International Law. 47
The Court notes that petitioners adopted an additional but different theory when they elevated the
case to the appellate court. In the Motion to Dismiss 48 filed with the trial court, petitioners never
contended that the RTC is an inconvenient forum. They merely argued that the applicable law
which will determine the validity or invalidity of respondent's claim is that of Japan, following the

principles of lex loci celebrationis and lex contractus. 49 While not abandoning this stance in
their petition before the appellate court, petitioners on certiorari significantly invoked the defense
of forum non conveniens. 50 On petition for review before this Court, petitioners dropped their
other arguments, maintained the forum non conveniens defense, and introduced their new
argument that the applicable principle is the [state of the] most significant relationship rule. 51
Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change
in theory, as explained in Philippine Ports Authority v. City of Iloilo. 52 We only pointed out
petitioners' inconstancy in their arguments to emphasize their incorrect assertion of conflict of
laws principles.
To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved:
jurisdiction, choice of law, and recognition and enforcement of judgments. Corresponding to these
phases are the following questions: (1) Where can or should litigation be initiated? (2) Which law
will the court apply? and (3) Where can the resulting judgment be enforced? 53 HDTISa
Analytically, jurisdiction and choice of law are two distinct concepts. 54 Jurisdiction considers
whether it is fair to cause a defendant to travel to this state; choice of law asks the further question
whether the application of a substantive law which will determine the merits of the case is fair to
both parties. The power to exercise jurisdiction does not automatically give a state constitutional
authority to apply forum law. While jurisdiction and the choice of the lex fori will often coincide,
the "minimum contacts" for one do not always provide the necessary "significant contacts" for the
other. 55 The question of whether the law of a state can be applied to a transaction is different
from the question of whether the courts of that state have jurisdiction to enter a judgment. 56
In this case, only the first phase is at issue — jurisdiction. Jurisdiction, however, has various
aspects. For a court to validly exercise its power to adjudicate a controversy, it must have
jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over the
subject matter, over the issues of the case and, in cases involving property, over the res or the thing
which is the subject of the litigation. 57 In assailing the trial court's jurisdiction herein, petitioners
are actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign
authority which establishes and organizes the court. It is given only by law and in the manner
prescribed by law. 58 It is further determined by the allegations of the complaint irrespective of
whether the plaintiff is entitled to all or some of the claims asserted therein. 59 To succeed in its
motion for the dismissal of an action for lack of jurisdiction over the subject matter of the
claim, 60 the movant must show that the court or tribunal cannot act on the matter submitted to
it because no law grants it the power to adjudicate the claims. 61
In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not
properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No.
00-0264 for specific performance and damages is one not capable of pecuniary estimation and is
properly cognizable by the RTC of Lipa City. 62 What they rather raise as grounds to question
subject matter jurisdiction are the principles of lex loci celebrationis and lex contractus,and the
"state of the most significant relationship rule."
111
The Court finds the invocation of these grounds unsound. DCASIT
Lex loci celebrationis relates to the "law of the place of the ceremony" 63 or the law of the place
where a contract is made. 64 The doctrine of lex contractus or lex loci contractus means the "law
of the place where a contract is executed or to be performed." 65 It controls the nature,
construction, and validity of the contract66 and it may pertain to the law voluntarily agreed upon
by the parties or the law intended by them either expressly or implicitly. 67 Under the "state of the
most significant relationship rule," to ascertain what state law to apply to a dispute, the court
should determine which state has the most substantial connection to the occurrence and the
parties. In a case involving a contract, the court should consider where the contract was made, was
negotiated, was to be performed, and the domicile, place of business, or place of incorporation of
the parties. 68 This rule takes into account several contacts and evaluates them according to their
relative importance with respect to the particular issue to be resolved. 69
Since these three principles in conflict of laws make reference to the law applicable to a dispute,
they are rules proper for the second phase, the choice of law. 70They determine which state's law
is to be applied in resolving the substantive issues of a conflicts problem. 71 Necessarily, as the
only issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also
not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they
have not yet pointed out any conflict between the laws of Japan and ours. Before determining
which law should apply, first there should exist a conflict of laws situation requiring the application
of the conflict of laws rules. 72Also, when the law of a foreign country is invoked to provide the
proper rules for the solution of a case, the existence of such law must be pleaded and proved.73
It should be noted that when a conflicts case, one involving a foreign element, is brought before a
court or administrative agency, there are three alternatives open to the latter in disposing of it: (1)
dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the
case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of some other State or
States. 74 The court's power to hear cases and controversies is derived from the Constitution and
the laws. While it may choose to recognize laws of foreign nations, the court is not limited by
foreign sovereign law short of treaties or other formal agreements, even in matters regarding rights
provided by foreign sovereigns. 75 EASIHa
Neither can the other ground raised, forum non conveniens, 76 be used to deprive the trial court
of its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1,
Rule 16 of the Rules of Court does not include it as a ground. 77 Second, whether a suit should be
entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. 78 In this case, the RTC
decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle
requires a factual determination; hence, this conflicts principle is more properly considered a
matter of defense. 79
 112

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed
by respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate,
the trial and appellate courts correctly denied the petitioners' motion to dismiss.
WHEREFORE, premises considered, the petition for review on certiorari is DENIED.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Chico-Nazario and Reyes, JJ., concur.
||| (Hasegawa v. Kitamura, G.R. No. 149177, [November 23, 2007], 563 PHIL 572-590)

FIRST DIVISION
[G.R. No. 136804. February 19, 2003.]
MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL
BANK, petitioners, vs. RAFAEL MA. GUERRERO, respondent.
SYNOPSIS
Respondent filed a complaint for damages against petitioner bank for illegally withholding taxes
charged against interest on his checking account, returning a check due to signature verification
problems, and unauthorized conversion of his account. In answer thereto, petitioner alleged that
the issue should be limited to actual damages as respondent's account is governed by the New York
law. In support thereof, petitioner presented the authenticated affidavit of New York Attorney
Alyssa Walden. Thus, petitioner filed a motion for partial summary judgment. ATICcS
Petitioner's motion for summary judgment is not proper as it does not demonstrate that
respondent's claims are sham, fictitious, or contrived. There can be no summary judgment where
material allegations of the pleadings are in dispute and can be resolved only by trial on the merits.
On the alleged foreign law applicable, the Walden affidavit and attached US court decisions therein
are not proper substantiation thereof for failure to comply with Sec. 24, Rule 132 on proof of
foreign laws, records, and decisions.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMARY JUDGMENT; WHEN PROPER. — A court
may grant a summary judgment to settle expeditiously a case if, on motion of either party, there
appears from the pleadings, depositions, admissions, and affidavits that no important issues of
fact are involved, except the amount of damages. In such event, the moving party is entitled to a
judgment as a matter of law. In a motion for summary judgment, the crucial question is: are the
issues raised in the pleadings genuine, sham or fictitious, as shown by affidavits, depositions or
admissions accompanying the motion? A genuine issue means an issue of fact which calls for the
presentation of evidence as distinguished from an issue which is fictitious or contrived so as not
to constitute a genuine issue for trial. There can be no summary judgment where questions of fact
are in issue or where material allegations of the pleadings are in dispute.
2. ID.; EVIDENCE; PROOF OF OFFICIAL RECORDS; ON FOREIGN LAWS. — The resolution of
whether a foreign law allows only the recovery of actual damages is a question of fact as far as the
trial court is concerned since foreign laws do not prove themselves in our courts. Foreign laws are
not a matter of judicial notice. Like any other fact, they must be alleged and proven. Certainly, the
113
conflicting allegations as to whether New York law or Philippine law applies to Guerrero's claims
present a clear dispute on material allegations which can be resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal
may be proved by (1) an official publication thereof or (2) a copy attested by the officer having
the legal custody thereof. Such official publication or copy must be accompanied, if the record is
not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof.
The certificate may be issued by any of the authorized Philippine embassy or consular officials
stationed in the foreign country in which the record is kept, and authenticated by the seal of his
office. The attestation must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be under the official seal of the attesting officer.
3. ID.; ID.; ID.; ID.; EXCEPTIONS; NOT APPLICABLE IN CASE AT BAR. — Certain exceptions
to Rule 24 of Rule 132 were recognized in Asiavest Limited v. Court of Appeals. The Bank, however,
cannot rely thereon to support its cause. These cases involved attorneys testifying in open court
during the trial in the Philippines and quoting the particular foreign laws sought to be established.
On the other hand, the Walden affidavit was taken abroad ex parte and the affiant never testified
in open court. The Walden affidavit cannot be considered as proof of New York law on damages
not only because it is self-serving but also because it does not state the specific New York law on
damages.
4. ID.; CIVIL PROCEDURE; PLEADINGS; OPPOSING AFFIDAVIT; NOT MANDATORY. — The
Bank makes much of Guerrero's failure to submit an opposing affidavit to the Walden affidavit.
However, the pertinent provision of Section 3, Rule 35 of the old Rules of Court did not make the
submission of an opposing affidavit mandatory. Thus: the adverse party prior to the day of
hearing may serve opposing affidavits. It is axiomatic that the term "may" as used in remedial
law, is only permissive and not mandatory. Guerrero cannot be said to have admitted the
averments in the Bank's motion for partial summary judgment and the Walden affidavit just
because he failed to file an opposing affidavit. Guerrero opposed the motion for partial summary
judgment, although he did not present an opposing affidavit. Guerrero may not have presented an
opposing affidavit, as there was no need for one, because the Walden affidavit did not establish
what the Bank intended to prove. Certainly, Guerrero did not admit, expressly or impliedly, the
veracity of the statements in the Walden affidavit. The Bank still had the burden of proving New
York law and jurisprudence even if Guerrero did not present an opposing affidavit. As the party
moving for summary judgment, the Bank has the burden of clearly demonstrating the absence of
any genuine issue of fact and that any doubt as to the existence of such issue is resolved against
the movant. DaIACS
DECISION
CARPIO, J p:
The Case
This is a petition for review under Rule 45 of the Rules of Court to set aside the Court of
Appeals 1 Decision of August 24, 1998 and Resolution of December 14, 1998 in CA-G.R. SP No.
42310 2 affirming the trial court's denial of petitioners' motion for partial summary judgment.

The Antecedents
On May 17, 1994, respondent Rafael Ma. Guerrero ("Guerrero" for brevity) filed a complaint for
damages against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank ("the Bank"
for brevity) with the Regional Trial Court of Manila ("RTC" for brevity). Guerrero sought payment
of damages allegedly for (1) illegally withheld taxes charged against interests on his checking
account with the Bank; (2) a returned check worth US$18,000.00 due to signature verification
problems; and (3) unauthorized conversion of his account. Guerrero amended his complaint on
April 18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by stipulation Guerrero's
account is governed by New York law and this law does not permit any of Guerrero's claims except
actual damages. Subsequently, the Bank filed a Motion for Partial Summary Judgment seeking the
dismissal of Guerrero's claims for consequential, nominal, temperate, moral and exemplary
damages as well as attorney's fees on the same ground alleged in its Answer. The Bank contended
that the trial should be limited to the issue of actual damages. Guerrero opposed the motion.
The affidavit of Alyssa Walden, a New York attorney, supported the Bank's Motion for Partial
Summary Judgment. Alyssa Walden's affidavit ("Walden affidavit" for brevity) stated that
Guerrero's New York bank account stipulated that the governing law is New York law and that this
law bars all of Guerrero's claims except actual damages. The Philippine Consular Office in New
York authenticated the Walden affidavit. STHAaD
The RTC denied the Bank's Motion for Partial Summary Judgment and its motion for
reconsideration on March 6, 1996 and July 17, 1996, respectively. The Bank filed a petition
for certiorari and prohibition with the Court of Appeals assailing the RTC Orders. In its Decision
dated August 24, 1998, the Court of Appeals dismissed the petition. On December 14, 1998, the
Court of Appeals denied the Bank's motion for reconsideration.
Hence, the instant petition.
The Ruling of the Court of Appeals
The Court of Appeals sustained the RTC orders denying the motion for partial summary judgment.
The Court of Appeals ruled that the Walden affidavit does not serve as proof of the New York law
and jurisprudence relied on by the Bank to support its motion. The Court of Appeals considered
the New York law and jurisprudence as public documents defined in Section 19, Rule 132 of the
Rules on Evidence, as follows:
"SEC. 19. Classes of Documents. — For the purpose of their presentation in
evidence, documents are either public or private.
Public documents are:
(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and
public officers, whether of the Philippines, or of a foreign
country;
114
xxx xxx xxx."
The Court of Appeals opined that the following procedure outlined in Section 24, Rule 132 should
be followed in proving foreign law:
"SEC. 24. Proof of official record. — The record of public documents referred
to in paragraph (a) of Section 19, when admissible for any purpose, may be
evidenced by an official publication thereof or by a copy attested by the officer
having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has
the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul
general, consul, vice consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in which the record
is kept, and authenticated by the seal of his office."
The Court of Appeals likewise rejected the Bank's argument that Section 2, Rule 34 of the old Rules
of Court allows the Bank to move with the supporting Walden affidavit for partial summary
judgment in its favor. The Court of Appeals clarified that the Walden affidavit is not the supporting
affidavit referred to in Section 2, Rule 34 that would prove the lack of genuine issue between the
parties. The Court of Appeals concluded that even if the Walden affidavit is used for purposes of
summary judgment, the Bank must still comply with the procedure prescribed by the Rules to
prove the foreign law.
The Issues
The Bank contends that the Court of Appeals committed reversible error in —
". . . HOLDING THAT [THE BANK'S] PROOF OF FACTS TO SUPPORT ITS
MOTION FOR SUMMARY JUDGMENT MAY NOT BE GIVEN BY
AFFIDAVIT;
. . . HOLDING THAT [THE BANK'S] AFFIDAVIT, WHICH PROVES
FOREIGN LAW AS A FACT, IS "HEARSAY" AND THEREBY 'CANNOT
SERVE AS PROOF OF THE NEW YORK LAW RELIED UPON BY
PETITIONERS IN THEIR MOTION FOR SUMMARY JUDGMENT . . . .'" 3
First, the Bank argues that in moving for partial summary judgment, it was entitled to use the
Walden affidavit to prove that the stipulated foreign law bars the claims for consequential, moral,
temperate, nominal and exemplary damages and attorney's fees. Consequently, outright dismissal
by summary judgment of these claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the requirements of Rule 35 on
summary judgments and those of a trial on the merits in considering the Walden affidavit as
"hearsay." The Bank points out that the Walden affidavit is not hearsay since Rule 35 expressly
permits the use of affidavits.

Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit to refute the
facts contained in the Walden affidavit, he failed to show the need for a trial on his claims for
damages other than actual.
The Court's Ruling
The petition is devoid of merit.
The Bank filed its motion for partial summary judgment pursuant to Section 2, Rule 34 of the old
Rules of Court which reads:
"Section 2. Summary judgment for defending party. — A party against whom
a claim, counterclaim, or cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting affidavits for a summary
judgment in his favor as to all or any part thereof."
A court may grant a summary judgment to settle expeditiously a case if, on motion of either party,
there appears from the pleadings, depositions, admissions, and affidavits that no important issues
of fact are involved, except the amount of damages. In such event, the moving party is entitled to
a judgment as a matter of law. 4
In a motion for summary judgment, the crucial question is: are the issues raised in the
pleadings genuine, sham or fictitious, as shown by affidavits, depositions or admissions
accompanying the motion? 5
A genuine issue means an issue of fact which calls for the presentation of evidence as distinguished
from an issue which is fictitious or contrived so as not to constitute a genuine issue for trial. 6
A perusal of the parties' respective pleadings would show that there are genuine issues of fact that
necessitate formal trial. Guerrero's complaint before the RTC contains a statement of the ultimate
facts on which he relies for his claim for damages. He is seeking damages for what he asserts as
"illegally withheld taxes charged against interests on his checking account with the Bank, a
returned check worth US$18,000.00 due to signature verification problems, and unauthorized
conversion of his account." In its Answer, the Bank set up its defense that the agreed foreign law
to govern their contractual relation bars the recovery of damages other than actual. Apparently,
facts are asserted in Guerrero's complaint while specific denials and affirmative defenses are set
out in the Bank's answer. aHSTID
True, the court can determine whether there are genuine issues in a case based merely on the
affidavits or counter-affidavits submitted by the parties to the court. However, as correctly ruled
by the Court of Appeals, the Bank's motion for partial summary judgment as supported by the
Walden affidavit does not demonstrate that Guerrero's claims are sham, fictitious or contrived. On
the contrary, the Walden affidavit shows that the facts and material allegations as pleaded by the
parties are disputed and there are substantial triable issues necessitating a formal trial.
There can be no summary judgment where questions of fact are in issue or where material
allegations of the pleadings are in dispute. 7 The resolution of whether a foreign law allows only
the recovery of actual damages is a question of fact as far as the trial court is concerned since
115
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) acopy attested by the officer
having the legal custody thereof. Such official publication or copy must be accompanied, if
the record is not kept in the Philippines, with a certificate that the attesting officer has the legal
custody thereof. The certificate may be issued by any of the authorized Philippine embassy or
consular officials stationed in the foreign country in which the record is kept, and authenticated
by the seal of his office. The attestation must state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may be, and must be under the official seal of the
attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v. Court of
Appeals 10 which held that:
"xxx xxx xxx:
Although it is desirable that foreign law be proved in accordance with the
above rule, however, the Supreme Court held in the case of Willamette Iron
and Steel Works v. Muzzal, that Section 41, Rule 123 (Section 25, Rule 132 of
the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law
of San Francisco, California, who quoted verbatim a section of California
Civil Code and who stated that the same was in force at the time the
obligations were contracted, as sufficient evidence to establish the existence
of said law. Accordingly, in line with this view, the Supreme Court in
the Collector of Internal Revenue v. Fisher, et al., upheld the Tax Court in
considering the pertinent law of California as proved by the respondents'
witness. In that case, the counsel for respondent "testified that as an active
member of the California Bar since 1951, he is familiar with the revenue and
taxation laws of the State of California. When asked by the lower court to
state the pertinent California law as regards exemption of intangible
personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the
California Internal and Revenue Code as published in Derring's California
Code, a publication of Bancroft-Whitney Co., Inc. And as part of his
testimony, a full quotation of the cited section was offered in evidence by
respondents." Likewise, in several naturalization cases, it was held by the
Court that evidence of the law of a foreign country on reciprocity regarding
the acquisition of citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action, if, in the light
of all the circumstances, the Court is "satisfied of the authenticity of the
written proof offered." Thus, in a number of decisions, mere authentication

of the Chinese Naturalization Law by the Chinese Consulate General of
Manila was held to be competent proof of that law." (Italics supplied)
The Bank, however, cannot rely on Willamete Iron and Steel Works v.
Muzzal or Collector of Internal Revenue v. Fisher to support its cause. These cases
involved attorneys testifying in open court during the trial in the Philippines and quoting the
particular foreign laws sought to be established. On the other hand, the Walden affidavit was taken
abroad ex parte and the affiant never testified in open court. The Walden affidavit cannot be
considered as proof of New York law on damages not only because it is self-serving but also
because it does not state the specific New York law on damages. We reproduce portions of the
Walden affidavit as follows:
"3. In New York, "[n]ominal damages are damages in name only, trivial sums
such as six cents or $1. Such damages are awarded both in tort and contract
cases when the plaintiff establishes a cause of action against the defendant,
but is unable to prove" actual damages. Dobbs, Law of Remedies, § 3.32 at
294 (1993). Since Guerrero is claiming for actual damages, he cannot ask for
nominal damages.
4. There is no concept of temperate damages in New York law. I have reviewed
Dobbs, a well-respected treatise, which does not use the phrase "temperate
damages" in its index. I have also done a computerized search for the phrase
in all published New York cases, and have found no cases that use it. I have
never heard the phrase used in American law.
5. The Uniform Commercial Code ("UCC") governs many aspects of a Bank's
relationship with its depositors. In this case, it governs Guerrero's claim
arising out of the non-payment of the $18,000 check. Guerrero claims that
this was a wrongful dishonor. However, the UCC states that "justifiable
refusal to pay or accept" as opposed to dishonor, occurs when a bank refuses
to pay a check for reasons such as a missing indorsement, a missing or
illegible signature or a forgery, § 3-510, Official Comment 2. . . . to the
Complaint, MHT returned the check because it had no signature card on . . .
and could not verify Guerrero's signature. In my opinion, consistent with the
UCC, that is a legitimate and justifiable reason not to pay.
6. Consequential damages are not available in the ordinary case of a
justifiable refusal to pay. UCC 1-106 provides that "neither consequential or
special or punitive damages may be had except as specifically provided in the
Act or by other rule of law." UCC 4-103 further provides that consequential
damages can be recovered only where there is bad faith. This is more
restrictive than the New York common law, which may allow consequential
damages in a breach of contract case (as does the UCC where there is a
wrongful dishonor).
116
7. Under New York law, requests for lost profits, damage to reputation and
mental distress are considered consequential damages. Kenford Co., Inc. v.
Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 4-5 (1989) (lost
profits); Motif Construction Corp. v. Buffalo Savings Bank, 50 A.D.2d 718,
374 N.Y.S..2d 868, 869-70 (4th Dep't 1975) damage to reputation); Dobbs,
Law of Remedies §12.4(1) at 63 (emotional distress).
8. As a matter of New York law, a claim for emotional distress cannot be
recovered for a breach of contract. Geler v. National Westminster Bank
U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y. 1991); Pitcherello v. Moray Homes,
Ltd., 150 A.D.2d 860, 540 N.Y.S.2d 387, 390 (3d Dep't 1989) Martin v.
Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dep't 1976).
Damage to reputation is also not recoverable for a contract. Motif
Construction Corp. v. Buffalo Savings Bank, 374 N.Y.S.2d at 869-70.
9. In cases where the issue is the breach of a contract to purchase stock, New
York courts will not take into consideration the performance of the stock after
the breach. Rather, damages will be based on the value of the stock at the time
of the breach, Aroneck v. Atkin, 90 A.D.2d 966, 456 N.Y.S.2d 558, 559 (4th
Dep't 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463 N.Y.S.2d 1023
(1983). TADaCH
10. Under New York law, a party can only get consequential damages if they
were the type that would naturally arise from the breach and if they were
"brought within the contemplation of parties as the probable result of the
breach at the time of or prior to contracting." Kenford Co., Inc. v. Country of
Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v.
Fargo, 223 N.Y. 32, 36 (1918).
11. Under New York law, a plaintiff is not entitled to attorneys' fees unless they
are provided by contract or statute. E.g., Geler v. National Westminster Bank,
770 F. Supp. 210, 213 (S.D.N.Y. 1991); Camatron Sewing Mach, Inc. v. F.M.
Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d 396 (1st Dep't
1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280,
281 (1st Dep't 1991). There is no statute that permits attorney's fees in a case
of this type.
12. Exemplary, or punitive damages are not allowed for a breach of contract,
even where the plaintiff claims the defendant acted with malice. Geler v.
National Westminster Bank, 770 F. Supp. 210, 215 (S.D.N.Y.
1991); Catalogue Service of . . . chester 11 v. Insurance Co. of North America,
74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637 (2d Dep't 1980); Senior
v. Manufacturers Hanover Trust Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242
(2d Dep't 1985).
13. Exemplary or punitive damages may be recovered only where it is alleged
and proven that the wrong supposedly committed by defendant amounts to a
 117

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.
Bank has the burden of clearly demonstrating the absence of any genuine issue of fact and that any
doubt as to the existence of such issue is resolved against the movant. 14
Moreover, it would have been redundant and pointless for Guerrero to submit an opposing
affidavit considering that what the Bank seeks to be opposed is the very subject matter of the
complaint. Guerrero need not file an opposing affidavit to the Walden affidavit because his
complaint itself controverts the matters set forth in the Bank's motion and the Walden affidavit. A
party should not be made to deny matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a quo correctly denied the
Bank's motion for partial summary judgment. There is a need to determine by presentation of
evidence in a regular trial if the Bank is guilty of any wrongdoing and if it is liable for damages
under the applicable laws. DTEScI
This case has been delayed long enough by the Bank's resort to a motion for partial summary
judgment. Ironically, the Bank has successfully defeated the very purpose for which summary
judgments were devised in our rules, which is, to aid parties in avoiding the expense and loss of
time involved in a trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 24, 1998 and
the Resolution dated December 14, 1998 of the Court of Appeals in CA-G.R. SP No. 42310 is
AFFIRMED.

Next, the Bank makes much of Guerrero's failure to submit an opposing affidavit to the Walden SO ORDERED.
affidavit. However, the pertinent provision of Section 3, Rule 35 of the old Rules of Court did not
Davide, Jr., C.J., Vitug and Azcuna, JJ., concur.
make the submission of an opposing affidavit mandatory, thus:
Ynares-Santiago, J., took no part
"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 ||| (Manufacturers Hanover Trust Co. v. Guerrero, G.R. No. 136804, [February 19, 2003], 445
prior to the day of hearing may serve opposing affidavits. After the hearing, PHIL 770-783)
the judgment sought shall be rendered forthwith if the pleadings, depositions
and admissions on file, together with the affidavits, show that, except as to
the amount of damages, there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law." (Italics
supplied)
It is axiomatic that the term "may" as used in remedial law, is only permissive and not
mandatory. 13
Guerrero cannot be said to have admitted the averments in the Bank's motion for partial summary
judgment and the Walden affidavit just because he failed to file an opposing affidavit. Guerrero
opposed the motion for partial summary judgment, although he did not present an opposing
affidavit. Guerrero may not have presented an opposing affidavit, as there was no need for one,
because the Walden affidavit did not establish what the Bank intended to prove. Certainly,
Guerrero did not admit, expressly or impliedly, the veracity of the statements in the Walden
affidavit. The Bank still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit. As the party moving for summary judgment, the

SECOND DIVISION
[G.R. No. 183622. February 8, 2012.]
MEROPE ENRIQUEZ VDA. DE CATALAN, petitioner, vs. LOUELLA
A. CATALAN-LEE, respondent.
RESOLUTION
SERENO, J p:
Before us is a Petition for Review assailing the Court of Appeals (CA) Decision 1 and
Resolution 2 regarding the issuance of letters of administration of the intestate estate of Orlando
B. Catalan.
The facts are as follows:
Orlando B. Catalan was a naturalized American citizen. After allegedly obtaining a divorce in the
United States from his first wife, Felicitas Amor, he contracted a second marriage with petitioner
herein.
On 18 November 2004, Orlando died intestate in the Philippines.
Thereafter, on 25 February 2005, petitioner filed with the Regional Trial Court (RTC) of Burgos,
Pangasinan a Petition for the issuance of letters of administration for her appointment as
administratrix of the intestate estate of Orlando. The case was docketed as Special Proceedings
(Spec. Proc.) No. 228.
On 3 March 2005, while Spec. Proc. No. 228 was pending, respondent Louella A. Catalan-Lee, one
of the children of Orlando from his first marriage, filed a similar petition with the RTC docketed
as Spec. Proc. No. 232.
The two cases were subsequently consolidated.
Petitioner prayed for the dismissal of Spec. Proc. No. 232 on the ground of litis
pendentia, considering that Spec. Proc. No. 228 covering the same estate was already
pending. HcaDIA
On the other hand, respondent alleged that petitioner was not considered an interested person
qualified to file a petition for the issuance of letters of administration of the estate of Orlando. In
support of her contention, respondent alleged that a criminal case for bigamy was filed against
petitioner before Branch 54 of the RTC of Alaminos, Pangasinan, and docketed as Crim. Case No.
2699-A.
118
Apparently, Felicitas Amor filed a Complaint for bigamy, alleging that petitioner contracted a
second marriage to Orlando despite having been married to one Eusebio Bristol on 12 December
1959.
On 6 August 1998, the RTC had acquitted petitioner of bigamy. 3 The trial court ruled that since
the deceased was a divorced American citizen, and since that divorce was not recognized under
Philippine jurisdiction, the marriage between him and petitioner was not valid.
Furthermore, it took note of the action for declaration of nullity then pending action with the trial
court in Dagupan City filed by Felicitas Amor against the deceased and petitioner. It considered
the pending action to be a prejudicial question in determining the guilt of petitioner for the crime
of bigamy.
Finally, the trial court found that, in the first place, petitioner had never been married to Eusebio
Bristol.
On 26 June 2006, Branch 70 of the RTC of Burgos, Pangasinan dismissed the Petition for the
issuance of letters of administration filed by petitioner and granted that of private respondent.
Contrary to its findings in Crim. Case No. 2699-A, the RTC held that the marriage between
petitioner and Eusebio Bristol was valid and subsisting when she married Orlando. Without
expounding, it reasoned further that her acquittal in the previous bigamy case was fatal to her
cause. Thus, the trial court held that petitioner was not an interested party who may file a petition
for the issuance of letters of administration. 4
After the subsequent denial of her Motion for Reconsideration, petitioner elevated the matter to
the Court of Appeals (CA) via her Petition for Certiorari, alleging grave abuse of discretion on the
part of the RTC in dismissing her Petition for the issuance of letters of administration. HCEcaT
Petitioner reiterated before the CA that the Petition filed by respondent should have been
dismissed on the ground of litis pendentia. She also insisted that, while a petition for letters of
administration may have been filed by an "uninterested person," the defect was cured by the
appearance of a real party-in-interest. Thus, she insisted that, to determine who has a better right
to administer the decedent's properties, the RTC should have first required the parties to present
their evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed Decision. First, it held that petitioner
undertook the wrong remedy. She should have instead filed a petition for review rather than a
petition for certiorari. Nevertheless, since the Petition for Certiorari was filed within the fifteen-
day reglementary period for filing a petition for review under Sec. 4 of Rule 43, the CA allowed the
Petition and continued to decide on the merits of the case. Thus, it ruled in this wise:
As to the issue of litis pendentia, we find it not applicable in the case. For litis
pendentia to be a ground for the dismissal of an action, there must be: (a)
identity of the parties or at least such as to represent the same interest in both
actions; (b) identity of rights asserted and relief prayed for, the relief being
founded on the same acts, and (c) the identity in the two cases should be such
that the judgment which may be rendered in one would, regardless of which

party is successful, amount to res judicata in the other. A petition for letters
of administration is a special proceeding. A special proceeding is an
application or proceeding to establish the status or right of a party, or a
particular fact. And, in contrast to an ordinary civil action, a special
proceeding involves no defendant or respondent. The only party in this kind
of proceeding is the petitioner of the applicant. Considering its nature, a
subsequent petition for letters of administration can hardly be barred by a
similar pending petition involving the estate of the same decedent unless both
petitions are filed by the same person. In the case at bar, the petitioner was
not a party to the petition filed by the private respondent, in the same manner
that the latter was not made a party to the petition filed by the former. The
first element of litis pendentia is wanting. The contention of the petitioner
must perforce fail.
Moreover, to yield to the contention of the petitioner would render nugatory
the provision of the Rules requiring a petitioner for letters of administration
to be an "interested party," inasmuch as any person, for that matter,
regardless of whether he has valid interest in the estate sought to be
administered, could be appointed as administrator for as long as he files his
petition ahead of any other person, in derogation of the rights of those
specifically mentioned in the order of preference in the appointment of
administrator under Rule 78, Section 6 of the Revised Rules of Court, which
provides:
xxx xxx xxx
The petitioner, armed with a marriage certificate, filed her petition for letters
of administration. As a spouse, the petitioner would have been preferred to
administer the estate of Orlando B. Catalan. However, a marriage certificate,
like any other public document, is only prima facie evidence of the facts
stated therein. The fact that the petitioner had been charged with
bigamy and was acquitted has not been disputed by the
petitioner. Bigamy is an illegal marriage committed by contracting a second
or subsequent marriage before the first marriage has been dissolved or before
the absent spouse has been declared presumptively dead by a judgment
rendered in a proper proceedings. The deduction of the trial court that
the acquittal of the petitioner in the said case negates the validity
of her subsequent marriage with Orlando B. Catalan has not been
disproved by her. There was not even an attempt from the
petitioner to deny the findings of the trial court. There is therefore no
basis for us to make a contrary finding. Thus, not being an interested party
and a stranger to the estate of Orlando B. Catalan, the dismissal of her petition
for letters of administration by the trial court is in place.
xxx xxx xxx
119
WHEREFORE, premises considered, the petition is DISMISSED for lack
of merit. No pronouncement as to costs. AacDHE
SO ORDERED. 5 (Emphasis supplied)
Petitioner moved for a reconsideration of this Decision. 6 She alleged that the reasoning of the CA
was illogical in stating, on the one hand, that she was acquitted of bigamy, while, on the other hand,
still holding that her marriage with Orlando was invalid. She insists that with her acquittal of the
crime of bigamy, the marriage enjoys the presumption of validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special proceedings failed to appreciate the finding of
the RTC in Crim. Case No. 2699-A that petitioner was never married to Eusebio Bristol. Thus, the
trial court concluded that, because petitioner was acquitted of bigamy, it follows that the first
marriage with Bristol still existed and was valid. By failing to take note of the findings of fact on
the nonexistence of the marriage between petitioner and Bristol, both the RTC and CA held that
petitioner was not an interested party in the estate of Orlando.
Second, it is imperative to note that at the time the bigamy case in Crim. Case No. 2699-A was
dismissed, we had already ruled that under the principles of comity, our jurisdiction recognizes a
valid divorce obtained by a spouse of foreign nationality. This doctrine was established as early as
1985 in Van Dorn v. Romillo, Jr. 7 wherein we said:
It is true that owing to the nationality principle embodied in Article 15 of the
Civil Code, only Philippine nationals are covered by the policy against
absolute divorces[,] the same being considered contrary to our concept of
public policy and morality. However, aliens may obtain divorces
abroad, which may be recognized in the Philippines, provided they
are valid according to their national law. In this case, the divorce
in Nevada released private respondent from the marriage from the
standards of American law, under which divorce dissolves the
marriage. . . .
We reiterated this principle in Llorente v. Court of Appeals, 8 to wit:
In Van Dorn v. Romillo, Jr. we held that owing to the nationality principle
embodied in Article 15 of the Civil Code, only Philippine nationals are covered
by the policy against absolute divorces, the same being considered contrary
to our concept of public policy and morality. In the same case, the Court
ruled that aliens may obtain divorces abroad, provided they are
valid according to their national law. CaTcSA
Citing this landmark case, the Court held in Quita v. Court of
Appeals, that once proven that respondent was no longer a
Filipino citizen when he obtained the divorce from petitioner, the

ruling in Van Dorn would become applicable and petitioner could
"very well lose her right to inherit" from him.
In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the
respondent in his country, the Federal Republic of Germany. There, we
stated that divorce and its legal effects may be recognized in the
Philippines insofar as respondent is concerned in view of the
nationality principle in our civil law on the status of persons.
For failing to apply these doctrines, the decision of the Court of Appeals must
be reversed. We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and recognized in this
jurisdiction as a matter of comity. . . .
Nonetheless, the fact of divorce must still first be proven as we have enunciated in Garcia v.
Recio, 9 to wit:
Respondent is getting ahead of himself. Before a foreign judgment is given
presumptive evidentiary value, the document must first be presented and
admitted in evidence. A divorce obtained abroad is proven by the divorce
decree itself. Indeed the best evidence of a judgment is the judgment
itself. The decree purports to be a written act or record of an act of an official
body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or
document may be proven as a public or official record of a foreign country by
either (1) an official publication or (2) a copy thereof attested by the officer
having legal custody of the document. If the record is not kept in the
Philippines, such copy must be (a) accompanied by a certificate issued by the
proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office.
The divorce decree between respondent and Editha Samson appears to be an
authentic one issued by an Australian family court. However, appearance is
not sufficient; compliance with the aforementioned rules on
evidence must be demonstrated. TCaADS
Fortunately for respondent's cause, when the divorce decree of May 18, 1989
was submitted in evidence, counsel for petitioner objected, not to its
admissibility, but only to the fact that it had not been registered in the Local
Civil Registry of Cabanatuan City. The trial court ruled that it was admissible,
subject to petitioner's qualification. Hence, it was admitted in evidence and
accorded weight by the judge. Indeed, petitioner's failure to object properly
rendered the divorce decree admissible as a written act of the Family Court of
Sydney, Australia.
120
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not
necessary; respondent was no longer bound by Philippine personal laws after
he acquired Australian citizenship in 1992. Naturalization is the legal act of
adopting an alien and clothing him with the political and civil rights belonging
to a citizen. Naturalized citizens, freed from the protective cloak of their
former states, don the attires of their adoptive countries. By becoming an
Australian, respondent severed his allegiance to the Philippines and
the vinculum juris that had tied him to Philippine personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law falls
upon petitioner, because she is the party challenging the validity of a foreign
judgment. He contends that petitioner was satisfied with the original of the
divorce decree and was cognizant of the marital laws of Australia, because she
had lived and worked in that country for quite a long time. Besides, the
Australian divorce law is allegedly known by Philippine courts; thus, judges
may take judicial notice of foreign laws in the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the "party who
alleges the existence of a fact or thing necessary in the prosecution
or defense of an action." In civil cases, plaintiffs have the burden
of proving the material allegations of the complaint when those are
denied by the answer; and defendants have the burden of proving
the material allegations in their answer when they introduce new
matters. Since the divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law validating it falls
squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take
judicial notice of foreign laws. Like any other facts, they must be
alleged and proved. Australian marital laws are not among those
matters that judges are supposed to know by reason of their
judicial function. The power of judicial notice must be exercised
with caution, and every reasonable doubt upon the subject should
be resolved in the negative. (Emphasis supplied) aTIEcA
It appears that the trial court no longer required petitioner to prove the validity of Orlando's
divorce under the laws of the United States and the marriage between petitioner and the deceased.
Thus, there is a need to remand the proceedings to the trial court for further reception of evidence
to establish the fact of divorce.
Should petitioner prove the validity of the divorce and the subsequent marriage, she has the
preferential right to be issued the letters of administration over the estate. Otherwise, letters of
administration may be issued to respondent, who is undisputedly the daughter or next of kin of
the deceased, in accordance with Sec. 6 of Rule 78 of the Revised Rules of Court.
 121

This is consistent with our ruling in San Luis v. San Luis, 10 in which we said: ||| (Vda. de Catalan v. Catalan-Lee, G.R. No. 183622 (Resolution), [February 8, 2012], 681 PHIL
493-502)
Applying the above doctrine in the instant case, the divorce decree allegedly
obtained by Merry Lee which absolutely allowed Felicisimo to remarry, would
have vested Felicidad with the legal personality to file the present petition as
Felicisimo's surviving spouse. However, the records show that there is
insufficient evidence to prove the validity of the divorce obtained
by Merry Lee as well as the marriage of respondent and Felicisimo
under the laws of the U.S.A.In Garcia v. Recio, the Court laid down the
specific guidelines for pleading and proving foreign law and divorce
judgments. It held that presentation solely of the divorce decree is insufficient
and that proof of its authenticity and due execution must be presented. Under
Sections 24 and 25 of Rule 132, a writing or document may be proven as a
public or official record of a foreign country by either (1) an official
publication or (2) a copy thereof attested by the officer having legal custody
of the document. If the record is not kept in the Philippines, such copy must
be (a) accompanied by a certificate issued by the proper diplomatic or
consular officer in the Philippine foreign service stationed in the foreign
country in which the record is kept and (b) authenticated by the seal of his
office.
With regard to respondent's marriage to Felicisimo allegedly solemnized in
California, U.S.A., she submitted photocopies of the Marriage Certificate and
the annotated text of the Family Law Act of California which purportedly
show that their marriage was done in accordance with the said law. As stated
in Garcia, however, the Court cannot take judicial notice of foreign laws as
they must be alleged and proved.
Therefore, this case should be remanded to the trial court for
further reception of evidence on the divorce decree obtained by
Merry Lee and the marriage of respondent and
Felicisimo. (Emphasis supplied)
Thus, it is imperative for the trial court to first determine the validity of the divorce to ascertain
the rightful party to be issued the letters of administration over the estate of Orlando B. Catalan.
WHEREFORE, premises considered, the Petition is hereby PARTIALLY GRANTED. The
Decision dated 18 October 2007 and the Resolution dated 20 June 2008 of the Court of Appeals
are hereby REVERSED and SET ASIDE. Let this case be REMANDED to Branch 70 of the
Regional Trial Court of Burgos, Pangasinan for further proceedings in accordance with this
Decision. DcSEHT
SO ORDERED.
Carpio, Brion, Perez and Reyes, JJ., concur.

THIRD DIVISION
[G.R. No. 133743. February 6, 2007.]
EDGAR SAN LUIS, petitioner, vs. FELICIDAD SAN LUIS, respondent.
[G.R. No. 134029. February 6, 2007]
RODOLFO SAN LUIS, petitioner, vs. FELICIDAD SAGALONGOS
alias FELICIDAD SAN LUIS, respondent.
DECISION
YNARES-SANTIAGO, J p:
Before us are consolidated petitions for review assailing the February 4, 1998 Decision 1 of the
Court of Appeals in CA-G.R. CV No. 52647, which reversed and set aside the September 12,
1995 2 and January 31, 1996 3 Resolutions of the Regional Trial Court of Makati City, Branch 134
in SP. Proc. No. M-3708; and its May 15, 1998 Resolution 4 denying petitioners' motion for
reconsideration.
The instant case involves the settlement of the estate of Felicisimo T. San Luis (Felicisimo), who
was the former governor of the Province of Laguna. During his lifetime, Felicisimo contracted
three marriages. His first marriage was with Virginia Sulit on March 17, 1942 out of which were
born six children, namely: Rodolfo, Mila, Edgar, Linda, Emilita and Manuel. On August 11, 1963,
Virginia predeceased Felicisimo.
Five years later, on May 1, 1968, Felicisimo married Merry Lee Corwin, with whom he had a son,
Tobias. However, on October 15, 1971, Merry Lee, an American citizen, filed a Complaint for
Divorce 5 before the Family Court of the First Circuit, State of Hawaii, United States of America
(U.S.A.), which issued a Decree Granting Absolute Divorce and Awarding Child Custody on
December 14, 1973. 6
On June 20, 1974, Felicisimo married respondent Felicidad San Luis, then surnamed Sagalongos,
before Rev. Fr. William Meyer, Minister of the United Presbyterian at Wilshire Boulevard, Los
Angeles, California, U.S.A. 7 He had no children with respondent but lived with her for 18 years
from the time of their marriage up to his death on December 18, 1992.
Thereafter, respondent sought the dissolution of their conjugal partnership assets and the
settlement of Felicisimo's estate. On December 17, 1993, she filed a petition for letters of
122
administration 8 before the Regional Trial Court of Makati City, docketed as SP. Proc. No. M-3708
which was raffled to Branch 146 thereof.
Respondent alleged that she is the widow of Felicisimo; that, at the time of his death, the decedent
was residing at 100 San Juanico Street, New Alabang Village, Alabang, Metro Manila; that the
decedent's surviving heirs are respondent as legal spouse, his six children by his first marriage,
and son by his second marriage; that the decedent left real properties, both conjugal and exclusive,
valued at P30,304,178.00 more or less; that the decedent does not have any unpaid debts.
Respondent prayed that the conjugal partnership assets be liquidated and that letters of
administration be issued to her. TAaIDH
On February 4, 1994, petitioner Rodolfo San Luis, one of the children of Felicisimo by his first
marriage, filed a motion to dismiss 9 on the grounds of improper venue and failure to state a cause
of action. Rodolfo claimed that the petition for letters of administration should have been filed in
the Province of Laguna because this was Felicisimo's place of residence prior to his death. He
further claimed that respondent has no legal personality to file the petition because she was only
a mistress of Felicisimo since the latter, at the time of his death, was still legally married to Merry
Lee.
On February 15, 1994, Linda invoked the same grounds and joined her brother Rodolfo in seeking
the dismissal 10 of the petition. On February 28, 1994, the trial court issued an Order 11 denying
the two motions to dismiss.
Unaware of the denial of the motions to dismiss, respondent filed on March 5, 1994 her
opposition 12 thereto. She submitted documentary evidence showing that while Felicisimo
exercised the powers of his public office in Laguna, he regularly went home to their house in New
Alabang Village, Alabang, Metro Manila which they bought sometime in 1982. Further, she
presented the decree of absolute divorce issued by the Family Court of the First Circuit, State of
Hawaii to prove that the marriage of Felicisimo to Merry Lee had already been dissolved. Thus,
she claimed that Felicisimo had the legal capacity to marry her by virtue of paragraph 2, 13 Article
26 of the Family Code and the doctrine laid down in Van Dorn v. Romillo, Jr. 14
Thereafter, Linda, Rodolfo and herein petitioner Edgar San Luis, separately filed motions for
reconsideration from the Order denying their motions to dismiss. 15They asserted that paragraph
2, Article 26 of the Family Code cannot be given retroactive effect to validate respondent's
bigamous marriage with Felicisimo because this would impair vested rights in derogation of
Article 256 16 of the Family Code.
On April 21, 1994, Mila, another daughter of Felicisimo from his first marriage, filed a motion to
disqualify Acting Presiding Judge Anthony E. Santos from hearing the case.
On October 24, 1994, the trial court issued an Order 17 denying the motions for reconsideration.
It ruled that respondent, as widow of the decedent, possessed the legal standing to file the petition
and that venue was properly laid. Meanwhile, the motion for disqualification was deemed moot
and academic 18 because then Acting Presiding Judge Santos was substituted by Judge Salvador
S. Tensuan pending the resolution of said motion.

Mila filed a motion for inhibition 19 against Judge Tensuan on November 16, 1994. On even date,
Edgar also filed a motion for reconsideration 20 from the Order denying their motion for
reconsideration arguing that it does not state the facts and law on which it was based.
On November 25, 1994, Judge Tensuan issued an Order 21 granting the motion for inhibition. The
case was re-raffled to Branch 134 presided by Judge Paul T. Arcangel.
On April 24, 1995, 22 the trial court required the parties to submit their respective position papers
on the twin issues of venue and legal capacity of respondent to file the petition. On May 5, 1995,
Edgar manifested 23 that he is adopting the arguments and evidence set forth in his previous
motion for reconsideration as his position paper. Respondent and Rodolfo filed their position
papers on June 14, 24 and June 20, 25 1995, respectively.
On September 12, 1995, the trial court dismissed the petition for letters of administration. It held
that, at the time of his death, Felicisimo was the duly elected governor and a resident of the
Province of Laguna. Hence, the petition should have been filed in Sta. Cruz, Laguna and not in
Makati City. It also ruled that respondent was without legal capacity to file the petition for letters
of administration because her marriage with Felicisimo was bigamous, thus, void ab initio. It
found that the decree of absolute divorce dissolving Felicisimo's marriage to Merry Lee was not
valid in the Philippines and did not bind Felicisimo who was a Filipino citizen. It also ruled that
paragraph 2, Article 26 of the Family Code cannot be retroactively applied because it would impair
the vested rights of Felicisimo's legitimate children. CDTHSI
Respondent moved for reconsideration 26 and for the disqualification 27 of Judge Arcangel but
said motions were denied. 28
Respondent appealed to the Court of Appeals which reversed and set aside the orders of the trial
court in its assailed Decision dated February 4, 1998, the dispositive portion of which states:
WHEREFORE, the Orders dated September 12, 1995 and January 31, 1996
are hereby REVERSED and SET ASIDE; the Orders dated February 28 and
October 24, 1994 are REINSTATED; and the records of the case is
REMANDED to the trial court for further proceedings. 29
The appellate court ruled that under Section 1, Rule 73 of the Rules of Court, the term "place of
residence" of the decedent, for purposes of fixing the venue of the settlement of his estate, refers
to the personal, actual or physical habitation, or actual residence or place of abode of a person as
distinguished from legal residence or domicile. It noted that although Felicisimo discharged his
functions as governor in Laguna, he actually resided in Alabang, Muntinlupa. Thus, the petition
for letters of administration was properly filed in Makati City.
The Court of Appeals also held that Felicisimo had legal capacity to marry respondent by virtue of
paragraph 2, Article 26 of the Family Code and the rulings inVan Dorn v. Romillo,
Jr. 30 and Pilapil v. Ibay-Somera. 31 It found that the marriage between Felicisimo and Merry
Lee was validly dissolved by virtue of the decree of absolute divorce issued by the Family Court of
the First Circuit, State of Hawaii. As a result, under paragraph 2, Article 26, Felicisimo was
capacitated to contract a subsequent marriage with respondent. Thus —
123
With the well-known rule — express mandate of paragraph 2, Article 26, of
the Family Code of the Philippines, the doctrines in Van Dorn, Pilapil, and the
reason and philosophy behind the enactment of E.O. No. 227, — there is no
justiciable reason to sustain the individual view — sweeping statement — of
Judge Arc[h]angel, that "Article 26, par. 2 of the Family Code, contravenes
the basic policy of our state against divorce in any form whatsoever." Indeed,
courts cannot deny what the law grants. All that the courts should do is to give
force and effect to the express mandate of the law. The foreign divorce having
been obtained by the Foreigner on December 14, 1992, 32 the Filipino
divorcee, "shall . . . have capacity to remarry under Philippine laws". For this
reason, the marriage between the deceased and petitioner should not be
denominated as "a bigamous marriage.
Therefore, under Article 130 of the Family Code, the petitioner as the
surviving spouse can institute the judicial proceeding for the settlement of the
estate of the deceased. . . . 33
Edgar, Linda, and Rodolfo filed separate motions for reconsideration 34 which were denied by the
Court of Appeals.
On July 2, 1998, Edgar appealed to this Court via the instant petition for review
on certiorari. 35 Rodolfo later filed a manifestation and motion to adopt the said petition which
was granted. 36
In the instant consolidated petitions, Edgar and Rodolfo insist that the venue of the subject
petition for letters of administration was improperly laid because at the time of his death,
Felicisimo was a resident of Sta. Cruz, Laguna. They contend that pursuant to our rulings in Nuval
v. Guray 37 and Romualdez v. RTC, Br. 7, Tacloban City, 38 "residence" is synonymous with
"domicile" which denotes a fixed permanent residence to which when absent, one intends to return.
They claim that a person can only have one domicile at any given time. Since Felicisimo never
changed his domicile, the petition for letters of administration should have been filed in Sta. Cruz,
Laguna.
Petitioners also contend that respondent's marriage to Felicisimo was void and bigamous because
it was performed during the subsistence of the latter's marriage to Merry Lee. They argue that
paragraph 2, Article 26 cannot be retroactively applied because it would impair vested rights and
ratify the void bigamous marriage. As such, respondent cannot be considered the surviving wife of
Felicisimo; hence, she has no legal capacity to file the petition for letters of administration.
The issues for resolution: (1) whether venue was properly laid, and (2) whether respondent has
legal capacity to file the subject petition for letters of administration. DScTaC
The petition lacks merit.

Under Section 1, 39 Rule 73 of the Rules of Court, the petition for letters of administration of the
estate of Felicisimo should be filed in the Regional Trial Court of the province "in which
he resides at the time of his death." In the case of Garcia Fule v. Court of Appeals, 40 we laid
down the doctrinal rule for determining the residence — as contradistinguished from domicile —
of the decedent for purposes of fixing the venue of the settlement of his estate:
[T]he term "resides" connotes ex vi termini "actual residence" as
distinguished from "legal residence or domicile." This term "resides," like the
terms "residing" and "residence," is elastic and should be interpreted in the
light of the object or purpose of the statute or rule in which it is employed. In
the application of venue statutes and rules — Section 1, Rule 73 of the Revised
Rules of Court is of such nature — residence rather than domicile is the
significant factor. Even where the statute uses the word "domicile" still it is
construed as meaning residence and not domicile in the technical sense. Some
cases make a distinction between the terms "residence" and "domicile" but as
generally used in statutes fixing venue, the terms are synonymous, and convey
the same meaning as the term "inhabitant." In other words, "resides" should
be viewed or understood in its popular sense, meaning, the personal,
actual or physical habitation of a person, actual residence or place
of abode. It signifies physical presence in a place and actual stay thereat. In
this popular sense, the term means merely residence, that is, personal
residence, not legal residence or domicile. Residence simply requires
bodily presence as an inhabitant in a given place, while domicile requires
bodily presence in that place and also an intention to make it one's domicile.
No particular length of time of residence is required though; however, the
residence must be more than temporary. 41 (Emphasis supplied) STIcEA
It is incorrect for petitioners to argue that "residence," for purposes of fixing the venue of the
settlement of the estate of Felicisimo, is synonymous with "domicile." The rulings
in Nuval and Romualdez are inapplicable to the instant case because they involve election cases.
Needless to say, there is a distinction between "residence" for purposes of election laws and
"residence" for purposes of fixing the venue of actions. In election cases, "residence" and
"domicile" are treated as synonymous terms, that is, the fixed permanent residence to which when
absent, one has the intention of returning. 42 However, for purposes of fixing venue under the
Rules of Court, the "residence" of a person is his personal, actual or physical habitation, or actual
residence or place of abode, which may not necessarily be his legal residence or domicile provided
he resides therein with continuity and consistency. 43 Hence, it is possible that a person may have
his residence in one place and domicile in another.
In the instant case, while petitioners established that Felicisimo was domiciled in Sta. Cruz,
Laguna, respondent proved that he also maintained a residence in Alabang, Muntinlupa from 1982
up to the time of his death. Respondent submitted in evidence the Deed of Absolute Sale 44 dated
January 5, 1983 showing that the deceased purchased the aforesaid property. She also presented
billing statements 45 from the Philippine Heart Center and Chinese General Hospital for the
period August to December 1992 indicating the address of Felicisimo at "100 San Juanico, Ayala
Alabang, Muntinlupa." Respondent also presented proof of membership of the deceased in the
124
Ayala Alabang Village Association 46 and Ayala Country Club, Inc., 47 letter-envelopes 48 from
1988 to 1990 sent by the deceased's children to him at his Alabang address, and the deceased's
calling cards 49 stating that his home/city address is at "100 San Juanico, Ayala Alabang Village,
Muntinlupa" while his office/provincial address is in "Provincial Capitol, Sta. Cruz, Laguna."
From the foregoing, we find that Felicisimo was a resident of Alabang, Muntinlupa for purposes
of fixing the venue of the settlement of his estate. Consequently, the subject petition for letters of
administration was validly filed in the Regional Trial Court 50 which has territorial jurisdiction
over Alabang, Muntinlupa. The subject petition was filed on December 17, 1993. At that time,
Muntinlupa was still a municipality and the branches of the Regional Trial Court of the National
Capital Judicial Region which had territorial jurisdiction over Muntinlupa were then seated in
Makati City as per Supreme Court Administrative Order No. 3. 51Thus, the subject petition was
validly filed before the Regional Trial Court of Makati City.
Anent the issue of respondent Felicidad's legal personality to file the petition for letters of
administration, we must first resolve the issue of whether a Filipino who is divorced by his alien
spouse abroad may validly remarry under the Civil Code, considering that Felicidad's marriage to
Felicisimo was solemnized on June 20, 1974, or before the Family Code took effect on August 3,
1988. In resolving this issue, we need not retroactively apply the provisions of the Family Code,
particularly Art. 26, par. (2) considering that there is sufficient jurisprudential basis allowing us
to rule in the affirmative.
The case of Van Dorn v. Romillo, Jr. 52 involved a marriage between a foreigner and
his Filipino wife, which marriage was subsequently dissolved through a divorce obtained
abroad by the latter. Claiming that the divorce was not valid under Philippine law, the alien
spouse alleged that his interest in the properties from their conjugal partnership should be
protected. The Court, however, recognized the validity of the divorce and held that the alien
spouse had no interest in the properties acquired by the Filipino wife after the divorce. Thus:
In this case, the divorce in Nevada released private respondent from the
marriage from the standards of American law, under which divorce dissolves
the marriage. As stated by the Federal Supreme Court of the United States in
Atherton vs. Atherton, 45 L. Ed. 794, 799:
"The purpose and effect of a decree of divorce from the bond of
matrimony by a competent jurisdiction are to change the existing
status or domestic relation of husband and wife, and to free them
both from the bond. The marriage tie, when thus severed as to one
party, ceases to bind either. A husband without a wife, or a wife
without a husband, is unknown to the law. When the law provides,
in the nature of a penalty, that the guilty party shall not marry again,
that party, as well as the other, is still absolutely freed from the bond
of the former marriage."
Thus, pursuant to his national law, private respondent is no longer the
husband of petitioner. He would have no standing to sue in the case below as
petitioner's husband entitled to exercise control over conjugal assets. As he is

bound by the Decision of his own country's Court, which validly exercised
jurisdiction over him, and whose decision he does not repudiate, he is
estopped by his own representation before said Court from asserting his right
over the alleged conjugal property. 53
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longer be
considered married to the alien spouse. Further, she should not be required to perform her marital
duties and obligations. It held:
To maintain, as private respondent does, that, under our laws,
petitioner has to be considered still married to private
respondent and still subject to a wife's obligations under Article
109, et. seq. of the Civil Code cannot be just. Petitioner should not be
obliged to live together with, observe respect and fidelity, and render support
to private respondent. The latter should not continue to be one of her heirs
with possible rights to conjugal property. She should not be
discriminated against in her own country if the ends of justice are
to be served. 54 (Emphasis added) AcaEDC
This principle was thereafter applied in Pilapil v. Ibay-Somera 55 where the Court recognized the
validity of a divorce obtained abroad. In the said case, it was held that the alien spouse is not a
proper party in filing the adultery suit against his Filipino wife. The Court stated that "the
severance of the marital bond had the effect of dissociating the former spouses from each other,
hence the actuations of one would not affect or cast obloquy on the other." 56
Likewise, in Quita v. Court of Appeals, 57 the Court stated that where a Filipino is divorced by his
naturalized foreign spouse, the ruling in Van Dorn applies. 58Although decided on December 22,
1998, the divorce in the said case was obtained in 1954 when the Civil Code provisions were still
in effect.
The significance of the Van Dorn case to the development of limited recognition of divorce in the
Philippines cannot be denied. The ruling has long been interpreted as severing marital ties
between parties in a mixed marriage and capacitating the Filipino spouse to remarry as a necessary
consequence of upholding the validity of a divorce obtained abroad by the alien spouse. In his
treatise, Dr. Arturo M. Tolentino cited Van Dorn stating that "if the foreigner obtains a valid
foreign divorce, the Filipino spouse shall have capacity to remarry under Philippine
law." 59 In Garcia v. Recio, 60 the Court likewise cited the aforementioned case in relation to
Article 26. 61
In the recent case of Republic v. Orbecido III, 62 the historical background and legislative intent
behind paragraph 2, Article 26 of the Family Code were discussed, to wit:
Brief Historical Background
125
On July 6, 1987, then President Corazon Aquino signed into law Executive
Order No. 209, otherwise known as the "Family Code," which took effect on
August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the laws
in force in the country where they were solemnized, and valid there as such,
shall also be valid in this country, except those prohibited under Articles 35,
37, and 38.
On July 17, 1987, shortly after the signing of the original Family
Code, Executive Order No. 227 was likewise signed into law, amending
Articles 26, 36, and 39 of the Family Code. A second paragraph was added to
Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. (Emphasis supplied)
xxx xxx xxx
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the
intent of Paragraph 2 of Article 26, according to Judge Alicia Sempio-Diy, a
member of the Civil Code Revision Committee, is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who,
after obtaining a divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985
case of Van Dorn v. Romillo, Jr. The Van Dorn case involved a
marriage between a Filipino citizen and a foreigner. The Court
held therein that a divorce decree validly obtained by the alien
spouse is valid in the Philippines, and consequently, the Filipino
spouse is capacitated to remarry under Philippine
law. 63 (Emphasis added)
As such, the Van Dorn case is sufficient basis in resolving a situation where a divorce is validly
obtained abroad by the alien spouse. With the enactment of theFamily Code and paragraph 2,
Article 26 thereof, our lawmakers codified the law already established through judicial
precedent. HAaECD

Indeed, when the object of a marriage is defeated by rendering its continuance intolerable to one
of the parties and productive of no possible good to the community, relief in some way should be
obtainable. 64 Marriage, being a mutual and shared commitment between two parties, cannot
possibly be productive of any good to the society where one is considered released from the marital
bond while the other remains bound to it. Such is the state of affairs where the alien spouse obtains
a valid divorce abroad against the Filipino spouse, as in this case.
Petitioners cite Articles 15 65 and 17 66 of the Civil Code in stating that the divorce is void under
Philippine law insofar as Filipinos are concerned. However, in light of this Court's rulings in the
cases discussed above, the Filipino spouse should not be discriminated against in his own country
if the ends of justice are to be served. 67 In Alonzo v. Intermediate Appellate Court, 68 the Court
stated:
But as has also been aptly observed, we test a law by its results; and likewise,
we may add, by its purposes. It is a cardinal rule that, in seeking the meaning
of the law, the first concern of the judge should be to discover in its provisions
the intent of the lawmaker. Unquestionably, the law should never be
interpreted in such a way as to cause injustice as this is never within the
legislative intent. An indispensable part of that intent, in fact, for we presume
the good motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance
with justice. Law and justice are inseparable, and we must keep them so. To
be sure, there are some laws that, while generally valid, may seem arbitrary
when applied in a particular case because of its peculiar circumstances. In
such a situation, we are not bound, because only of our nature and functions,
to apply them just the same, in slavish obedience to their language. What we
do instead is find a balance between the word and the will, that justice may be
done even as the law is obeyed.
As judges, we are not automatons. We do not and must not unfeelingly apply
the law as it is worded, yielding like robots to the literal command without
regard to its cause and consequence. "Courts are apt to err by sticking too
closely to the words of a law," so we are warned, by Justice Holmes again,
"where these words import a policy that goes beyond them."
xxx xxx xxx
More than twenty centuries ago, Justinian defined justice "as the constant
and perpetual wish to render every one his due." That wish continues to
motivate this Court when it assesses the facts and the law in every case
brought to it for decision. Justice is always an essential ingredient of its
decisions. Thus when the facts warrants, we interpret the law in a way that
will render justice, presuming that it was the intention of the lawmaker, to
begin with, that the law be dispensed with justice. 69
126
Applying the above doctrine in the instant case, the divorce decree allegedly obtained by Merry
Lee which absolutely allowed Felicisimo to remarry, would have vested Felicidad with the legal
personality to file the present petition as Felicisimo's surviving spouse. However, the records show
that there is insufficient evidence to prove the validity of the divorce obtained by Merry Lee as well
as the marriage of respondent and Felicisimo under the laws of the U.S.A. In Garcia v.
Recio, 70 the Court laid down the specific guidelines for pleading and proving foreign law and
divorce judgments. It held that presentation solely of the divorce decree is insufficient and that
proof of its authenticity and due execution must be presented. Under Sections 24 and 25 of Rule
132, a writing or document may be proven as a public or official record of a foreign country by
either (1) an official publication or (2) a copy thereof attested by the officer having legal custody of
the document. If the record is not kept in the Philippines, such copy must be (a) accompanied by
a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his
office. 71
With regard to respondent's marriage to Felicisimo allegedly solemnized in California, U.S.A., she
submitted photocopies of the Marriage Certificate and the annotated text 72 of the Family Law
Act of California which purportedly show that their marriage was done in accordance with the said
law. As stated in Garcia, however, the Court cannot take judicial notice of foreign laws as they
must be alleged and proved. 73
Therefore, this case should be remanded to the trial court for further reception of evidence on the
divorce decree obtained by Merry Lee and the marriage of respondent and Felicisimo.
Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we
find that the latter has the legal personality to file the subject petition for letters of administration,
as she may be considered the co-owner of Felicisimo as regards the properties that were acquired
through their joint efforts during their cohabitation. TIEHDC
Section 6, 74 Rule 78 of the Rules of Court states that letters of administration may be granted to
the surviving spouse of the decedent. However, Section 2, Rule 79 thereof also provides in part:
SEC. 2. Contents of petition for letters of administration. — A petition for
letters of administration must be filed by an interested person and must
show, as far as known to the petitioner: . . . .
An "interested person" has been defined as one who would be benefited by the estate, such as an
heir, or one who has a claim against the estate, such as a creditor. The interest must be material
and direct, and not merely indirect or contingent. 75
In the instant case, respondent would qualify as an interested person who has a direct interest in
the estate of Felicisimo by virtue of their cohabitation, the existence of which was not denied by
petitioners. If she proves the validity of the divorce and Felicisimo's capacity to remarry, but fails
to prove that her marriage with him was validly performed under the laws of the U.S.A., then she
may be considered as a co-owner under Article 144 76 of the Civil Code. This provision governs
the property relations between parties who live together as husband and wife without the benefit
of marriage, or their marriage is void from the beginning. It provides that the property acquired
 127

by either or both of them through their work or industry or their wages and salaries shall be SO ORDERED.
governed by the rules on co-ownership. In a co-ownership, it is not necessary that the property be
acquired through their joint labor, efforts and industry. Any property acquired during the union Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
is prima facie presumed to have been obtained through their joint efforts. Hence, the portions
||| (San Luis v. San Luis, G.R. Nos. 133743 & 134029, [February 6, 2007], 543 PHIL 275-298)
belonging to the co-owners shall be presumed equal, unless the contrary is proven. 77

Meanwhile, if respondent fails to prove the validity of both the divorce and the marriage, the
applicable provision would be Article 148 of the Family Code which has filled the hiatus in Article
144 of the Civil Code by expressly regulating the property relations of couples living together as
husband and wife but are incapacitated to marry. 78 In Saguid v. Court of Appeals, 79 we held
that even if the cohabitation or the acquisition of property occurred before the Family Codetook
effect, Article 148 governs. 80 The Court described the property regime under this provision as
follows:
The regime of limited co-ownership of property governing the union of parties
who are not legally capacitated to marry each other, but who nonetheless live
together as husband and wife, applies to properties acquired during said
cohabitation in proportion to their respective contributions. Co-ownership
will only be up to the extent of the proven actual contribution of money,
property or industry. Absent proof of the extent thereof, their contributions
and corresponding shares shall be presumed to be equal.
xxx xxx xxx
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved
the issue of co-ownership of properties acquired by the parties to a bigamous
marriage and an adulterous relationship, respectively, we ruled that proof of
actual contribution in the acquisition of the property is essential. . . .
As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an affirmative
issue. Contentions must be proved by competent evidence and reliance must
be had on the strength of the party's own evidence and not upon the weakness
of the opponent's defense. . . . 81
In view of the foregoing, we find that respondent's legal capacity to file the subject petition for
letters of administration may arise from her status as the surviving wife of Felicisimo or as his co-
owner under Article 144 of the Civil Code or Article 148 of the Family Code.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals reinstating and
affirming the February 28, 1994 Order of the Regional Trial Court which denied petitioners'
motion to dismiss and its October 24, 1994 Order which dismissed petitioners' motion for
reconsideration is AFFIRMED. Let this case be REMANDED to the trial court for further
proceedings.

SECOND DIVISION
[G.R. No. 196049. June 26, 2013.]
MINORU FUJIKI, petitioner, vs. MARIA PAZ GALELA MARINAY,
SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR OF QUEZON
CITY, and THE ADMINISTRATOR AND CIVIL REGISTRAR
GENERAL OF THE NATIONAL STATISTICS OFFICE, respondents.
DECISION
CARPIO, J p:
The Case
This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107, Quezon
City, through a petition for review on certiorari under Rule 45 of the Rules of Court on a pure
question of law. The petition assails the Order 1 dated 31 January 2011 of the RTC in Civil Case No.
Q-11-68582 and its Resolution dated 2 March 2011 denying petitioner's Motion for
Reconsideration. The RTC dismissed the petition for "Judicial Recognition of Foreign Judgment
(or Decree of Absolute Nullity of Marriage)" based on improper venue and the lack of personality
of petitioner, Minoru Fujiki, to file the petition.
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz Galela
Marinay (Marinay) in the Philippines 2 on 23 January 2004. The marriage did not sit well with
petitioner's parents. Thus, Fujiki could not bring his wife to Japan where he resides. Eventually,
they lost contact with each other.
In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first marriage
being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon City, Philippines.
Maekara brought Marinay to Japan. However, Marinay allegedly suffered physical abuse from
Maekara. She left Maekara and started to contact Fujiki. 3
Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In 2010,
Fujiki helped Marinay obtain a judgment from a family court in Japan which declared the marriage
between Marinay and Maekara void on the ground of bigamy. 4 On 14 January 2011, Fujiki filed a
petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or Decree of Absolute
Nullity of Marriage)." Fujiki prayed that (1) the Japanese Family Court judgment be recognized;
(2) that the bigamous marriage between Marinay and Maekara be declared void ab initio under
Articles 35 (4) and 41 of the Family Code of the Philippines; 5 and (3) for the RTC to direct the
Local Civil Registrar of Quezon City to annotate the Japanese Family Court judgment on the
128
Certificate of Marriage between Marinay and Maekara and to endorse such annotation to the
Office of the Administrator and Civil Registrar General in the National Statistics Office (NSO). 6
The Ruling of the Regional Trial Court
A few days after the filing of the petition, the RTC immediately issued an Order dismissing the
petition and withdrawing the case from its active civil docket. 7The RTC cited the following
provisions of the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC):
Sec. 2. Petition for declaration of absolute nullity of void marriages. —
(a) Who may file. — A petition for declaration of absolute nullity of void
marriage may be filed solely by the husband or the wife.
xxx xxx xxx
Sec. 4. Venue. — The petition shall be filed in the Family Court of the
province or city where the petitioner or the respondent has been residing
for at least six months prior to the date of filing, or in the case of a non-
resident respondent, where he may be found in the Philippines, at the
election of the petitioner. . . .
The RTC ruled, without further explanation, that the petition was in "gross violation" of the
above provisions. The trial court based its dismissal on Section 5 (4) of A.M. No. 02-11-10-
SC which provides that "[f]ailure to comply with any of the preceding requirements may be a
ground for immediate dismissal of the petition." 8 Apparently, the RTC took the view that
only "the husband or the wife," in this case either Maekara or Marinay, can file the petition to
declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC contemplated
ordinary civil actions for declaration of nullity and annulment of marriage. Thus, A.M. No. 02-11-
10-SC does not apply. A petition for recognition of foreign judgment is a special proceeding, which
"seeks to establish a status, a right or a particular fact," 9 and not a civil action which is "for the
enforcement or protection of a right, or the prevention or redress of a wrong." 10 In other words,
the petition in the RTC sought to establish (1) the status and concomitant rights of Fujiki and
Marinay as husband and wife and (2) the fact of the rendition of the Japanese Family Court
judgment declaring the marriage between Marinay and Maekara as void on the ground of bigamy.
The petitioner contended that the Japanese judgment was consistent with Article 35 (4) of the
Family Code of the Philippines 11 on bigamy and was therefore entitled to recognition by
Philippine courts. 12
In any case, it was also Fujiki's view that A.M. No. 02-11-10-SC applied only to void marriages
under Article 36 of the Family Code on the ground of psychological incapacity. 13 Thus, Section
2 (a) of A.M. No. 02-11-10-SC provides that "a petition for declaration of absolute nullity of void
marriages may be filed solely by the husband or the wife." To apply Section 2 (a) in bigamy would
be absurd because only the guilty parties would be permitted to sue. In the words of Fujiki, "[i]t is
not, of course, difficult to realize that the party interested in having a bigamous marriage declared

a nullity would be the husband in the prior, pre-existing marriage." 14 Fujiki had material interest
and therefore the personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of the Rules
of Court is applicable. Rule 108 is the "procedural implementation" of the Civil Register Law (Act
No. 3753) 15 in relation to Article 413 of the Civil Code.16 The Civil Register Law imposes a duty
on the "successful petitioner for divorce or annulment of marriage to send a copy of the final decree
of the court to the local registrar of the municipality where the dissolved or annulled marriage was
solemnized." 17 Section 2 of Rule 108 provides that entries in the civil registry relating to
"marriages," "judgments of annulments of marriage" and "judgments declaring marriages void
from the beginning" are subject to cancellation or correction. 18 The petition in the RTC sought
(among others) to annotate the judgment of the Japanese Family Court on the certificate of
marriage between Marinay and Maekara. CaAIES
Fujiki's motion for reconsideration in the RTC also asserted that the trial court "gravely erred"
when, on its own, it dismissed the petition based on improper venue. Fujiki stated that the RTC
may be confusing the concept of venue with the concept of jurisdiction, because it is lack of
jurisdiction which allows a court to dismiss a case on its own. Fujiki cited Dacoycoy v.
Intermediate Appellate Court 19 which held that the "trial court cannot pre-empt the defendant's
prerogative to object to the improper laying of the venue by motu proprio dismissing the
case." 20 Moreover, petitioner alleged that the trial court should not have "immediately
dismissed" the petition under Section 5 of A.M. No. 02-11-10-SC because he substantially
complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioner's motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC applies because the petitioner, in effect,
prays for a decree of absolute nullity of marriage. 21 The trial court reiterated its two grounds for
dismissal, i.e., lack of personality to sue and improper venue under Sections 2 (a) and 4 of A.M.
No. 02-11-10-SC. The RTC considered Fujiki as a "third person" 22 in the proceeding because he
"is not the husband in the decree of divorce issued by the Japanese Family Court, which he now
seeks to be judicially recognized, . . . ." 23 On the other hand, the RTC did not explain its ground
of impropriety of venue. It only said that "[a]lthough the Court cited Sec. 4 (Venue) . . . as a ground
for dismissal of this case[,] it should be taken together with the other ground cited by the Court . . .
which is Sec. 2 (a) . . . ." 24
The RTC further justified its motu proprio dismissal of the petition based on Braza v. The City
Civil Registrar of Himamaylan City, Negros Occidental. 25 The Court in Braza ruled that "[i]n a
special proceeding for correction of entry under Rule 108 (Cancellation or Correction of Entries in
the Original Registry), the trial court has no jurisdiction to nullify
marriages . . . ." 26 Braza emphasized that the "validity of marriages as well as legitimacy and
filiation can be questioned only in a direct action seasonably filed by the proper party, and not
through a collateral attack such as [a] petition [for correction of entry] . . . ." 27
The RTC considered the petition as a collateral attack on the validity of marriage between Marinay
and Maekara. The trial court held that this is a "jurisdictional ground" to dismiss the
petition. 28 Moreover, the verification and certification against forum shopping of the petition
129
was not authenticated as required under Section 5 29 of A.M. No. 02-11-10-SC. Hence, this also
warranted the "immediate dismissal" of the petition under the same provision.
The Manifestation and Motion of the Office of the Solicitor General and
the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their comment on the petition for
review. 30 The public respondents, the Local Civil Registrar of Quezon City and the Administrator
and Civil Registrar General of the NSO, participated through the Office of the Solicitor General.
Instead of a comment, the Solicitor General filed a Manifestation and Motion. 31
The Solicitor General agreed with the petition. He prayed that the RTC's "pronouncement that the
petitioner failed to comply with . . . A.M. No. 02-11-10-SC . . . be set aside" and that the case be
reinstated in the trial court for further proceedings. 32 The Solicitor General argued that Fujiki,
as the spouse of the first marriage, is an injured party who can sue to declare the bigamous
marriage between Marinay and Maekara void. The Solicitor General cited Juliano-Llave v.
Republic 33 which held that Section 2 (a) of A.M. No. 02-11-10-SC does not apply in cases of
bigamy. In Juliano-Llave, this Court explained: SCHATc
[t]he subsequent spouse may only be expected to take action if he or she
had only discovered during the connubial period that the marriage was
bigamous, and especially if the conjugal bliss had already vanished. Should
parties in a subsequent marriage benefit from the bigamous marriage, it
would not be expected that they would file an action to declare the marriage
void and thus, in such circumstance, the "injured spouse" who should be
given a legal remedy is the one in a subsisting previous marriage. The latter
is clearly the aggrieved party as the bigamous marriage not only threatens
the financial and the property ownership aspect of the prior marriage but
most of all, it causes an emotional burden to the prior spouse. The
subsequent marriage will always be a reminder of the infidelity of the
spouse and the disregard of the prior marriage which sanctity is protected
by the Constitution. 34
The Solicitor General contended that the petition to recognize the Japanese Family Court
judgment may be made in a Rule 108 proceeding. 35 In Corpuz v. Santo Tomas, 36 this Court
held that "[t]he recognition of the foreign divorce decree may be made in a Rule 108 proceeding
itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a particular fact." 37 While Corpuz concerned
a foreign divorce decree, in the present case the Japanese Family Court judgment also affected the
civil status of the parties, especially Marinay, who is a Filipino citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to record "[a]cts,
events and judicial decrees concerning the civil status of persons" in the civil registry as required
by Article 407 of the Civil Code.In other words, "[t]he law requires the entry in the civil registry
of judicial decrees that produce legal consequences upon a person's legal capacity and
status . . . ." 38 The Japanese Family Court judgment directly bears on the civil status of a Filipino
citizen and should therefore be proven as a fact in a Rule 108 proceeding.

Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing a void
marriage under Rule 108, citing De Castro v. De Castro 39 andNiñal v. Bayadog 40 which
declared that "[t]he validity of a void marriage may be collaterally attacked." 41
Marinay and Maekara individually sent letters to the Court to comply with the directive for them
to comment on the petition. 42 Maekara wrote that Marinay concealed from him the fact that she
was previously married to Fujiki. 43 Maekara also denied that he inflicted any form of violence on
Marinay. 44 On the other hand, Marinay wrote that she had no reason to oppose the
petition. 45 She would like to maintain her silence for fear that anything she say might cause
misunderstanding between her and Fujiki. 46 ScTaEA
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.
(2) Whether a husband or wife of a prior marriage can file a petition to recognize a foreign
judgment nullifying the subsequent marriage between his or her spouse and a foreign citizen on
the ground of bigamy.
(3) Whether the Regional Trial Court can recognize the foreign judgment in a proceeding for
cancellation or correction of entries in the Civil Registry under Rule 108 of the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign judgment
relating to the status of a marriage where one of the parties is a citizen of a foreign country.
Moreover, in Juliano-Llave v. Republic,47 this Court held that the rule in A.M. No. 02-11-10-
SC that only the husband or wife can file a declaration of nullity or annulment of marriage "does
not apply if the reason behind the petition is bigamy." 48
I.
For Philippine courts to recognize a foreign judgment relating to the status of a marriage where
one of the parties is a citizen of a foreign country, the petitioner only needs to prove the foreign
judgment as a fact under the Rules of Court. To be more specific, a copy of the foreign judgment
may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and 25, in relation
to Rule 39, Section 48 (b) of the Rules of Court. 49 Petitioner may prove the Japanese Family
Court judgment through (1) an official publication or (2) a certification or copy attested by the
officer who has custody of the judgment. If the office which has custody is in a foreign country
such as Japan, the certification may be made by the proper diplomatic or consular officer of the
Philippine foreign service in Japan and authenticated by the seal of office. 50 EaISTD
130
To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign judgment would
mean that the trial court and the parties should follow its provisions, including the form and
contents of the petition, 51 the service of summons, 52 the investigation of the public
prosecutor, 53 the setting of pre-trial, 54the trial 55 and the judgment of the trial court. 56 This
is absurd because it will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues." 57 The interpretation of
the RTC is tantamount to relitigating the case on the merits. In Mijares v. Rañada, 58 this Court
explained that "[i]f every judgment of a foreign court were reviewable on the merits, the plaintiff
would be forced back on his/her original cause of action, rendering immaterial the previously
concluded litigation." 59
A foreign judgment relating to the status of a marriage affects the civil status, condition and legal
capacity of its parties. However, the effect of a foreign judgment is not automatic. To extend the
effect of a foreign judgment in the Philippines, Philippine courts must determine if the foreign
judgment is consistent with domestic public policy and other mandatory laws. 60 Article 15 of
the Civil Code provides that "[l]aws relating to family rights and duties, or to the status, condition
and legal capacity of persons are binding upon citizens of the Philippines, even though living
abroad." This is the rule of lex nationalii in private international law. Thus, the Philippine State
may require, for effectivity in the Philippines, recognition by Philippine courts of a foreign
judgment affecting its citizen, over whom it exercises personal jurisdiction relating to the status,
condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does not require relitigation
under a Philippine court of the case as if it were a new petition for declaration of nullity of marriage.
Philippine courts cannot presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition and legal capacity of the
foreign citizen who is under the jurisdiction of another state. Thus, Philippine courts can only
recognize the foreign judgment as a fact according to the rules of evidence. ECcTaS
Section 48 (b), Rule 39 of the Rules of Court provides that a foreign judgment or final order against
a person creates a "presumptive evidence of a right as between the parties and their successors in
interest by a subsequent title." Moreover, Section 48 of the Rules of Court states that "the
judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact." Thus, Philippine courts exercise limited
review on foreign judgments. Courts are not allowed to delve into the merits of a foreign judgment.
Once a foreign judgment is admitted and proven in a Philippine court, it can only be repelled on
grounds external to its merits, i.e., "want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact." The rule on limited review embodies the policy of efficiency
and the protection of party expectations, 61 as well as respecting the jurisdiction of other
states. 62
Since 1922 in Adong v. Cheong Seng Gee, 63 Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the rules of
evidence. 64 Divorce involves the dissolution of a marriage, but the recognition of a foreign
divorce decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the rules
of ordinary trial. While the Philippines does not have a divorce law, Philippine courts may,

however, recognize a foreign divorce decree under the second paragraph of Article 26 of the Family
Code, to capacitate a Filipino citizen to remarry when his or her foreign spouse obtained a divorce
decree abroad. 65
There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family Court
judgment nullifying the marriage between Marinay and Maekara on the ground of bigamy. While
the Philippines has no divorce law, the Japanese Family Court judgment is fully consistent with
Philippine public policy, as bigamous marriages are declared void from the beginning under
Article 35 (4) of the Family Code. Bigamy is a crime under Article 349 of the Revised Penal Code.
Thus, Fujiki can prove the existence of the Japanese Family Court judgment in accordance with
Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48 (b) of the Rules of Court.
II.
Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be
made in a special proceeding for cancellation or correction of entries in the civil registry under
Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides that "[a] special
proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact."
Rule 108 creates a remedy to rectify facts of a person's life which are recorded by the State pursuant
to the Civil Register Law or Act No. 3753. These are facts of public consequence such as birth,
death or marriage, 66 which the State has an interest in recording. As noted by the Solicitor
General, in Corpuz v. Sto. Tomas this Court declared that "[t]he recognition of the foreign divorce
decree may be made in a Rule 108 proceeding itself, as the object of special proceedings (such as
that in Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or a
particular fact." 67 AIaHES
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. — Any person interested in any act, event,
order or decree concerning the civil status of persons which has
been recorded in the civil register, may file a verified petition for the
cancellation or correction of any entry relating thereto, with the Regional
Trial Court of the province where the corresponding civil registry is located.
(Emphasis supplied)
Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay
and Maekara in the civil registry on the basis of the decree of the Japanese Family Court.
There is no doubt that the prior spouse has a personal and material interest in maintaining the
integrity of the marriage he contracted and the property relations arising from it. There is also no
doubt that he is interested in the cancellation of an entry of a bigamous marriage in the civil
registry, which compromises the public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve, in limited instances) 68 his most
intimate human relation, but also to protect his property interests that arise by operation of law
131
the moment he contracts marriage. 69These property interests in marriage include the right to be
supported "in keeping with the financial capacity of the family" 70 and preserving the property
regime of the marriage. 71
Property rights are already substantive rights protected by the Constitution, 72 but a spouse's
right in a marriage extends further to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family Code. 73 A.M. No. 02-11-10-SC cannot
"diminish, increase, or modify" the substantive right of the spouse to maintain the integrity of his
marriage. 74 In any case, Section 2 (a) of A.M. No. 02-11-10-SC preserves this substantive right by
limiting the personality to sue to the husband or the wife of the union recognized by law. DHSCTI
Section 2 (a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to
question the validity of a subsequent marriage on the ground of bigamy. On the contrary, when
Section 2 (a) states that "[a] petition for declaration of absolute nullity of void marriage may be
filed solely by the husband or the wife" 75 — it refers to the husband or the wife of the
subsisting marriage. Under Article 35 (4) of the Family Code, bigamous marriages are void from
the beginning. Thus, the parties in a bigamous marriage are neither the husband nor the wife
under the law. The husband or the wife of the prior subsisting marriage is the one who has the
personality to file a petition for declaration of absolute nullity of void marriage under Section 2 (a)
of A.M. No. 02-11-10-SC.
Article 35 (4) of the Family Code, which declares bigamous marriages void from the beginning, is
the civil aspect of Article 349 of the Revised Penal Code, 76which penalizes bigamy. Bigamy is a
public crime. Thus, anyone can initiate prosecution for bigamy because any citizen has an interest
in the prosecution and prevention of crimes. 77 If anyone can file a criminal action which leads to
the declaration of nullity of a bigamous marriage, 78 there is more reason to confer personality to
sue on the husband or the wife of a subsisting marriage. The prior spouse does not only share in
the public interest of prosecuting and preventing crimes, he is also personally interested in the
purely civil aspect of protecting his marriage.
When the right of the spouse to protect his marriage is violated, the spouse is clearly an injured
party and is therefore interested in the judgment of the suit. 79Juliano-Llave ruled that the prior
spouse "is clearly the aggrieved party as the bigamous marriage not only threatens the financial
and the property ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse." 80 Being a real party in interest, the prior spouse is entitled to sue in
order to declare a bigamous marriage void. For this purpose, he can petition a court to recognize
a foreign judgment nullifying the bigamous marriage and judicially declare as a fact that such
judgment is effective in the Philippines. Once established, there should be no more impediment
to cancel the entry of the bigamous marriage in the civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court held that
a "trial court has no jurisdiction to nullify marriages" in a special proceeding for cancellation or
correction of entry under Rule 108 of the Rules of Court. 81 Thus, the "validity of marriage[] . . .
can be questioned only in a direct action" to nullify the marriage. 82 The RTC relied on Braza in

dismissing the petition for recognition of foreign judgment as a collateral attack on the marriage
between Marinay and Maekara. EAcTDH
Braza is not applicable because Braza does not involve a recognition of a foreign judgment
nullifying a bigamous marriage where one of the parties is a citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in the civil registry cannot substitute
for an action to invalidate a marriage. A direct action is necessary to prevent circumvention of the
substantive and procedural safeguards of marriage under the Family Code, A.M. No. 02-11-10-
SC and other related laws. Among these safeguards are the requirement of proving the limited
grounds for the dissolution of marriage, 83 support pendente lite of the spouses and
children, 84 the liquidation, partition and distribution of the properties of the spouses, 85 and
the investigation of the public prosecutor to determine collusion. 86A direct action for declaration
of nullity or annulment of marriage is also necessary to prevent circumvention of the jurisdiction
of the Family Courts under theFamily Courts Act of 1997 (Republic Act No. 8369), as a petition for
cancellation or correction of entries in the civil registry may be filed in the Regional Trial Court
"where the corresponding civil registry is located." 87 In other words, a Filipino citizen cannot
dissolve his marriage by the mere expedient of changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or cancellation of a civil registry entry
based on the recognition of a foreign judgment annulling a marriage where one of the parties is a
citizen of the foreign country. There is neither circumvention of the substantive and procedural
safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A.
No. 8369. A recognition of a foreign judgment is not an action to nullify a marriage. It is an action
for Philippine courts to recognize the effectivity of a foreign judgment, which presupposes a
case which was already tried and decided under foreign law. The procedure in A.M. No.
02-11-10-SC does not apply in a petition to recognize a foreign judgment annulling a bigamous
marriage where one of the parties is a citizen of the foreign country. Neither can R.A. No.
8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a
foreign divorce decree to a Filipino spouse without undergoing trial to determine the validity of
the dissolution of the marriage. The second paragraph of Article 26 of the Family Code provides
that "[w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry,
the Filipino spouse shall have capacity to remarry under Philippine law." In Republic v.
Orbecido, 88 this Court recognized the legislative intent of the second paragraph of Article 26
which is "to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino spouse" 89 under the
laws of his or her country. The second paragraph of Article 26 of the Family Code only authorizes
Philippine courts to adopt the effects of a foreign divorce decree precisely because the Philippines
does not allow divorce. Philippine courts cannot try the case on the merits because it is tantamount
to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to address the anomaly that results
from a marriage between a Filipino, whose laws do not allow divorce, and a foreign citizen, whose
132
laws allow divorce. The anomaly consists in the Filipino spouse being tied to the marriage while
the foreign spouse is free to marry under the laws of his or her country. The correction is made by
extending in the Philippines the effect of the foreign divorce decree, which is already effective in
the country where it was rendered. The second paragraph of Article 26 of the Family Code is based
on this Court's decision in Van Dorn v. Romillo 90 which declared that the Filipino spouse
"should not be discriminated against in her own country if the ends of justice are to be
served." 91 IDETCA
The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a
foreign citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy.
The Filipino spouse may file a petition abroad to declare the marriage void on the ground of
bigamy. The principle in the second paragraph of Article 26 of the Family Code applies because
the foreign spouse, after the foreign judgment nullifying the marriage, is capacitated to remarry
under the laws of his or her country. If the foreign judgment is not recognized in the Philippines,
the Filipino spouse will be discriminated — the foreign spouse can remarry while the Filipino
spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered to
correct a situation where the Filipino spouse is still tied to the marriage while the foreign spouse
is free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine courts
already have jurisdiction to extend the effect of a foreign judgment in the Philippines to the extent
that the foreign judgment does not contravene domestic public policy. A critical difference
between the case of a foreign divorce decree and a foreign judgment nullifying a bigamous
marriage is that bigamy, as a ground for the nullity of marriage, is fully consistent with Philippine
public policy as expressed in Article 35 (4) of the Family Code and Article 349 of the Revised Penal
Code. The Filipino spouse has the option to undergo full trial by filing a petition for declaration of
nullity of marriage under A.M. No. 02-11-10-SC, but this is not the only remedy available to him
or her. Philippine courts have jurisdiction to recognize a foreign judgment nullifying a bigamous
marriage, without prejudice to a criminal prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are incompetent to substitute their
judgment on how a case was decided under foreign law. They cannot decide on the "family rights
and duties, or on the status, condition and legal capacity" of the foreign citizen who is a party to
the foreign judgment. Thus, Philippine courts are limited to the question of whether to extend the
effect of a foreign judgment in the Philippines. In a foreign judgment relating to the status of a
marriage involving a citizen of a foreign country, Philippine courts only decide whether to extend
its effect to the Filipino party, under the rule of lex nationalii expressed in Article 15 of the Civil
Code.
For this purpose, Philippine courts will only determine (1) whether the foreign judgment is
inconsistent with an overriding public policy in the Philippines; and (2) whether any alleging party
is able to prove an extrinsic ground to repel the foreign judgment, i.e., want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to repel the judgment, Philippine courts
should, by default, recognize the foreign judgment as part of the comity of nations. Section 48 (b),
Rule 39 of the Rules of Court states that the foreign judgment is already "presumptive evidence of
 133

a right between the parties." Upon recognition of the foreign judgment, this right becomes
conclusive and the judgment serves as the basis for the correction or cancellation of entry in the
civil registry. The recognition of the foreign judgment nullifying a bigamous marriage is a
subsequent event that establishes a new status, right and fact 92 that needs to be reflected in the
civil registry. Otherwise, there will be an inconsistency between the recognition of the effectivity
of the foreign judgment and the public records in the Philippines.
However, the recognition of a foreign judgment nullifying a bigamous marriage is without
prejudice to prosecution for bigamy under Article 349 of the Revised Penal Code. 93 The
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for extinction of
criminal liability under Articles 89 and 94 of the Revised Penal Code. Moreover, under Article 91
of the Revised Penal Code, "[t]he term of prescription [of the crime of bigamy] shall not run when
the offender is absent from the Philippine archipelago." CcHDSA
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to address the
questions on venue and the contents and form of the petition under Sections 4 and 5, respectively,
of A.M. No. 02-11-10-SC.
WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the Resolution
dated 2 March 2011 of the Regional Trial Court, Branch 107, Quezon City, in Civil Case No. Q-11-
68582 are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in accordance with this
Decision.
SO ORDERED.
Brion, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
||| (Fujiki v. Marinay, G.R. No. 196049, [June 26, 2013], 712 PHIL 524-558)

SECOND DIVISION
[G.R. No. 172342. July 13, 2009.]
LWV CONSTRUCTION CORPORATION, petitioner,vs.MARCELO B.
DUPO, respondent.
DECISION
QUISUMBING, J p:
Petitioner LWV Construction Corporation appeals the Decision 1 dated December 6,
2005 of the Court of Appeals in CA-G.R. SP No. 76843 and its Resolution 2 dated April 12,
2006, denying the motion for reconsideration. The Court of Appeals had ruled that under
Article 87 of the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo
Dupo is entitled to a service award or longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent
as Civil Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-
Mojil Group/Establishment (MMG).On February 26, 1992, respondent signed his first
overseas employment contract, renewable after one year. It was renewed five times on the
following dates: May 10, 1993, November 16, 1994, January 22, 1996, April 14, 1997, and
March 26, 1998. All were fixed-period contracts for one year. The sixth and last contract stated
that respondent's employment starts upon reporting to work and ends when he leaves the
work site. Respondent left Saudi Arabia on April 30, 1999 and arrived in the Philippines on
May 1, 1999.
On May 28, 1999, respondent informed MMG, through the petitioner, that he needs
to extend his vacation because his son was hospitalized. He also sought a promotion with
salary adjustment. 3 In reply, MMG informed respondent that his promotion is subject to
management's review; that his services are still needed; that he was issued a plane ticket for
his return flight to Saudi Arabia on May 31, 1999; and that his decision regarding his
employment must be made within seven days, otherwise, MMG "will be compelled to cancel
[his] slot". 4
On July 6, 1999, respondent resigned. In his letter to MMG, he also stated: IEAHca
xxx xxx xxx
I am aware that I still have to do a final settlement with the company and hope
that during my more than seven (7) [years] services, as the Saudi Law stated,
I am entitled for a long service award. 5 (Emphasis supplied.)
xxx xxx xxx
134
According to respondent, when he followed up his claim for long service award on
December 7, 2000, petitioner informed him that MMG did not respond. 6
On December 11, 2000, respondent filed a complaint 7 for payment of service
award against petitioner before the National Labor Relations Commission (NLRC),Regional
Arbitration Branch, Cordillera Administrative Region, Baguio City. In support of his claim,
respondent averred in his position paper that:
xxx xxx xxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5)
years in a company within the jurisdiction of Saudi Arabia, is entitled to the
so-calledlong service award which is known to others as longevity pay of at
least one half month pay for every year of service. In excess of five years an
employee is entitled to one month pay for every year of service. In both cases
inclusive of all benefits and allowances.
This benefit was offered to complainant before he went on vacation, hence,
this was engrained in his mind. He reconstructed the computation of his long
service award or longevity pay and he arrived at the following computation
exactly the same with the amount he was previously offered [which is
US$12,640.33]. 8 (Emphasis supplied.)
xxx xxx xxx
Respondent said that he did not grab the offer for he intended to return after his vacation.
For its part, petitioner offered payment and prescription as defenses. Petitioner
maintained that MMG "pays its workers their Service Award or Severance Pay every
conclusion of their Labor Contracts pursuant to Article 87 of the [Saudi Labor Law]". Under
Article 87, "payment of the award is at the end or termination of the Labor Contract concluded
for a specific period". Based on the payroll, 9 respondent was already paid his service award
or severance pay for his latest (sixth) employment contract.
Petitioner added that under Article 13 10 of the Saudi Labor Law, the action to
enforce payment of the service award must be filed within one year from the termination of
a labor contract for a specific period. Respondent's six contracts ended when he left Saudi
Arabia on the following dates: April 15, 1993, June 8, 1994, December 18, 1995, March 21,
1997, March 16, 1998 and April 30, 1999. Petitioner concluded that the one-year prescriptive
period had lapsed because respondent filed his complaint on December 11, 2000 or one year
and seven months after his sixth contract ended. 11 STcADa
In his June 18, 2001 Decision, 12 the Labor Arbiter ordered petitioner to pay
respondent longevity pay of US$12,640.33 or P648,562.69 and attorney's fees of P64,856.27
or a total of P713,418.96. 13
The Labor Arbiter ruled that respondent's seven-year employment with MMG had
sufficiently oriented him on the benefits given to workers; that petitioner was unable to

convincingly refute respondent's claim that MMG offered him longevity pay before he went
on vacation on May 1, 1999; and that respondent's claim was not barred by prescription since
his claim on July 6, 1999, made a month after his cause of action accrued, interrupted the
prescriptive period under the Saudi Labor Law until his claim was categorically denied.
Petitioner appealed. However, the NLRC dismissed the appeal and affirmed the
Labor Arbiter's decision. 14 The NLRC ruled that respondent is entitled to longevity pay
which is different from severance pay.
Aggrieved, petitioner brought the case to the Court of Appeals through a petition
for certiorari under Rule 65 of the Rules of Court. The Court of Appeals denied the petition
and affirmed the NLRC. The Court of Appeals ruled that service award is the same as
longevity pay, and that the severance payreceived by respondent cannot be equated with
service award. The dispositive portion of the Court of Appeals decision reads:
WHEREFORE,finding no grave abuse of discretion amounting to lack or in
(sic) excess of jurisdiction on the part of public respondent NLRC, the petition
is denied. The NLRC decision dated November 29, 2002 as well as and (sic)
its January 31, 2003 Resolution are hereby AFFIRMED in toto.
SO ORDERED. 15
After its motion for reconsideration was denied, petitioner filed the instant petition raising the
following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
FINDING NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION ON THE PART OF PUBLIC RESPONDENT
NATIONAL LABOR RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
FINDING THAT THE SERVICE AWARD OF THE RESPONDENT [HAS]
NOT PRESCRIBED WHEN HIS COMPLAINT WAS FILED ON DECEMBER
11, 2000. caCEDA
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING IN THE CASE AT BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING ARTICLE NO. 7 OF THE SAUDI LABOR AND WORKMEN LAW
TO SUPPORT ITS FINDING THAT THE BASIS OF THE SERVICE AWARD
135
IS LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN
EMPLOYEE. 16
Essentially, the issue is whether the Court of Appeals erred in ruling that respondent
is entitled to a service award or longevity pay of US$12,640.33 under the provisions of the
Saudi Labor Law. Related to this issue are petitioner's defenses of payment and prescription.
Petitioner points out that the Labor Arbiter awarded longevity pay although the
Saudi Labor Law grants no such benefit, and the NLRC confusedlongevity pay and service
award. Petitioner maintains that the benefit granted by Article 87 of the Saudi Labor Law
is service award which was already paid by MMG each time respondent's contract ended.
Petitioner insists that prescription barred respondent's claim for service award as
the complaint was filed one year and seven months after the sixth contract ended. Petitioner
alleges that the Court of Appeals erred in ruling that respondent's July 6, 1999 claim
interrupted the running of the prescriptive period. Such ruling is contrary to Article 13 of the
Saudi Labor Law which provides that no case or claim relating to any of the rights provided
for under said law shall be heard after the lapse of 12 months from the date of the termination
of the contract.
Respondent counters that he is entitled to longevity pay under the provisions of the
Saudi Labor Law and quotes extensively the decision of the Court of Appeals. He points out
that petitioner has not refuted the Labor Arbiter's finding that MMG offered him longevity
pay of US$12,640.33 before his one-month vacation in the Philippines in 1999. Thus, he
"submits that such offer indeed exists" as he sees no reason for MMG to offer the benefit if no
law grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals.
We find that respondent's service award under Article 87 of the Saudi Labor Law has already
been paid. Our computation will show that the severance pay received by respondent was
his service award.
Article 87 clearly grants a service award.It reads: HAEDIS
Article 87
Where the term of a labor contract concluded for a specified
period comes to an end or where the employer cancels a contract of
unspecified period, the employer shall pay to the workman an award
for the period of his service to be computed on the basis of half a month's
pay for each of the first five years and one month's pay for each of the
subsequent years. The last rate of pay shall be taken as basis for the
computation of the award. For fractions of a year, the workman shall be
entitled to an award which is proportionate to his service period during that
year. Furthermore, the workman shall be entitled to the service
award provided for at the beginning of this article in the following cases:

A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond
his control. 17 (Emphasis supplied.)
Respondent, however, has called the benefit other names such as long service
award and longevity pay. On the other hand, petitioner claimed that theservice award is the
same as severance pay. Notably, the Labor Arbiter was unable to specify any law to support
his award of longevity pay. 18 He anchored the award on his finding that respondent's
allegations were more credible because his seven-year employment at MMG had sufficiently
oriented him on the benefits given to workers. To the NLRC, respondent is entitled to service
award or longevity pay under Article 87 and that longevity pay is different from severance
pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree
with respondent that service award is the same as longevity pay, and wrong to agree with
petitioner that service award is the same as severance pay? And why would it be correct to say
that service award is severance pay, and wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented. Respondent's
position paper mentioned how his long service award or longevity pay is computed: half-
month's pay per year of service and one-month's pay per year after five years of service. Article
87 has the same formula to compute the service award.
The payroll submitted by petitioner showed that respondent received severance
pay of SR2,786 for his sixth employment contract covering the period April 21, 1998 to April
29, 1999. 19 The computation below shows that respondent's severance pay of SR2,786
was his service award under Article 87.
Service Award = 1/2 (SR5,438) 20 + (9 days/365 days) 21 x 1/2 (SR5,438)
Service Award = SR2,786.04
Respondent's service award for the sixth contract is equivalent only to half-month's
pay plus the proportionate amount for the additional nine days of service he rendered after
one year. Respondent's employment contracts expressly stated that his employment ended
upon his departure from work. Each year he departed from work and successively new
contracts were executed before he reported for work anew. His service was not cumulative.
Pertinently, inBrent School, Inc. v. Zamora, 22 we said that "a fixed term is an essential and
natural appurtenance" of overseas employment contracts, 23 as in this case. We also said in
that case that under American law, "[w]here a contract specifies the period of its duration, it
terminates on the expiration of such period. A contract of employment for a definite period
terminates by its own terms at the end of such period." 24 As it is, Article 72 of the Saudi
Labor Law is also of similar import. It reads: HIACEa
136
A labor contract concluded for a specified period shall terminate upon the
expiry of its term. If both parties continue to enforce the contract, thereafter,
it shall be considered renewed for an unspecified period. 25
Regarding respondent's claim that he was offered US$12,640.33 as longevity pay
before he returned to the Philippines on May 1, 1999, we find that he was not candid on this
particular point. His categorical assertion about the offer being "engrained in his mind" such
that he "reconstructed the computation . . . and arrived at the . . . computation exactly the
same with the amount he was previously offered" is not only beyond belief. Such assertion is
also a stark departure from his July 6, 1999 letter to MMG where he could only express his
hope that he was entitled to a long service award and where he never mentioned the supposed
previous offer. Moreover, respondent's claim that his monthly compensation is
SR10,248.92 26 is belied by the payroll which shows that he receives SR5,438 per month.
We therefore emphasize that such payroll should have prompted the lower tribunals
to examine closely respondent's computation of his supposed longevity pay before adopting
that computation as their own.
On the matter of prescription, however, we cannot agree with petitioner that
respondent's action has prescribed under Article 13 of the Saudi Labor Law. What applies is
Article 291 of our Labor Code which reads:
ART. 291. Money claims. — All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise
they shall be forever barred.
xxx xxx xxx
In Cadalin v. POEA's Administrator, 27 we held that Article 291 covers all money
claims from employer-employee relationship and is broader in scope than claims arising from
a specific law. It is not limited to money claims recoverable under the Labor Code, but applies
also to claims of overseas contract workers. 28 The following ruling in Cadalin v. POEA's
Administrator is instructive:
First to be determined is whether it is the Bahrain law on prescription of
action based on the Amiri Decree No. 23 of 1976 or a Philippine law on
prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after
the lapse of one year from the date of the expiry of the contract" ....
As a general rule, a foreign procedural law will not be applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum. This
is true even if the action is based upon a foreign substantive law (Restatement
 137

of the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 WHEREFORE,the petition is GRANTED.The assailed Decision dated December
[1979]). ScCIaA 6, 2005 and Resolution dated April 12, 2006, of the Court of Appeals in CA-G.R. SP No. 76843,
as well as the Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case No. RAB-CAR-
A law on prescription of actions is sui generis in Conflict of Laws in the sense 12-0649-00 and the Decision dated November 29, 2002 and Resolution dated January 31,
that it may be viewed either as procedural or substantive, depending on the 2003 of the NLRC in NLRC CA No. 028994-01 (NLRC RAB-CAR-12-0649-00)
characterization given such a law. are REVERSED and SET ASIDE.The Complaint of respondent is
hereby DISMISSED. DTaSIc
xxx xxx xxx
No pronouncement as to costs.
However, the characterization of a statute into a procedural or substantive
law becomes irrelevant when the country of the forum has a "borrowing SO ORDERED.
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 Carpio Morales, Chico-Nazario, * Leonardo-de Castro ** and Brion, JJ., concur
"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, ||| (LWV Construction Corp. v. Dupo, G.R. No. 172342, [July 13, 2009], 610 PHIL 164-177)
183 [1975]).While there are several kinds of "borrowing statutes",one form
provides that an action barred by the laws of the place where it accrued, will
not be enforced in the forum even though the local statute has not run against
it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]).Section 48 of our
Code of Civil Procedure is of this kind. Said Section provides:
"If by the laws of the state or country where the cause of action arose, the
action is barred, it is also barred in the Philippine Islands."
Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions of the
Code of Civil Procedure as to which were inconsistent with it. There is no
provision in the Civil Code of the Philippines, which is inconsistent with or
contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine
Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil
Procedure] cannot be enforced ex proprio vigore insofar as it ordains the
application in this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of
1976.
The courts of the forum will not enforce any foreign claim obnoxious to the
forum's public policy ....To enforce the one-year prescriptive period of the
Amiri Decree No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor. 29
xxx xxx xxx
Thus, in our considered view, respondent's complaint was filed well within the three-
year prescriptive period under Article 291 of our Labor Code. This point, however, has already
been mooted by our finding that respondent's service award had been paid, albeit the payroll
termed such payment as severance pay.

THIRD DIVISION
[G.R. No. 178551. October 11, 2010.]
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and
MINISTRY OF PUBLIC HEALTH-KUWAIT, petitioners, vs. MA.
JOSEFA ECHIN, respondent.
DECISION
CARPIO MORALES, J p:
Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in
behalf of its principal-co-petitioner, the Ministry of Public Health of Kuwait (the Ministry),
for the position of medical technologist under a two-year contract, denominated as a
Memorandum of Agreement (MOA), with a monthly salary of US$1,200.00.
Under the MOA, 1 all newly-hired employees undergo a probationary period of one
(1) year and are covered by Kuwait's Civil Service Board Employment Contract No. 2.
Respondent was deployed on February 17, 2000 but was terminated from
employment on February 11, 2001, she not having allegedly passed the probationary period.
As the Ministry denied respondent's request for reconsideration, she returned to the
Philippines on March 17, 2001, shouldering her own air fare.
On July 27, 2001, respondent filed with the National Labor Relations Commission
(NLRC) a complaint 2 for illegal dismissal against petitioner ATCI as the local recruitment
agency, represented by petitioner, Amalia Ikdal (Ikdal), and the Ministry, as the foreign
principal.
By Decision 3 of November 29, 2002, the Labor Arbiter, finding that petitioners
neither showed that there was just cause to warrant respondent's dismissal nor that she failed
to qualify as a regular employee, held that respondent was illegally dismissed and accordingly
ordered petitioners to pay her US$3,600.00, representing her salary for the three months
unexpired portion of her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC affirmed the Labor Arbiter's
decision by Resolution 4 of January 26, 2004. Petitioners' motion for reconsideration having
been denied by Resolution 5 of April 22, 2004, they appealed to the Court of Appeals,
contending that their principal, the Ministry, being a foreign government agency, is immune
from suit and, as such, the immunity extended to them; and that respondent was validly
dismissed for her failure to meet the performance rating within the one-year period as
required under Kuwait's Civil Service Laws. Petitioners further contended that Ikdal should
not be liable as an officer of petitioner ATCI.
138
By Decision 6 of March 30, 2007, the appellate court affirmed the NLRC Resolution.
In brushing aside petitioners' contention that they only acted as agent of the Ministry
and that they cannot be held jointly and solidarily liable with it, the appellate court noted that
under the law, a private employment agency shall assume all responsibilities for the
implementation of the contract of employment of an overseas worker, hence, it can be sued
jointly and severally with the foreign principal for any violation of the recruitment agreement
or contract of employment. ATcaHS
As to Ikdal's liability, the appellate court held that under Sec. 10 of Republic Act No.
8042, the "Migrant and Overseas Filipinos' Act of 1995," corporate officers, directors and
partners of a recruitment agency may themselves be jointly and solidarily liable with the
recruitment agency for money claims and damages awarded to overseas workers.
Petitioners' motion for reconsideration having been denied by the appellate court by
Resolution 7 of June 27, 2007, the present petition for review oncertiorari was filed.
Petitioners maintain that they should not be held liable because respondent's
employment contract specifically stipulates that her employment shall be governed by the
Civil Service Law and Regulations of Kuwait. They thus conclude that it was patent error for
the labor tribunals and the appellate court to apply the Labor Code provisions governing
probationary employment in deciding the present case.
Further, petitioners argue that even the Philippine Overseas Employment Act
(POEA) Rules relative to master employment contracts (Part III, Sec. 2 of the POEA Rules
and Regulations) accord respect to the "customs, practices, company policies and labor laws
and legislation of the host country."
Finally, petitioners posit that assuming arguendo that Philippine labor laws are
applicable, given that the foreign principal is a government agency which is immune from suit,
as in fact it did not sign any document agreeing to be held jointly and solidarily liable,
petitioner ATCI cannot likewise be held liable, more so since the Ministry's liability had not
been judicially determined as jurisdiction was not acquired over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the
money claims of Overseas Filipino workers (OFWs) which it deploys abroad by the mere
expediency of claiming that its foreign principal is a government agency clothed with
immunity from suit, or that such foreign principal's liability must first be established before
it, as agent, can be held jointly and solidarily liable.
In providing for the joint and solidary liability of private recruitment agencies with
their foreign principals, Republic Act No. 8042 precisely affords the OFWs with a recourse
and assures them of immediate and sufficient payment of what is due them. Skippers United
Pacific v. Maguad 8 explains:
. . . [T]he obligations covenanted in the recruitment agreement
entered into by and between the local agent and its foreign

principal are not coterminous with the term of such agreement so
that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the
agreement do not at all end, but the same extends up to and until the
expiration of the employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement. Otherwise, this
will render nugatory the very purpose for which the law governing
the employment of workers for foreign jobs abroad was
enacted. (emphasis supplied)
The imposition of joint and solidary liability is in line with the policy of the state to protect
and alleviate the plight of the working class. 9 Verily, to allow petitioners to simply invoke the
immunity from suit of its foreign principal or to wait for the judicial determination of the
foreign principal's liability before petitioner can be held liable renders the law on joint and
solidary liability inutile.
As to petitioners' contentions that Philippine labor laws on probationary
employment are not applicable since it was expressly provided in respondent's employment
contract, which she voluntarily entered into, that the terms of her engagement shall be
governed by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules
accord respect to such rules, customs and practices of the host country, the same was not
substantiated.
Indeed, a contract freely entered into is considered the law between the parties who
can establish stipulations, clauses, terms and conditions as they may deem convenient,
including the laws which they wish to govern their respective obligations, as long as they are
not contrary to law, morals, good customs, public order or public policy.
It is hornbook principle, however, that the party invoking the application of a foreign
law has the burden of proving the law, under the doctrine ofprocessual presumption which,
in this case, petitioners failed to discharge. The Court's ruling in EDI-Staffbuilders Int'l. v.
NLRC 10 illuminates:
In the present case, the employment contract signed by Gran
specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g., specific causes for termination,
termination procedures, etc.). Being the law intended by the parties (lex loci
intentiones) to apply to the contract, Saudi Labor Laws should govern all
matters relating to the termination of the employment of Gran. HcACTE
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the foreign
law. The foreign law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only domestic
or forum law.
139
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. Where a foreign law is not pleaded
or, even if pleaded, is not proved, the presumption is that foreign
law is the same as ours. Thus, we apply Philippine labor laws in
determining the issues presented before us. (emphasis and
underscoring supplied)
The Philippines does not take judicial notice of foreign laws, hence, they must not
only be alleged; they must be proven. To prove a foreign law, the party invoking it must
present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules
of Court which reads:
SEC. 24. Proof of official record. — The record of public documents referred
to in paragraph (a) of Section 19, when admissible for any purpose, may be
evidenced by an official publication thereof or by a copy attested by the officer
having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has
the custody. If the office in which the record is kept is in a foreign
country, the certificate may be made by a secretary of the embassy
or legation, consul general, consul, vice consul, or consular agent
or by any officer in the foreign service of the Philippines stationed
in the foreign country in which the record is kept, and
authenticated by the seal of his office. (emphasis supplied)
SEC. 25. What attestation of copy must state. — Whenever a copy of a
document or record is attested for the purpose of the evidence, the attestation
must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be. The attestation must be under the
official seal of the attesting officer, if there be any, or if he be the clerk of a
court having a seal, under the seal of such court.
To prove the Kuwaiti law, petitioners submitted the following: MOA between
respondent and the Ministry, as represented by ATCI, which provides that the employee is
subject to a probationary period of one (1) year and that the host country's Civil Service Laws
and Regulations apply; a translated copy 11(Arabic to English) of the termination letter to
respondent stating that she did not pass the probation terms, without specifying the grounds
therefor, and a translated copy of the certificate of termination, 12 both of which documents
were certified by Mr. Mustapha Alawi, Head of the Department of Foreign Affairs-Office of
Consular Affairs Inslamic Certification and Translation Unit; and respondent's letter 13 of
reconsideration to the Ministry, wherein she noted that in her first eight (8) months of
employment, she was given a rating of "Excellent" albeit it changed due to changes in her shift
of work schedule.
These documents, whether taken singly or as a whole, do not sufficiently prove that
respondent was validly terminated as a probationary employee under Kuwaiti civil service
 140

laws. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly ||| (ATCI Overseas Corporation v. Echin, G.R. No. 178551, [October 11, 2010], 647 PHIL 43-52)
authenticated and translated by Embassy officials thereat, as required under the
Rules, what petitioners submitted were mere certifications attesting only to the
correctness of the translations of the MOA and the termination letter which does
not prove at all that Kuwaiti civil service laws differ from Philippine laws and
that under such Kuwaiti laws, respondent was validly terminated. Thus the subject
certifications read:
xxx xxx xxx
This is to certify that the herein attached translation/s from Arabic to
English/Tagalog and or vice versa was/were presented to this Office for
review and certification and the same was/were found to be in order. This
Office, however, assumes no responsibility as to the contents of the
document/s.
This certification is being issued upon request of the interested party for
whatever legal purpose it may serve. (emphasis supplied)
Respecting Ikdal's joint and solidary liability as a corporate officer, the same is in
order too following the express provision of R.A. 8042 on money claims, viz.:
SEC. 10. Money Claims. — Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual moral, exemplary and other forms of damages. cHDAIS
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical
being, the corporate officers and directors and partners as the
case may be, shall themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid claims and
damages. (emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED.
SO ORDERED.
Brion, Bersamin, Villarama, Jr. and Sereno, JJ., concur.

SECOND DIVISION
[G.R. No. 120135. March 31, 2003.]
BANK OF AMERICA NT&SA, BANK OF AMERICA
INTERNATIONAL, LTD., petitioners, vs. COURT OF APPEALS, HON.
MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO
K. LITONJUA, JR., respondents.
SYNOPSIS
The Litonjuas were engaged in the shipping business and owned two vessels, through their wholly-
owned corporations. With their business doing well, the petitioner banks induced them to increase
the number of their ships in operation, offering them easy loans to acquire said vessels. Thereafter,
petitioners acquired, through Litonjuas' corporations as borrowers, four additional vessels which
were registered in the names of their corporations. The Litonjuas claimed, among others, that
petitioners as trustees did not fully render an account of all the income derived from the operation
of the vessels as well as the proceeds of the subsequent foreclosure sale and that the loans acquired
for the purchase of the four additional vessels matured and remained unpaid, prompting
petitioners to have all the six vessels, including the two vessels originally owned by the private
respondents, foreclosed and sold at public auction. Petitioners filed a motion to dismiss on
grounds of forum non conveniens and lack of cause of action against them, but the same was
denied by the trial court. The Court of Appeals denied petitioners' petition for review
on certiorari and motion for reconsideration. Hence, this petition.
In denying the petition, the Supreme Court ruled that it is not the lack or absence of cause of action
that is a ground for dismissal of the complaint, but rather the fact that the complaint states no
cause of action. Failure to state a cause of action refers to the insufficiency of allegation in the
pleading, unlike lack of cause of action which refers to the insufficiency of factual basis for the
action. In the case at bar, the complaint contains the three elements of a cause of action.
The Court further ruled that whether a suit should be entertained or dismissed on the basis of the
doctrine of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court. In the case of Communication Materials and
Design, Inc. vs. Court of Appeals, this Court held that a Philippine Court may assume jurisdiction
over the case if it chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have the power to enforce its decision. Evidently, all these
requisites are present in the instant case.
141
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; ORDER
DENYING MOTION TO DISMISS CANNOT BE THE SUBJECT THEREOF; CASE AT BAR. —
[T]he order denying the motion to dismiss cannot be the subject of petition for certiorari.
Petitioners should have filed an answer to the complaint, proceed to trial and await judgment
before making an appeal. As repeatedly held by this Court: "An order denying a motion to dismiss
is interlocutory and cannot be the subject of the extraordinary petition for certiorari or
mandamus. The remedy of the aggrieved party is to file an answer and to interpose as defenses
the objections raised in his motion to dismiss, proceed to trial, and in case of an adverse decision,
to elevate the entire case by appeal in due course. . . . Under certain situations, recourse
to certiorari or mandamus is considered appropriate, i.e., (a) when the trial court issued the order
without or in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial
court; or (c) appeal would not prove to be a speedy and adequate remedy as when an appeal would
not promptly relieve a defendant from the injurious effects of the patently mistaken order
maintaining the plaintiff's baseless action and compelling the defendant needlessly to go through
a protracted trial and clogging the court dockets by another futile case."
2. ID.; ACTIONS; MOTION TO DISMISS; LACK OF PERSONALITY TO SUE CAN BE USED AS
GROUND FOR MOTION TO DISMISS BASED ON THE FACT THAT THE COMPLAINT
EVIDENTLY STATES NO CAUSE OF ACTION. — A case is dismissible for lack of personality to
sue upon proof that the plaintiff is not the real party-in-interest. Lack of personality to sue can be
used as a ground for a Motion to Dismiss based on the fact that the complaint, on the face thereof,
evidently states no cause of action.
3. ID.; ID.; CAUSE OF ACTION; ELEMENTS; PRESENT IN CASE AT BAR. — In San Lorenzo
Village Association, Inc. vs. Court of Appeals, this Court clarified that a complaint states a cause
of action where it contains three essential elements of a cause of action, namely: (1) the legal right
of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right. If these elements are absent, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a cause of action. . . . In the case
at bar, the complaint contains the three elements of a cause of action. It alleges that: (1) plaintiffs,
herein private respondents, have the right to demand for an accounting from defendants (herein
petitioners), as trustees by reason of the fiduciary relationship that was created between the parties
involving the vessels in question; (2) petitioners have the obligation, as trustees, to render such an
accounting; and (3) petitioners failed to do the same. cHTCaI
4. ID.; ID.; ID.; FAILURE TO STATE A CAUSE OF ACTION AND LACK OF CAUSE OF ACTION,
DISTINGUISHED. — [I]t is not the lack or absence of cause of action that is a ground for dismissal
of the complaint but rather the fact that the complaint states no cause of action. "Failure to state
a cause of action" refers to the insufficiency of allegation in the pleading, unlike "lack of cause of
action" which refers to the insufficiency of factual basis for the action. "Failure to state a cause of
action" may be raised at the earliest stages of an action through a motion to dismiss the complaint,
while "lack of cause of action" may be raised any time after the questions of fact have been resolved
on the basis of stipulations, admissions or evidence presented.

5. PRIVATE INTERNATIONAL LAW; FORUM NON CONVENIENS; APPLICATION OF THE
DOCTRINE DEPENDS LARGELY UPON THE FACTS OF THE CASE AND ADDRESSED TO THE.
SOUND DISCRETION OF THE TRIAL COURT. — The doctrine of forum non-conveniens, literally
meaning 'the forum is inconvenient', emerged in private international law to deter the practice of
global forum shopping, that is to prevent non-resident litigants from choosing the forum or place
wherein to bring their suit for malicious reasons, such as to secure procedural advantages, to
annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue.
Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded from
seeking remedies elsewhere. Whether a suit should be entertained or dismissed on the basis of
said doctrine depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial court. In the case ofCommunication Materials and Design, Inc. vs. Court of
Appeals, this Court held that ". . . [a] Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is
one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has
or is likely to have power to enforce its decision." Evidently, all these requisites are present in the
instant case.
6. ID.; ID.; SHOULD NOT BE USED AS GROUND FOR A MOTION TO DISMISS. — [T]his Court
enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine of forum
non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of
the Rules of Court does not include said doctrine as a ground. This Court further ruled that while
it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after vital facts are established, to determine whether special circumstances
require the court's desistance; and that the propriety of dismissing a case based on this principle
of forum non conveniens requires a factual determination, hence it is more properly considered a
matter of defense.
7. REMEDIAL LAW; ACTIONS; FORUM SHOPPING; WHEN PRESENT. — Forum shopping
exists where the elements of litis pendentia are present and where a final judgment in one case
will amount to res judicata in the other.
8. ID.; ID.; LITIS PENDENTIA; ELEMENTS; NOT PRESENT IN CASE AT BAR. — [F]or litis
pendentia to be a ground for the dismissal of an action there must be: (a) identity of the parties or
at least such as to represent the same interest in both actions; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases
should be such that the judgment which may be rendered in one would, regardless of which party
is successful, amount to res judicata in the other. In case at bar, not all the requirements for litis
pendentia are present. While there may be identity of parties, notwithstanding the presence of
other respondents, as well as the reversal in positions of plaintiffs and defendants, still the other
requirements necessary for litis pendentia were not shown by petitioner. It merely mentioned that
civil cases were filed in Hongkong and England without however showing the identity of rights
asserted and the reliefs sought for as well as the presence of the elements of res judicata should
one of the cases be adjudged.
142
DECISION
AUSTRIA-MARTINEZ, J p:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
November 29, 1994 decision of the Court of Appeals 1 and the April 28, 1995 resolution denying
petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a
Complaint 2 before the Regional Trial Court of Pasig against the Bank of America NT&SA and
Bank of America International, Ltd. (defendant banks for brevity) alleging that: they were engaged
in the shipping business; they owned two vessels: Don Aurelio and El Champion, through their
wholly-owned corporations; they deposited their revenues from said business together with other
funds with the branches of said banks in the United Kingdom and Hongkong up to 1979; with their
business doing well, the defendant banks induced them to increase the number of their ships in
operation, offering them easy loans to acquire said vessels; 3 thereafter, the defendant banks
acquired, through their (Litonjuas') corporations as the borrowers: (a) El Carrier 4 ; (b) El
General 5 ; (c) El Challenger 6 ; and (d) El Conqueror 7 ; the vessels were registered in the names
of their corporations; the operation and the funds derived therefrom were placed under the
complete and exclusive control and disposition of the petitioners; 8 and the possession of the
vessels was also placed by defendant banks in the hands of persons selected and designated by
them (defendant banks). 9
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the
income derived from the operation of the vessels as well as of the proceeds of the subsequent
foreclosure sale; 10 because of the breach of their fiduciary duties and/or negligence of the
petitioners and/or the persons designated by them in the operation of private respondents' six
vessels, the revenues derived from the operation of all the vessels declined drastically; the loans
acquired for the purchase of the four additional vessels then matured and remained unpaid,
prompting defendant banks to have all the six vessels, including the two vessels originally owned
by the private respondents, foreclosed and sold at public auction to answer for the obligations
incurred for and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of
their own personal funds equivalent to ten percent (10%) of the acquisition cost of the four vessels
and were left with the unpaid balance of their loans with defendant banks. 11 The Litonjuas prayed
for the accounting of the revenues derived in the operation of the six vessels and of the proceeds
of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of
trust; exemplary damages and attorney's fees. 12
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause
of action against them. 13
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:

"WHEREFORE, and in view of the foregoing consideration, the Motion to
Dismiss is hereby DENIED. The defendant is therefore, given a period of ten
(10) days to file its Answer to the complaint.
"SO ORDERED." 14
Instead of filing an answer the defendant banks went to the Court of Appeals on a "Petition for
Review on Certiorari" 15 which was aptly treated by the appellate court as a petition for certiorari.
They assailed the above-quoted order as well as the subsequent denial of their Motion for
Reconsideration. 16 The appellate court dismissed the petition and denied petitioners' Motion for
Reconsideration. 17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE FACT
THAT THE SEPARATE PERSONALITIES OF THE PRIVATE
RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN
CORPORATIONS (THE REAL BORROWERS) CLEARLY
SUPPORT, BEYOND ANY DOUBT, THE PROPOSITION THAT
THE PRIVATE RESPONDENTS HAVE NO PERSONALITIES TO
SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE THAT
WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT
MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO
FOLLOW IN DETERMINING WHETHER THE CHOICE OF
FORUM SHOULD BE DISTURBED. UNDER THE
CIRCUMSTANCES SURROUNDING THE INSTANT CASE,
DISMISSAL OF THE COMPLAINT ON THE GROUND OF FORUM
NON-CONVENIENS IS MORE APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL
JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY
OF FOREIGN ACTION MAY BE THE LEGAL BASIS FOR THE
DISMISSAL OF THE COMPLAINT FILED BY THE PRIVATE
RESPONDENT. COROLLARY TO THIS, THE RESPONDENT
COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT
PRIVATE RESPONDENTS ARE GUILTY OF FORUM
SHOPPING." 18
As to the first assigned error: Petitioners argue that the borrowers and the registered owners of
the vessels are the foreign corporations and not private respondents Litonjuas who are mere
stockholders; and that the revenues derived from the operations of all the vessels are deposited in
the accounts of the corporations. Hence, petitioners maintain that these foreign corporations are
the legal entities that have the personalities to sue and not herein private respondents; that private
respondents, being mere shareholders, have no claim on the vessels as owners since they merely
have an inchoate right to whatever may remain upon the dissolution of the said foreign
143
corporations and after all creditors have been fully paid and satisfied; 19 and that while private
respondents may have allegedly spent amounts equal to 10% of the acquisition costs of the vessels
in question, their 10% however represents their investments as stockholders in the foreign
corporations. 20
Anent the second assigned error, petitioners posit that while the application of the principle
of forum non conveniens is discretionary on the part of the Court, said discretion is limited by the
guidelines pertaining to the private as well as public interest factors in determining whether
plaintiffs' choice of forum should be disturbed, as elucidated in Gulf Oil Corp. vs.
Gilbert 21 and Piper Aircraft Co. vs. Reyno, 22 to wit:
"Private interest factors include: (a) the relative ease of access to sources of
proof; (b) the availability of compulsory process for the attendance of
unwilling witnesses; (c) the cost of obtaining attendance of willing witnesses;
or (d) all other practical problems that make trial of a case easy, expeditious
and inexpensive. Public interest factors include: (a) the administrative
difficulties flowing from court congestion; (b) the local interest in having
localized controversies decided at home; (c) the avoidance of unnecessary
problems in conflict of laws or in the application of foreign law; or (d) the
unfairness of burdening citizens in an unrelated forum with jury duty." 23
In support of their claim that the local court is not the proper forum, petitioners allege the
following:
"i) The Bank of America Branches involved, as clearly mentioned in the
Complaint, are based in Hongkong and England. As such, the
evidence and the witnesses are not readily available in the
Philippines;
"ii) The loan transactions were obtained, perfected, performed,
consummated and partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore, the
mortgaged vessels were part of an offshore fleet, not based in the
Philippines;
"iv) All the loans involved were granted to the Private Respondents'
foreign CORPORATIONS;
"v) The Restructuring Agreements were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged vessels and the application of the
sales proceeds occurred and transpired outside the Philippines, and
the deliveries of the sold mortgaged vessels were likewise made
outside the Philippines;

"vii) The revenues of the vessels and the proceeds of the sales of these vessels
were ALL deposited to the Accounts of the
foreign CORPORATIONS abroad; and
"viii) Bank of America International Ltd. is not licensed nor engaged in trade
or business in the Philippines." 24
Petitioners argue further that the loan agreements, security documentation and all subsequent
restructuring agreements uniformly, unconditionally and expressly provided that they will be
governed by the laws of England; 25 that Philippine Courts would then have to apply English law
in resolving whatever issues may be presented to it in the event it recognizes and accepts herein
case; that it would then be imposing a significant and unnecessary expense and burden not only
upon the parties to the transaction but also to the local court. Petitioners insist that the
inconvenience and difficulty of applying English law with respect to a wholly foreign transaction
in a case pending in the Philippines may be avoided by its dismissal on the ground of forum non
conveniens. 26
Finally, petitioners claim that private respondents have already waived their alleged causes of
action in the case at bar for their refusal to contest the foreign civil cases earlier filed by the
petitioners against them in Hongkong and England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench
Division Commercial Court (1992-Folio No. 2098) against (a)
LIBERIAN TRANSPORT NAVIGATION, SA.; (b) ESHLEY
COMPANIA NAVIERA SA., (c) EL CHALLENGER SA; (d)
ESPRIONA SHIPPING CO. SA; (e) PACIFIC NAVIGATORS CORP.
SA; (f) EDDIE NAVIGATION CORP. SA; (g) EDUARDO K.
LITONJUA & (h) AURELIO K. LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c)
EDUARDO KATIPUNAN LITONJUA and (d) AURELIO
KATIPUNAN LITONJUA.
"3.) Civil action in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b)
EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A.,
(d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE
NAVIGATION CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR.,
and (h) EDUARDO KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No.
4040 of 1992); against (a) ESHLEY COMPANIA NAVIERA S.A., (b)
144
EL CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A.,
(d) PACIFIC NAVIGATORS CORPORATION (e) EDDIE
NAVIGATION CORPORATION S.A., (f) LITONJUA CHARTERING
(EDYSHIP) CO., INC., (g) AURELIO KATIPUNAN LITONJUA, JR.,
and (h) EDUARDO KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by the pendency of
another action or by litis pendentia as shown above. 27
On the other hand, private respondents contend that certain material facts and pleadings are
omitted and/or misrepresented in the present petition forcertiorari; that the prefatory statement
failed to state that part of the security of the foreign loans were mortgages on a 39-hectare piece
of real estate located in the Philippines; 28 that while the complaint was filed only by the
stockholders of the corporate borrowers, the latter are wholly-owned by the private respondents
who are Filipinos and therefore under Philippine laws, aside from the said corporate borrowers
being but their alter-egos, they have interests of their own in the vessels. 29 Private respondents
also argue that the dismissal by the Court of Appeals of the petition for certiorari was justified
because there was neither allegation nor any showing whatsoever by the petitioners that they had
no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law from the
Order of the trial judge denying their Motion to Dismiss; that the remedy available to the
petitioners after their Motion to Dismiss was denied was to file an Answer to the
complaint; 30 that as upheld by the Court of Appeals, the decision of the trial court in not applying
the principle of forum non conveniens is in the lawful exercise of its discretion. 31 Finally, private
respondents aver that the statement of petitioners that the doctrine of res judicata also applies to
foreign judgment is merely an opinion advanced by them and not based on a categorical ruling of
this Court; 32 and that herein private respondents did not actually participate in the proceedings
in the foreign courts. 33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot be the subject of
petition for certiorari. Petitioners should have filed an answer to the complaint, proceed to trial
and await judgment before making an appeal. As repeatedly held by this Court:
"An order denying a motion to dismiss is interlocutory and cannot be the
subject of the extraordinary petition for certiorari or mandamus. The
remedy of the aggrieved party is to file an answer and to interpose as defenses
the objections raised in his motion to dismiss, proceed to trial, and in case of
an adverse decision, to elevate the entire case by appeal in due course. . . .
Under certain situations, recourse to certiorari or mandamus is considered
appropriate, i.e., (a) when the trial court issued the order without or in excess
of jurisdiction; (b) where there is patent grave abuse of discretion by the trial
court; or (c) appeal would not prove to be a speedy and adequate remedy as
when an appeal would not promptly relieve a defendant from the injurious
effects of the patently mistaken order maintaining the plaintiff's baseless
action and compelling the defendant needlessly to go through a protracted
trial and clogging the court dockets by another futile case." 34

Records show that the trial court acted within its jurisdiction when it issued the assailed Order
denying petitioners' motion to dismiss. Does the denial of the motion to dismiss constitute a patent
grave abuse of discretion? Would appeal, under the circumstances, not prove to be a speedy and
adequate remedy? We will resolve said questions in conjunction with the issues raised by the
parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the
complaint on the ground that plaintiffs have no cause of action against defendants since plaintiffs
are merely stockholders of the corporations which are the registered owners of the vessels and the
borrowers of petitioners?
No. Petitioners' argument that private respondents, being mere stockholders of the foreign
corporations, have no personalities to sue, and therefore, the complaint should be dismissed, is
untenable. A case is dismissible for lack of personality to sue upon proof that the plaintiff is not
the real party-in-interest. Lack of personality to sue can be used as a ground for a Motion to
Dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of
action. 35 In San Lorenzo Village Association, Inc. vs. Court of Appeals, 36 this Court clarified
that a complaint states a cause of action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant,
and (3) the act or omission of the defendant in violation of said legal right. If these elements are
absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state
a cause of action. 37 To emphasize, it is not the lack or absence of cause of action that is a ground
for dismissal of the complaint but rather the fact that the complaint states no cause of
action. 38 "Failure to state a cause of action" refers to the insufficiency of allegation in the
pleading, unlike "lack of cause of action" which refers to the insufficiency of factual basis for the
action. "Failure to state a cause of action" may be raised at the earliest stages of an action through
a motion to dismiss the complaint, while "lack of cause of action" may be raised any time after the
questions of fact have been resolved on the basis of stipulations, admissions or evidence
presented. 39
In the case at bar, the complaint contains the three elements of a cause of action. It alleges that:
(1) plaintiffs, herein private respondents, have the right to demand for an accounting from
defendants (herein petitioners), as trustees by reason of the fiduciary relationship that was created
between the parties involving the vessels in question; (2) petitioners have the obligation, as
trustees, to render such an accounting; and (3) petitioners failed to do the same.
Petitioners insist that they do not have any obligation to the private respondents as they are mere
stockholders of the corporation; that the corporate entities have juridical personalities separate
and distinct from those of the private respondents. Private respondents maintain that the
corporations are wholly owned by them and prior to the incorporation of such entities, they were
clients of petitioners which induced them to acquire loans from said petitioners to invest on the
additional ships.
We agree with private respondents. As held in the San Lorenzo case, 40
". . . assuming that the allegation of facts constituting plaintiffs' cause of action
is not as clear and categorical as would otherwise be desired, any uncertainty
145
thereby arising should be so resolved as to enable a full inquiry into the merits
of the action."
As this Court has explained in the San Lorenzo case, such a course, would preclude multiplicity of
suits which the law abhors, and conduce to the definitive determination and termination of the
dispute. To do otherwise, that is, to abort the action on account of the alleged fatal flaws of the
complaint would obviously be indecisive and would not end the controversy, since the institution
of another action upon a revised complaint would not be foreclosed. 41
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient', emerged
in private international law to deter the practice of global forum shopping, 42 that is to prevent
non-resident litigants from choosing the forum or place wherein to bring their suit for malicious
reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts
of law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies elsewhere. 43
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely
upon the facts of the particular case and is addressed to the sound discretion of the trial
court. 44 In the case of Communication Materials and Design, Inc. vs. Court of Appeals, 45 this
Court held that ". . . [a] Philippine Court may assume jurisdiction over the case if it chooses to do
so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to
have power to enforce its decision." 46 Evidently, all these requisites are present in the instant
case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, 47 that
the doctrine of forum non conveniens should not be used as a ground for a motion to dismiss
because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court
further ruled that while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine
whether special circumstances require the court's desistance; and that the propriety of dismissing
a case based on this principle of forum non conveniensrequires a factual determination, hence it
is more properly considered a matter of defense. 48
Third issue. Are private respondents guilty of forum shopping because of the pendency of foreign
action?
No. Forum shopping exists where the elements of litis pendentia are present and where a final
judgment in one case will amount to res judicata in the other. 49Parenthetically, for litis
pendentia to be a ground for the dismissal of an action there must be: (a) identity of the parties or
at least such as to represent the same interest in both actions; (b) identity of rights asserted and
 146

relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases
should be such that the judgment which may be rendered in one would, regardless of which party
is successful, amount to res judicata in the other. 50
In case at bar, not all the requirements for litis pendentia are present. While there may be identity
of parties, notwithstanding the presence of other respondents, 51 as well as the reversal in
positions of plaintiffs and defendants 52 , still the other requirements necessary for litis
pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in
Hongkong and England without however showing the identity of rights asserted and the reliefs
sought for as well as the presence of the elements of res judicata should one of the cases be
adjudged.
As the Court of Appeals aptly observed:
. . . [T]he petitioners, by simply enumerating the civil actions instituted
abroad involving the parties herein . . ., failed to provide this Court with
relevant and clear specifications that would show the presence of the above-
quoted elements or requisites for res judicata. While it is true that the
petitioners in their motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad, did aver that "Copies
of the foreign judgments are hereto attached and made integral parts hereof
as Annexes 'B', 'C', 'D' and `E'", they failed, wittingly or inadvertently, to
include a single foreign judgment in their pleadings submitted to this Court
as annexes to their petition. How then could We have been expected to rule
on this issue even if We were to hold that foreign judgments could be the basis
for the application of the aforementioned principle of res judicata? 53
Consequently, both courts correctly denied the dismissal of herein subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioners. TIcEDC
SO ORDERED.
Bellosillo, Mendoza, Quisumbing, and Callejo, Sr., JJ., concur.
||| (Bank of America NT&SA v. Court of Appeals, G.R. No. 120135, [March 31, 2003], 448 PHIL
181-198)

SECOND DIVISION
[G.R. No. 145587. October 26, 2007.]
EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S.
GRAN, respondents.
DECISION
VELASCO, JR., J p:
The Case
This Petition for Review on Certiorari 1 seeks to set aside the October 18, 2000 Decision 2 of the
Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999
Decision 3 and September 30, 1999 Resolution 4 rendered by the National Labor Relations
Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search
International (ESI), EDI-Staffbuilders International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr
Est. (OAB) jointly and severally to pay Eleazar S. Gran (Gran) the amount of USD 16,150.00 as
unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino
Workers (OFWs). 5 ESI is another recruitment agency which collaborated with EDI to process the
documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in
Riyadh, Kingdom of Saudi Arabia. 6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified
applicants for the position of "Computer Specialist." 7 In a facsimile transmission dated November
29, 1993, OAB informed EDI that, from the applicants' curricula vitae submitted to it for
evaluation, it selected Gran for the position of "Computer Specialist." The faxed letter also stated
that if Gran agrees to the terms and conditions of employment contained in it, one of which was a
monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran's
immediate dispatch. 8
After accepting OAB's offer of employment, Gran signed an employment contract 9 that granted
him a monthly salary of USD 850.00 for a period of two years. Gran was then deployed to Riyadh,
Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary — his employment
contract stated USD 850.00; while his Philippine Overseas Employment Agency (POEA)
147
Information Sheet indicated USD 600.00 only. However, through the assistance of the EDI office
in Riyadh, OAB agreed to pay Gran USD 850.00 a month. 10
After Gran had been working for about five months for OAB, his employment was terminated
through OAB's July 9, 1994 letter, 11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency
primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment
agency[,] vide OAB letter ref. F-5751-93, dated October 3, 1993. 12
3. Insubordination or disobedience to Top Management Order and/or
instructions (non-submittal of daily activity reports despite several
instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his final
pay, and on the same day, he executed a Declaration 13releasing OAB from any financial
obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against ESI/EDI,
OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation with the NLRC,
National Capital Region, Quezon City, which was docketed as POEA ADJ (L) 94-06-2194 for
underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision, 14 Labor Arbiter Manuel R. Caday, to whom Gran's case was
assigned, ruled that there was neither underpayment nor illegal dismissal. ICDcEA
The Labor Arbiter reasoned that there was no underpayment of salaries since according to the
POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary was USD
600.00, and in his Confirmation of Appointment as Computer Specialist, his monthly basic salary
was fixed at SR 2,500.00, which was equivalent to USD 600.00.
Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim for
unpaid salaries or wages against OAB.
With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute
EDI's allegations; namely, (1) that Gran did not submit a single activity report of his daily activity
as dictated by company policy; (2) that he was not qualified for the job as computer specialist due
to his insufficient knowledge in programming and lack of knowledge in ACAD system; (3) that
Gran refused to follow management's instruction for him to gain more knowledge of the job to
prove his worth as computer specialist; (4) that Gran's employment contract had never been
substituted; (5) and that Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly
as food allowance.

Accordingly, the Labor Arbiter decided that Gran was validly dismissed from his work due to
insubordination, disobedience, and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal 15 on April 6, 1998 with the NLRC, Third Division. However, it
appears from the records that Gran failed to furnish EDI with a copy of his Appeal
Memorandum. SETAcC
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor Code.This
scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading
Gran and even POEA of the actual terms and conditions of the OFW's employment. In addition, it
was found that Gran did not commit any act that constituted a legal ground for dismissal. The
alleged non-compliance with contractual stipulations relating to Gran's salary and contract
duration, and the absence of pre-qualification requirements cannot be attributed to Gran but to
EDI, which dealt directly with OAB. In addition, the charge of insubordination was not
substantiated, and Gran was not even afforded the required notice and investigation on his alleged
offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the dispositive
portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE. Respondents Expertise
Search International, Inc., EDI Staffbuilders Int'l., Inc. and Omar Ahmed Ali
Bin Bechr Est. (OAB) are hereby ordered jointly and severally liable to pay the
complainant Eleazar Gran the Philippine peso equivalent at the time of actual
payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS
(US$16,150.00) representing his salaries for the unexpired portion of his
contract.
SO ORDERED. 16
Gran then filed a Motion for Execution of Judgment 17 on March 29, 1999 with the NLRC and
petitioner receiving a copy of this motion on the same date. 18
To prevent the execution, petitioner filed an Opposition 19 to Gran's motion arguing that the Writ
of Execution cannot issue because it was not notified of the appellate proceedings before the NLRC
and was not given a copy of the memorandum of appeal nor any opportunity to participate in the
appeal.
Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition, petitioner
filed, on August 26, 1999, a Motion for Reconsideration of the NLRC Decision after receiving a
copy of the Decision on August 16, 1999. 20
148
The NLRC then issued a Resolution 21 denying petitioner's Motion for Reconsideration,
ratiocinating that the issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there was "no cogent reason or
patent or palpable error that warrant any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a Petition for Certiorari before the CA. Petitioner
claimed in its petition that the NLRC committed grave abuse of discretion in giving due course to
the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition. CIDTcH
On the procedural issue, the appellate court held that "Gran's failure to furnish a copy of his appeal
memorandum [to EDI was] a mere formal lapse, an excusable neglect and not a jurisdictional
defect which would justify the dismissal of his appeal." 22 The court also held that petitioner EDI
failed to prove that private respondent was terminated for a valid cause and in accordance with
due process; and that Gran's Declaration releasing OAB from any monetary obligation had no force
and effect. The appellate court ratiocinated that EDI had the burden of proving Gran's
incompetence; however, other than the termination letter, no evidence was presented to show how
and why Gran was considered to be incompetent. The court held that since the law requires the
recruitment agencies to subject OFWs to trade tests before deployment, Gran must have been
competent and qualified; otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily
Activity Report," the appellate court found that EDI failed to show that the submission of the
"Daily Activity Report" was a part of Gran's duty or the company's policy. The court also held that
even if Gran was guilty of insubordination, he should have just been suspended or reprimanded,
but not dismissed.
The CA also held that Gran was not afforded due process, given that OAB did not abide by the twin
notice requirement. The court found that Gran was terminated on the same day he received the
termination letter, without having been apprised of the bases of his dismissal or afforded an
opportunity to explain his side.
Finally, the CA held that the Declaration signed by Gran did not bar him from demanding benefits
to which he was entitled. The appellate court found that the Declaration was in the form of a
quitclaim, and as such is frowned upon as contrary to public policy especially where the monetary
consideration given in the Declaration was very much less than what he was legally entitled to —
his backwages amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition to set
aside the NLRC Decision.
Hence, this instant petition is before the Court.

The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS
APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S
RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF
GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF INCOMPETENCE. COROLLARY HERETO,
WHETHER THE PRIETO VS. NLRC RULING, AS APPLIED BY THE COURT
OF APPEALS, IS APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS
JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO
TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE
UNEXPIRED PORTION OF HIS CONTRACT. 23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal
Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide
Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum
constitutes a jurisdictional defect and a deprivation of due process that would warrant a rejection
of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal
to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission, 24 this Court set aside the order of the
NLRC which dismissed an appeal on the sole ground that the appellant did not furnish the appellee
a memorandum of appeal contrary to the requirements of Article 223 of the New Labor Code and
Section 9, Rule XIII of its Implementing Rules and Regulations. SEHaTC
149
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, 28and in Sunrise Manning
Agency, Inc. v. NLRC. 29
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party with a
copy of the appeal is treated only as a formal lapse, an excusable neglect, and hence, not a
jurisdictional defect. Accordingly, in such a situation, the appeal should not be dismissed; however,
it should not be given due course either. As enunciated in J.D. Magpayo, the duty that is
imposed on the NLRC, in such a case, is to require the appellant to comply with the
rule that the opposing party should be provided with a copy of the appeal
memorandum.
While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable, the abject
failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum constitutes grave
abuse of discretion.
The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal
Memorandum. The NLRC then ordered Gran to present proof of service. In compliance with the
order, Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent on April 7,
1998. 30 The post office's list shows that private respondent Gran sent two pieces of mail on the
same date: one addressed to a certain Dan O. de Guzman of Legaspi Village, Makati; and the other
appears to be addressed to Neil B. Garcia (or Gran), 31 of Ermita, Manila — both of whom are not
connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the Appeal
Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service
in proceedings before the NLRC:
Section 5. 32 Proof and completeness of service. — The return is prima
facie proof of the facts indicated therein. Service by registered mail is
complete upon receipt by the addressee or his agent; but if the
addressee fails to claim his mail from the post office within five (5) days from
the date of first notice of the postmaster, service shall take effect after such
time. (Emphasis supplied.)

Hence, if the service is done through registered mail, it is only deemed complete when the
addressee or his agent received the mail or after five (5) days from the date of first notice of the
postmaster. However, the NLRC Rules do not state what would constitute proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service: AHacIS
Section 13. Proof of service. — Proof of personal service shall consist of a
written admission of the party served or the official return of the server, or
the affidavit of the party serving, containing a full statement of the date, place
and manner of service. If the service is by ordinary mail, proof thereof shall
consist of an affidavit of the person mailing of facts showing compliance with
section 7 of this Rule. If service is made by registered mail, proof shall
be made by such affidavit and registry receipt issued by the mailing
office. The registry return card shall be filed immediately upon its
receipt by the sender, or in lieu thereof the unclaimed letter
together with the certified or sworn copy of the notice given by the
postmaster to the addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that the list submitted by Gran is not conclusive
proof that he had served a copy of his appeal memorandum to EDI, nor is it conclusive proof that
EDI received its copy of the Appeal Memorandum. He should have submitted an affidavit proving
that he mailed the Appeal Memorandum together with the registry receipt issued by the post office;
afterwards, Gran should have immediately filed the registry return card.
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
150
The second and third issues have a common matter — whether there was just cause for Gran's
dismissal — hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable
by reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations among and between the OFW, the local
recruiter/agent, and the foreign employer/principal are governed by the employment contract. A
contract freely entered into is considered law between the parties; and hence, should be respected.
In formulating the contract, the parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy. 34 HAaDcS
In the present case, the employment contract signed by Gran specifically states that Saudi Labor
Laws will govern matters not provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply
to the contract, Saudi Labor Laws should govern all matters relating to the termination of the
employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute or case has the
burden of proving the foreign law. The foreign law is treated as a question of fact to be properly
pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. He is
presumed to know only domestic or forum law. 35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity approach orprocessual presumption comes into
play. 36 Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is
that foreign law is the same as ours. 37 Thus, we apply Philippine labor laws in determining the
issues presented before us.
Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and
insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the
employer should prove that the dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code 38 states that:
ART. 277. MISCELLANEOUS PROVISIONS 39
(b) Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just and authorized
cause and without prejudice to the requirement of notice under Article 283 of
this Code, the employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to

defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the workers
to contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations Commission. The burden
of proving that the termination was for a valid or authorized cause
shall rest on the employer. . . .
In many cases, it has been held that in termination disputes or illegal dismissal cases, the employer
has the burden of proving that the dismissal is for just and valid causes; and failure to do so would
necessarily mean that the dismissal was not justified and therefore illegal. 40 Taking into account
the character of the charges and the penalty meted to an employee, the employer is bound to
adduce clear, accurate, consistent, and convincing evidence to prove that the dismissal is valid and
legal. 41 This is consistent with the principle of security of tenure as guaranteed by the
Constitution and reinforced by Article 277 (b) of theLabor Code of the Philippines. 42 aEAIDH
In the instant case, petitioner claims that private respondent Gran was validly dismissed for just
cause, due to incompetence and insubordination or disobedience. To prove its allegations, EDI
submitted two letters as evidence. The first is the July 9, 1994 termination letter, 43 addressed to
Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is an unsigned April 11,
1995 letter 44 from OAB addressed to EDI and ESI, which outlined the reasons why OAB had
terminated Gran's employment.
Petitioner claims that Gran was incompetent for the Computer Specialist position because he had
"insufficient knowledge in programming and zero knowledge of [the] ACAD
system." 45 Petitioner also claims that Gran was justifiably dismissed due to insubordination or
disobedience because he continually failed to submit the required "Daily Activity
Reports." 46 However, other than the abovementioned letters, no other evidence was presented
to show how and why Gran was considered incompetent, insubordinate, or disobedient. Petitioner
EDI had clearly failed to overcome the burden of proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private respondent due to his "insufficient knowledge
in programming and zero knowledge of the ACAD system" based only on the above mentioned
letters, without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual foundation. Incompetence may be shown by
weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any such
bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or willful
disobedience to prosper were not present.
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
151
willful, that is, characterized by a wrongful and perverse attitude; and (2) the
order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to
discharge. 47
EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. As
indicated by the second requirement provided for in Micro Sales Operation Network, in order to
justify willful disobedience, we must determine whether the order violated by the employee is
reasonable, lawful, made known to the employee, and pertains to the duties which he had been
engaged to discharge. In the case at bar, petitioner failed to show that the order of the company
which was violated — the submission of "Daily Activity Reports" — was part of Gran's duties as a
Computer Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company
policy, Gran's job description, or any other document that would show that the "Daily Activity
Reports" were required for submission by the employees, more particularly by a Computer
Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment agencies and not
the foreign employer, they should have adduced additional evidence to convincingly show that
Gran's employment was validly and legally terminated. The burden devolves not only upon the
foreign-based employer but also on the employment or recruitment agency for the latter is not
only an agent of the former, but is also solidarily liable with the foreign principal for any claims or
liabilities arising from the dismissal of the worker. 48 aTADCE
Thus, petitioner failed to prove that Gran was justifiably dismissed due to
incompetence, insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC, 49 as used by the CA in its Decision, is not
applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that before their deployment, the petitioners were
subjected to trade tests required by law to be conducted by the recruiting agency to insure
employment of only technically qualified workers for the foreign principal." 50 The CA, using the
ruling in the said case, ruled that Gran must have passed the test; otherwise, he would not have
been hired. Therefore, EDI was at fault when it deployed Gran who was allegedly "incompetent"
for the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was not
qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of the required trade test is to weed out
incompetent applicants from the pool of available workers. It is supposed to reveal applicants with
false educational backgrounds, and expose bogus qualifications. Since EDI deployed Gran to
Riyadh, it can be presumed that Gran had passed the required trade test and that Gran is qualified
for the job. Even if there was no objective trade test done by EDI, it was still EDI's responsibility

to subject Gran to a trade test; and its failure to do so only weakened its position but should not in
any way prejudice Gran. In any case, the issue is rendered moot and academic because Gran's
incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi laws, Philippine Labor laws and regulations
shall govern the relationship between Gran and EDI. Thus, our laws and rules on the requisites of
due process relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran was afforded due process, since he was allowed
to work and improve his capabilities for five months prior to his termination. 51 EDI also claims
that the requirements of due process, as enunciated in Santos Jr. v. NLRC, 52 and Malaya
Shipping Services, Inc. v. NLRC, 53cited by the CA in its Decision, were properly observed in the
present case.
This position is untenable.
In Agabon v. NLRC, 54 this Court held that:
Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30
days prior to the effectivity of his separation. EAHcCT
Under the twin notice requirement, the employees must be given two (2) notices before their
employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2)
a second notice to communicate to the employees that their employment is being terminated. In
between the first and second notice, the employees should be given a hearing or opportunity to
defend themselves personally or by counsel of their choice. 55
A careful examination of the records revealed that, indeed, OAB's manner of dismissing Gran fell
short of the two notice requirement. While it furnished Gran the written notice informing him of
his dismissal, it failed to furnish Gran the written notice apprising him of the charges against him,
as prescribed by the Labor Code. 56 Consequently, he was denied the opportunity to respond to
said notice. In addition, OAB did not schedule a hearing or conference with Gran to defend himself
and adduce evidence in support of his defenses. Moreover, the July 9, 1994 termination letter was
effective on the same day. This shows that OAB had already condemned Gran to dismissal, even
before Gran was furnished the termination letter. It should also be pointed out that OAB failed to
give Gran the chance to be heard and to defend himself with the assistance of a representative in
accordance with Article 277 of the Labor Code.Clearly, there was no intention to provide Gran
with due process. Summing up, Gran was notified and his employment arbitrarily terminated on
152
the same day, through the same letter, and for unjustified grounds. Obviously, Gran was not
afforded due process.
Pursuant to the doctrine laid down in Agabon, 57 an employer is liable to pay nominal damages
as indemnity for violating the employee's right to statutory due process. Since OAB was in breach
of the due process requirements under the Labor Code and its regulations, OAB, ESI, and EDI,
jointly and solidarily, are liable to Gran in the amount of PhP30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees hired for a fixed period of employment, in
cases arising before the effectivity of R.A. No. 8042 58 (Migrant Workers and Overseas Filipinos
Act) on August 25, 1995, that when the contract is for a fixed term and the employees are dismissed
without just cause, they are entitled to the payment of their salaries corresponding to the
unexpired portion of their contract. 59 On the other hand, for cases arising after the effectivity
ofR.A. No. 8042, when the termination of employment is without just, valid or authorized cause
as defined by law or contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired term
whichever is less. 60
In the present case, the employment contract provides that the employment contract shall be valid
for a period of two (2) years from the date the employee starts to work with the employer. 61 Gran
arrived in Riyadh, Saudi Arabia and started to work on February 7, 1994; 62 hence, his
employment contract is until February 7, 1996. Since he was illegally dismissed on July 9, 1994,
before the effectivity of R.A. No. 8042, he is therefore entitled to backwages corresponding to the
unexpired portion of his contract, which was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran. The relevant
portions of the Declaration are as follows: aEDCAH
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY
FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY
EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE
SERVICES I RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION
IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT
IN CASH.

I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME
IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING
MY SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more
particularly those executed by employees. This requirement was clearly articulated by Chief
Justice Artemio V. Panganiban in Land and Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits granted by laws or
contracts in favor of workers should be strictly scrutinized to protect the weak
and the disadvantaged. The waivers should be carefully examined, in
regard not only to the words and terms used, but also the factual
circumstances under which they have been executed. 63 (Emphasis
supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v.
NLRC, 64 the parameters for valid compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step in to annul
the questionable transaction. But where it is shown that the person making
the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding
undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in the amount of SR 2,948.00, is unreasonably
low. As correctly pointed out by the court a quo, the payment of SR 2,948.00 is even lower than
his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is also very much less than the
USD 16,150.00 which is the amount Gran is legally entitled to get from petitioner EDI as
backwages. AcHCED
2. The Declaration reveals that the payment of SR 2,948.00 is actually the payment for Gran's
salary for the services he rendered to OAB as Computer Specialist. If the Declaration is a quitclaim,
153
then the consideration should be much much more than the monthly salary of SR 3,190.00 (USD
850.00) — although possibly less than the estimated Gran's salaries for the remaining duration of
his contract and other benefits as employee of OAB. A quitclaim will understandably be lower than
the sum total of the amounts and benefits that can possibly be awarded to employees or to be
earned for the remainder of the contract period since it is a compromise where the employees will
have to forfeit a certain portion of the amounts they are claiming in exchange for the early payment
of a compromise amount. The court may however step in when such amount is unconscionably
low or unreasonable although the employee voluntarily agreed to it. In the case of the Declaration,
the amount is unreasonably small compared to the future wages of Gran.
3. The factual circumstances surrounding the execution of the Declaration would show that Gran
did not voluntarily and freely execute the document. Consider the following chronology of events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required
to pay his plane ticket; 65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained
to receive the amount of SR 2,948.00 even if it was against his will — since he was told on July 10,
1994 to leave Riyadh on July 12, 1994. He had no other choice but to sign the Declaration as he
needed the amount of SR 2,948.00 for the payment of his ticket. He could have entertained some
apprehensions as to the status of his stay or safety in Saudi Arabia if he would not sign the
quitclaim.
4. The court a quo is correct in its finding that the Declaration is a contract of adhesion which
should be construed against the employer, OAB. An adhesion contract is contrary to public policy
as it leaves the weaker party — the employee — in a "take-it-or-leave-it" situation. Certainly, the
employer is being unjust to the employee as there is no meaningful choice on the part of the
employee while the terms are unreasonably favorable to the employer. 66
Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine
laws in the absence of proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement; TCHEDA
2. The benefits of the employees if possible with the corresponding amounts, which the employees
are giving up in consideration of the fixed compromise amount;
 154

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 PhP30,000.00 to respondent Gran as nominal damages
for non-compliance with statutory due process.

No costs.
SO ORDERED.
Quisumbing, Carpio, Tinga and Nachura, * JJ., concur.
||| (EDI-Staffbuilders International, Inc. v. National Labor Relations Commission, G.R. No.
145587, [October 26, 2007], 563 PHIL 1-36)

FIRST DIVISION
[G.R. No. 128803. September 25, 1998.]
ASIAVEST LIMITED, petitioner, vs. THE COURT OF APPEALS and
ANTONIO HERAS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; VALIDITY OF FOREIGN JUDGMENTS. —
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, which was the governing law at
the time this case was decided by the trial court and respondent Court of Appeals, a foreign
judgment against a person rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors in interest by the
subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, Section 3(n) of Rule
131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a court, or
judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the
lawful exercise of jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the
burden to repel it on grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of
Court is on the party challenging the foreign judgment. EACTSH
2. ID.; ID.; ID.; ID.; CASE AT BAR. — At the pre-trial conference, HERAS admitted the existence
of the Hong Kong judgment. On the other hand, ASIAVEST presented evidence to prove rendition,
existence, and authentication of the judgment by the proper officials. The judgment is thus
presumed to be valid and binding in the country from which it comes, until the contrary is shown.
Consequently, the first ground relied upon by ASIAVEST has merit. The presumption of validity
accorded foreign judgment would be rendered meaningless were the party seeking to enforce it be
required to first establish its validity.
3. ID.; ACTIONS; MATTERS OF REMEDY AND PROCEDURE, GOVERNED BY THE LAW OF
THE FORUM. — Matters of remedy and procedure such as those relating to the service of process
upon the defendant are governed by the lex fori or the law of the forum. SHIETa
4. ID.; EVIDENCE; RECORD OF PUBLIC DOCUMENTS OF A SOVEREIGN AUTHORITY,
TRIBUNAL, OFFICIAL BODY OR PUBLIC OFFICER, HOW PROVED. — Under Sections 24 and
25, Rule 132 of the New Rules of Evidence, the record of public documents of a sovereign authority,
tribunal, official body, or public officer may be proved by (1) an official publication thereof or (2)
a copy attested by the officer having the legal custody thereof which must be accompanied if the
record is not kept in the Philippines, with a certificate that such officer has the custody. The
certificate may be issued by a secretary of the embassy or legation, consul general, consul, vice
consul, or consular agent, or any officer in the foreign service of the Philippines stationed in the
155
foreign country in which the record is kept, and authenticated by the seal of his office. The
attestation must state, in substance, that the copy is a correct copy of the original, or a specific part
thereof, as the case may be, and must be under the official seal of the attesting officer. Nevertheless,
the testimony of an expert witness may be allowed to prove a foreign law. CcAIDa
5. ID.; ID.; ID.; HONGKONG LAW ON SERVICE OF SUMMONS PRESUMED SIMILAR TO
PHILIPPINE LAW — In the absence of proof of the Hong Kong law on service of summons, the
presumption of identity or similarity or the so-called processual presumption shall come into play.
It will thus be presumed that the Hong Kong law on the matter is similar to the Philippine law.
6. ID.; ACTIONS; ACTION IN PERSONAM, IN REM AND QUASI IN REM; DISTINGUISHED. —
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person. An action quasi in
rem is one wherein an individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the property.
7. ID.; ID.; ACTION IN PERSONAM; JURISDICTION OVER THE PERSON OF THE
DEFENDANT, NECESSARY. — In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide the case. Jurisdiction over the person
of a resident defendant who does not voluntarily appear in court can be acquired by personal
service of summons as provided under Section 7, Rule 14 of the Rules of Court. If he cannot be
personally served with summons within a reasonable time, substituted service may be made in
accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following
modes of service may be resorted to: (1) substituted service set forth in Section 8; (2) personal
service outside the country, with leave of court (3) service by publication, also with leave of court;
or (4) any other manner the court may deem sufficient. However, in an
action in personamwherein the defendant is a non-resident who does not voluntarily submit
himself to the authority of the court, personal service of summons within the state is essential to
the acquisition of jurisdiction over her person. This method of service is possible if such defendant
is physically present in the country. If he is not found therein, the court cannot acquire jurisdiction
over his person and therefore cannot validly try and decide the case against him. An exception was
laid down in Gemperle v. Schenker wherein a non-resident was served with summons through his
wife, who was a resident of the Philippines and who was his representative and attorney-in-fact in
prior civil case filed by him; moreover, the second case was a mere offshoot of the first
case. HTSaEC
8. ID.; ID.; ACTION IN REM; JURISDICTION OVER THE PERSON OF DEFENDANT, NOT A
PREREQUISITE; SUMMONS MUST BE SERVED UPON DEFENDANT TO SATISFY DUE
PROCESS REQUIREMENT. — In a proceeding in rem or quasi in rem, jurisdiction over the
person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the
court acquires jurisdiction over the res. Nonetheless, summons must be served upon the
defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying the
due process requirements. Thus, where the defendant is a 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.
9. ID.; ID.; ENFORCEMENT OF FOREIGN JUDGMENT; SUMMONS MUST BE SERVED ON
DEFENDANT IN FOREIGN LAND; CASE AT BAR. — In the pre-trial conference, the parties came
up with stipulations of facts, among which was that "the residence of defendant, Antonio Heras, is
New Manila, Quezon City." We note that the residence of HERAS insofar as the action for the
enforcement of the Hong Kong court judgment is concerned, was never in issue. He never
challenged the service of summons on him through a security guard in his Quezon City residence
and through a lawyer in his office in that city. In his Motion to Dismiss, he did not question the
jurisdiction of the Philippine court over his person on the ground of invalid service of summons.
What was in issue was his residence as far as the Hong Kong suit was concerned. We therefore
conclude that the stipulated fact that HERAS "is a resident of New Manila, Quezon City,
Philippines" refers to his residence at the time jurisdiction over his person was being sought by
the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim that HERAS was
a resident of Hong Kong at the time. Accordingly, since HERAS was not a resident of Hong Kong
and the action against him was, indisputably, one in personam, summons should have been
personally served on him in Hong Kong. The extraterritorial service in the Philippines was
therefore invalid and did not confer on the Hong Kong court jurisdiction over his person. It follows
that the Hong Kong court judgment cannot be given force and effect here in the Philippines for
having been rendered without jurisdiction. Even assuming that HERAS was formerly as resident
of Hong Kong, he was no longer so in November 1984 when the extraterritorial service of summons
was attempted to be made on him; As declared by his secretary, which statement was not disputed
by ASIAVEST, HERAS left Hong Kong in October 1984 "for good." His absence in Hong Kong
must have been the reason why summons was not served on him therein; thus, ASIAVEST was
constrained to apply for leave to effect service in the Philippines, and upon obtaining a favorable
action on the matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve
the summons here in the Philippines. HERAS, who was also an absentee, should have been served
with summons in the same manner as a non-resident not found in Hong Kong. Section 17, Rule 14
of the Rules of Court providing for extraterritorial service will not apply because of the suit against
him was in personam. Neither can we apply Section 18, which allows extraterritorial service on a
resident defendant who is temporarily absent from the country, because even if HERAS be
considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong not
only "temporarily" but "for good." aDHScI
DECISION
DAVIDE, JR, J p:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision 1 of Branch 107 of the Regional Trial Court of Quezon
City in Civil Case No. Q-52452; thus:,
156
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against
the defendant Antonio Heras praying that said defendant be ordered to pay
to the plaintiff the amounts awarded by the Hong Kong Court Judgment dated
December 28, 1984 and amended on April 13, 1987 to wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the
time of payment with legal interest from December 28,
1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from
October 31, 1984 to December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorney's fees, litigation
expenses and cost, with interest thereon from the date of
the judgment until fully paid.
On March 3, 1988 the defendant filed a Motion to Dismiss. However, before
the court could resolve the said motion, a fire which partially razed the
Quezon City Hall Building on June 11, 1988 totally destroyed the office of this
Court, together with all its records, equipment and properties. On July 26,
1988, the plaintiff, through counsel filed a Motion for Reconstitution of Case
Records. The Court, after allowing the defendant to react thereto, granted the
said Motion and admitted the annexes attached thereto as the reconstituted
records of this case per Order dated September 6, 1988. Thereafter, the
Motion to Dismiss, the resolution of which had been deferred, was denied by
the Court in its Order of October 4, 1988.
On October 19, 1988 defendant filed his Answer. The case was then set for
pre-trial conference. At the conference, the parties could not arrive at any
settlement. However, they agreed on the following stipulations of facts:
1. The defendant admits the existence of the judgment dated
December 28, 1984 as well as its amendment dated April
13, 1987, but not necessarily the authenticity or validity
thereof;
2. The plaintiff is not doing business and is not licensed to do
business in the Philippines;
3. The residence of defendant, Antonio Heras, is New Manila,
Quezon City.
The only issue for this Court to determine is, whether or not the judgment of
the Hong Kong Court has been repelled by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud or clear mistake of law or fact,

such as to overcome the presumption established in Section 50, Rule 39 of the
Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the
aforementioned judgment (Pls. See Stipulations of Facts in the Order dated
January 5, 1989 as amended by the Order of January 18, 1989) as well as the
legal presumption in favor of the plaintiff as provided for in paragraph (b),
Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper
officials concerned (Pls. See Exhibits "A" thru "B", with their submarkings).
In addition, the plaintiff presented testimonial and documentary evidence to
show its entitlement to attorney's fees and other expenses of litigation . . .
On the other hand, the defendant presented two witnesses, namely, Fortunata
dela Vega and Russel Warren Lousich.
The gist of Ms. dela Vega's testimony is to the effect that no writ of summons
or copy of a statement of claim of Asiavest Limited was ever served in the
office of the Navegante Shipping Agency Limited and/or for Mr. Antonio
Heras, and that no service of the writ of summons was either served on the
defendant at his residence in New Manila, Quezon City. Her knowledge is
based on the fact that she was the personal secretary of Mr. Heras during his
JD Transit days up to the latter part of 1972 when he shifted or diversified to
shipping business in Hong Kong; that she was in-charge of all his letters and
correspondence, business commitments, undertakings, conferences and
appointments, until October 1984 when Mr. Heras left Hong Kong for good;
that she was also the Officer-in-Charge or Office Manager of Navegante
Shipping Agency LTD, a Hong Kong registered and based company acting as
ships agent, up to and until the company closed shop sometime in the first
quarter of 1985 when shipping business collapsed worldwide; that the said
Company held office at 34-35 Connaught Road, Central Hong Kong and later
transferred to Caxton House at Duddel Street, Hong Kong, until the company
closed shop in 1985; and that she was certain of such facts because she held
office at Caxton House up to the first quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a
representative of the law office of the defendant's counsel who made a
verification of the record of the case filed by the plaintiff in Hong Kong against
the defendant as well as the procedure in serving Court processes in Hong
Kong.
In his affidavit (Exh. "2") which constitutes his direct testimony the said
witness stated that:
The defendant was sued on the basis of his personal guarantee of the
obligations of Compania Hermanos de Navegacion S.A. There is no
record that a writ of summons was served on the person of the
157
defendant in Hong Kong, or that any such attempt at service was
made. Likewise, there is no record that a copy of the judgment of the
High Court was furnished or served on the defendant; anyway, it is
not a legal requirement to do so under Hong Kong laws;
a) The writ of summons or claim can be served by the solicitor
(lawyer) of the claimant or plaintiff. In Hong Kong there
are no Court personnel who serve writs of summons and/or
most other processes.
b) If the writ of summons or claim (or complaint) is not contested,
the claimant or the plaintiff is not required to present proof
of his claim or complaint nor present evidence under oath
of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision
rendered by the Court in Hong Kong [to] make a recitation
of the facts or the law upon which the claim is based.
d) There is no necessity to furnish the defendant with a copy of the
Judgment or decision rendered against him.
e) In an action based on a guarantee, there is no established legal
requirement or obligation under Hong Kong laws that the
creditor must first bring proceedings against the principal
debtor. The creditor can immediately go against the
guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned
by the law firm of the defendant's counsel as an expert witness and to verify
the records of the Hong Kong case he had been acting as counsel for the
defendant in a number of commercial matters; that there was an application
for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras
outside of Hong Kong, particularly in Manila or any other place in the
Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof of service
of summons otherwise the Hong Kong Court will refuse to render judgment
(p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment,
it can be presumed that there was service of summons; that in this case, it is
not just a presumption because there was an affidavit stating that service was
effected in [sic] a particular man here in Manila; that such affidavit was filed
by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December
1984 and stated in essence that "on Friday the 23rd of November 1984 he
served the 4th defendant at No. 6 First Street, Quezon City by leaving it at that
address with Mr. Dionisio Lopez, the son-in-law of the 4th defendant the copy
of the writ and Mr. Lopez informed me and I barely believed that he would
bring the said writ to the attention of the 4th "defendant" (pp. 11-12, ibid.);

that upon filing of that affidavit the Court was asked and granted judgment
against the 4th defendant; and that if the summons or claim is not contested,
the claimant of the plaintiff is not required to present proof of his claim or
complaint or present evidence under oath of the claim in order to obtain
judgment; and that such judgment can be enforced in the same manner as a
judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had the
burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He
did not testify to state categorically and under oath that he never received summons. Even his own
witness Lousich admitted that HERAS was served with summons in his Quezon City residence. As
to De la Vega's testimony regarding non-service of summons, the same was hearsay and had no
probative value. prLL
As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the
procedural laws of the Philippines because it contained no statements of the facts and the law on
which it was based, the trial court ruled that since the issue related to procedural matters, the law
of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich, such
legalities were not required under Hong Kong laws. The trial court also debunked HERAS'
contention that the principle of excussion under Article 2058 of the Civil Code of the
Philippines was violated. It declared that matters of substance are subject to the law of the place
where the transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given
effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the
foreign judgment It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to the
plaintiff the following sums or their equivalents in Philippine currency at the
time of payment: US$1,810,265.40 plus interest on the sum of
US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December
28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate
amount from December 28, 1984, and to pay attorneys fees in the sum of
P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and
an increase in attorney's fees in the amount of US$19,346.45 with interest until full payment of
the said obligations. On the other hand, HERAS no longer opposed the motion and instead
appealed the decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 29513.
In its order 2 of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration
by increasing the award of attorney's fees to "US$19,345.65 OR ITS EQUIVALENT IN
PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS SUIT," provided that ASIAVEST
would pay the corresponding filing fees for the increase. ASIAVEST appealed the order requiring
158
prior payment of filing fees. However, it later withdrew its appeal and paid the additional filing
fees.
On 3 April 1997, the Court of Appeals rendered its decision 3 reversing the decision of the trial
court and dismissing ASIAVEST's complaint without prejudice. It underscored the fact that a
foreign judgment does not of itself have any extraterritorial application. For it to be given effect,
the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If
such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such as
those relating to service of summons upon the defendant are governed by the lex fori, which was,
in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousich's testimony that
under the Hong Kong law, the substituted service of summons upon HERAS effected the
Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided
that it was done in accordance with Philippine laws. It then stressed that where the action is in
personam and the defendant is in the Philippines, the summons should be personally served on
the defendant pursuant to Section 7, Rule 14 of the Rules of Court. 4 Substituted service may only
be availed of where the defendant cannot be promptly served in person, the fact of impossibility
of personal service should be explained in the proof of service. It also found as persuasive HERAS'
argument that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law
office, who was not authorized by the judge of the court issuing the summons, ASIAVEST should
have asked for leave of the local courts to have the foreign summons served by the sheriff or other
court officer of the place where service was to be made, or for special reasons by any person
authorized by the judge. cdasia
The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is
unavailing to give jurisdiction in an action against him personally for money recovery." Summons
should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST,
HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an
attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not
acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the claim of ASIAVEST;
thus:
While we are not fully convinced that [HERAS] has a meritorious defense
against [ASIAVEST's] claims or that [HERAS] ought to be absolved of any
liability, nevertheless, in view of the foregoing discussion, there is a need to
deviate from the findings of the lower court in the interest of justice and fair
play This, however, is without prejudice to whatever action [ASIAVEST]
might deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted and that our courts are not bound to
give effect to foreign judgments which contravene our laws and the principle of sound morality
and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling
that

I.
. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE
'SUPPORTING THE VALIDITY OF THE JUDGMENT';
II.
. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER
PHILIPPINE LAW;
III.
. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS
IN HONG KONG;
IV.
. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH
LEAVE OF PHILIPPINE COURTS;
V.
. . . THE FOREIGN JUDGMENT 'CONTRAVENES PHILIPPINE LAWS, THE
PRINCIPLES OF SOUND MORALITY, AND THE PUBLIC POLICY OF THE
PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
Under paragraph (b) of Section 50, Rule 39 of the Rules of Court, 5 which was the governing law
at the time this case was decided by the trial court and respondent Court of Appeals, a foreign
judgment against a person rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors in interest by the
subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof
to the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is
presumed to have acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds
provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party
challenging the foreign judgment — HERAS in this case. cdrep
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the
other hand, ASIAVEST presented evidence to prove rendition, existence, and authentication of the
judgment by the proper officials. The judgment is thus presumed to be valid and binding in the
country from which it comes, until the contrary is shown. 6 Consequently, the first ground relied
upon by ASIAVEST has merit. The presumption of validity accorded foreign judgment would be
rendered meaningless were the party seeking to enforce it be required to first establish its validity.
159
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court
did not acquire jurisdiction over the person of HERAS. This involves the issue of whether
summons was properly and validly served on HERAS. It is settled that matters of remedy and
procedure such as those relating to the service of process upon the defendant are governed by
the lex fori or the law of the forum, 7 i.e., the law of Hong Kong in this case. HERAS insisted that
according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there
was no valid service of summons on him.
In his counter-affidavit, 8 which served as his direct testimony per agreement of the
parties, 9 Lousich declared that the record of the Hong Kong case failed to show that a writ of
summons was served upon HERAS in Hong Kong or that any such attempt was made. Neither did
the record show that a copy of the judgment of the court was served on HERAS. He stated further
that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the claimant
or plaintiff; and (b) where the said writ or claim was not contested, the claimant or plaintiff was
not required to present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court
authorized service of summons on HERAS outside of its jurisdiction, particularly in the
Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip
Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS
on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's son-in-law
Dionisio Lopez. 10 On redirect examination, Lousich declared that such service of summons
would be valid under Hong Kong laws provided that it was in accordance with Philippine laws. 11
We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich
as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of
Evidence, the record of public documents of a sovereign authority, tribunal, official body, or public
officer may be proved by (1) an official publication thereof or (2) a copy attested by the officer
having the legal custody thereof, which must be accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. The certificate may be issued by
the secretary of the embassy or legation, consul general, consul, vice consul, or consular agent, or
any officer in the foreign service of the Philippines stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The attestation must state, in substance,
that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and
must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An
authority 12 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the
above rule, however, the Supreme Court held in the case of Willamettee Iron
and Steel Works v. Muzzal, 13 that Section 41, Rule 123 (Section 25, Rule 132
of the Revised Rules of Court) does not exclude the presentation of other
competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law of
San Francisco, California, who quoted verbatim a section of California Civil

Code and who stated that the same was in force at the time the obligations
were contracted, as sufficient evidence to establish the existence of said law.
Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al., 14 upheld the Tax Court in considering the
pertinent law of California as proved by the respondents' witness. In that case,
the counsel for respondent "testified that as an active member of the
California Bar since 1951, he is familiar with the revenue and taxation laws of
the State of California. When asked by the lower court to state the pertinent
California law as regards exemption of intangible personal properties, the
witness cited Article 4, Sec. 13851 (a) & (b) of the California Internal and
Revenue Code as published in Derring's California Code, a publication of
Bancroft-Whitney Co., Inc. And as part of his testimony, a full quotation of
the cited section was offered in evidence by respondents." Likewise, in several
naturalization cases, it was held by the Court that evidence of the law of a
foreign country on reciprocity regarding the acquisition of citizenship,
although not meeting the prescribed rule of practice, may be allowed and used
as basis for favorable action, if, in the light of all the circumstances, the Court
is "satisfied of the authenticity of the written proof offered." 15 Thus, in a
number of decisions, mere authentication of the Chinese Naturalization Law
by the Chinese Consulate General of Manila was held to be competent proof
of that law. 16
There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of
Hong Kong in respect of service of summons either in actions in rem or in personam, and where
the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of
the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-
called processual presumption shall come into play. It will thus be presumed that the Hong Kong
law on the matter is similar to the Philippine law. 17
As stated in Valmonte vs. Court of Appeals, 18 it will be helpful to determine first whether the
action is in personam, in rem, or quasi in rem because the rules on service of summons under
Rule 14 of the Rules of Court of the Philippines apply according to the nature of the action. prcd
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person. 19 An action quasi
in rem is one wherein an individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the property. 20
In an action in personam, jurisdiction over the person of the defendant is necessary for the court
to validly try and decide the case. Jurisdiction over the person of 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
160
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 representative and attorney-in-fact in a prior civil case filed by him; moreover, the second case
was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Nonetheless, summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the due process
requirements. 27 Thus, where the defendant is a non-resident who is not found in the Philippines
and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject
matter of which is property in the Philippines in which the defendant has or claims a lien or
interest; (3) the action seeks the exclusion of the defendant from any interest in the property
located in the Philippines; or (4) the property of the defendant has been attached in the Philippines
— service of summons may be effected by (a) personal service out of the country, with leave of
court; (b) publication, also with leave of court; or (c) any other manner the court may deem
sufficient. 28
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was
based on his personal guarantee of the obligation of the principal debtor. Before we can apply the
foregoing rules, we must determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until 1985, 29 testified
that HERAS was the President and part owner of a shipping company in Hong Kong during all
those times that she served as his secretary. He had in his employ a staff of twelve. 30 He had
"business commitments, undertakings, conferences, and appointments until October 1984 when
[he] left Hong Kong for good." 31 HERAS's other witness, Russel Warren Lousich, testified that
he had acted as counsel for HERAS "for a number of commercial matters." 32 ASIAVEST then
infers that HERAS was a resident of Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss, 33 as well as in his Answer 34 to ASIAVEST's
complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the fundamental rule is that
jurisdiction in personam over non-residentdefendants, 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
 161

defendant to 'repel' the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong
Kong suit was in personam, thatdefendant 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.
Similarly, HERAS, who was also an absentee, should have been served with summons in the same
manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of Court
providing for extraterritorial service will not apply because the suit against him was in personam.
Neither can we apply Section 18, which allows extraterritorial service on a resident defendant who
is temporarily absent from the country, because even if HERAS be considered as a resident of
Hong Kong, the undisputed fact remains that he left Hong Kong not only "temporarily" but "for
good." cdll
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this
case and AFFIRMING the assailed Judgment of the Court of Appeals in CA-G.R. CV No. 29513.
No costs.
SO ORDERED.
Bellosillo, Vitug and Panganiban, JJ ., concur.
Quisumbing, J ., took no part
||| (Asiavest Limited v. Court of Appeals, G.R. No. 128803, [September 25, 1998], 357 PHIL 536-
558)

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."

THIRD DIVISION
[G.R. No. 186571. August 11, 2010.]
GERBERT R. CORPUZ, petitioner, vs. DAISYLYN TIROL STO.
TOMAS and The SOLICITOR GENERAL, respondents.
DECISION
BRION, J p:
Before the Court is a direct appeal from the decision 1 of the Regional Trial
Court (RTC) of Laoag City, Branch 11, elevated via a petition for review oncertiorari 2 under
Rule 45 of the Rules of Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian
citizenship through naturalization on November 29, 2000. 3 On January 18, 2005, Gerbert
married respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City. 4 Due to work and other
professional commitments, Gerbert left for Canada soon after the wedding. He returned to
the Philippines sometime in April 2005 to surprise Daisylyn, but was shocked to discover that
his wife was having an affair with another man. Hurt and disappointed, Gerbert returned to
Canada and filed a petition for divorce. The Superior Court of Justice, Windsor, Ontario,
Canada granted Gerbert's petition for divorce on December 8, 2005. The divorce decree took
effect a month later, on January 8, 2006. 5
Two years after the divorce, Gerbert has moved on and has found another Filipina
to love. Desirous of marrying his new Filipina fiancée in the Philippines, Gerbert went to the
Pasig City Civil Registry Office and registered the Canadian divorce decree on his and
Daisylyn's marriage certificate. Despite the registration of the divorce decree, an official of the
National Statistics Office (NSO) informed Gerbert that the marriage between him and
Daisylyn still subsists under Philippine law; to be enforceable, the foreign divorce decree must
first be judicially recognized by a competent Philippine court, pursuant to NSO Circular No.
4, series of 1982. 6 IHDCcT
Accordingly, Gerbert filed a petition for judicial recognition of foreign
divorce and/or declaration of marriage as dissolved (petition) with the RTC.
Although summoned, Daisylyn did not file any responsive pleading but submitted instead a
notarized letter/manifestation to the trial court. She offered no opposition to Gerbert's
petition and, in fact, alleged her desire to file a similar case herself but was prevented by
financial and personal circumstances. She, thus, requested that she be considered as a party-
in-interest with a similar prayer to Gerbert's.
In its October 30, 2008 decision, 7 the RTC denied Gerbert's petition. The RTC
concluded that Gerbert was not the proper party to institute the action for judicial
162
recognition of the foreign divorce decree as he is a naturalized Canadian citizen. It ruled
that only the Filipino spouse can avail of the remedy, under the second paragraph of Article
26 of the Family Code, 8 in order for him or her to be able to remarry under Philippine
law. 9 Article 26 of the Family Code reads:
Art. 26. All marriages solemnized outside the Philippines, in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law.
This conclusion, the RTC stated, is consistent with the legislative intent behind the enactment
of the second paragraph of Article 26 of the Family Code, as determined by the Court
in Republic v. Orbecido III; 10 the provision was enacted to "avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce,
is no longer married to the Filipino spouse." 11
THE PETITION
From the RTC's ruling, 12 Gerbert filed the present petition. 13
Gerbert asserts that his petition before the RTC is essentially for declaratory relief,
similar to that filed in Orbecido; he, thus, similarly asks for a determination of his rights under
the second paragraph of Article 26 of the Family Code. Taking into account the rationale
behind the second paragraph of Article 26 of the Family Code, he contends that the provision
applies as well to the benefit of the alien spouse. He claims that the RTC ruling unduly
stretched the doctrine in Orbecido by limiting the standing to file the petition only to the
Filipino spouse — an interpretation he claims to be contrary to the essence of the second
paragraph of Article 26 of the Family Code. He considers himself as a proper party, vested
with sufficient legal interest, to institute the case, as there is a possibility that he might be
prosecuted for bigamy if he marries his Filipina fiancée in the Philippines since two marriage
certificates, involving him, would be on file with the Civil Registry Office. The Office of the
Solicitor General and Daisylyn, in their respective Comments, 14 both support Gerbert's
position. SAcaDE
Essentially, the petition raises the issue of whether the second paragraph of Article 26 of
the Family Code extends to aliens the right to petition a court of this jurisdiction
for the recognition of a foreign divorce decree.

THE COURT'S RULING
The alien spouse can claim no right
under the second paragraph of
Article 26 of the Family Code as the
substantive right it establishes is in
favor of the Filipino spouse
The resolution of the issue requires a review of the legislative history and intent
behind the second paragraph of Article 26 of the Family Code.
The Family Code recognizes only two types of defective marriages — void 15 and
voidable 16 marriages. In both cases, the basis for the judicial declaration of absolute nullity
or annulment of the marriage exists before or at the time of the marriage. Divorce, on the
other hand, contemplates the dissolution of the lawful union for cause arising after the
marriage. 17 Our family laws do not recognize absolute divorce between Filipino citizens. 18
Recognizing the reality that divorce is a possibility in marriages between a Filipino
and an alien, President Corazon C. Aquino, in the exercise of her legislative powers under
the Freedom Constitution, 19 enacted Executive Order No. (EO) 227, amending Article 26 of
the Family Code to its present wording, as follows:
Art. 26. All marriages solemnized outside the Philippines, in accordance with
the laws in force in the country where they were solemnized, and valid there
as such, shall also be valid in this country, except those prohibited under
Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law.
Through the second paragraph of Article 26 of the Family Code, EO 227 effectively
incorporated into the law this Court's holding in Van Dorn v. Romillo, Jr. 20and Pilapil v.
Ibay-Somera. 21 In both cases, the Court refused to acknowledge the alien spouse's assertion
of marital rights after a foreign court's divorce decree between the alien and the Filipino. The
Court, thus, recognized that the foreign divorce had already severed the marital bond between
the spouses. The Court reasoned in Van Dorn v. Romillo that:
To maintain . . . that, under our laws, [the Filipino spouse] has to
be considered still married to [the alien spouse] and still subject to
a wife's obligations . . . cannot be just. [The Filipino spouse] should not
be obliged to live together with, observe respect and fidelity, and render
support to [the alien spouse]. The latter should not continue to be one of her
heirs with possible rights to conjugal property. She should not be
discriminated against in her own country if the ends of justice are
to be served. 22 aCHDST
163
As the RTC correctly stated, the provision was included in the law "to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who, after
obtaining a divorce, is no longer married to the Filipino spouse." 23 The legislative intent is
for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts
created by the divorce decree. Essentially, the second paragraph of Article 26 of
the Family Codeprovided the Filipino spouse a substantive right to have his or
her marriage to the alien spouse considered as dissolved, capacitating him or
her to remarry. 24 Without the second paragraph of Article 26 of the Family Code, the
judicial recognition of the foreign decree of divorce, whether in a proceeding instituted
precisely for that purpose or as a related issue in another proceeding, would be of no
significance to the Filipino spouse since our laws do not recognize divorce as a mode of
severing the marital bond; 25 Article 17 of the Civil Code provides that the policy against
absolute divorces cannot be subverted by judgments promulgated in a foreign country. The
inclusion of the second paragraph in Article 26 of the Family Code provides the direct
exception to this rule and serves as basis for recognizing the dissolution of the marriage
between the Filipino spouse and his or her alien spouse.
Additionally, an action based on the second paragraph of Article 26 of the Family
Code is not limited to the recognition of the foreign divorce decree. If the court finds that the
decree capacitated the alien spouse to remarry, the courts can declare that the Filipino spouse
is likewise capacitated to contract another marriage. No court in this jurisdiction, however,
can make a similar declaration for the alien spouse (other than that already established by the
decree), whose status and legal capacity are generally governed by his national law. 26
Given the rationale and intent behind the enactment, and the purpose of the second
paragraph of Article 26 of the Family Code, the RTC was correct in limiting the applicability
of the provision for the benefit of the Filipino spouse. In other words, only the Filipino spouse
can invoke the second paragraph of Article 26 of the Family Code; the alien spouse can claim
no right under this provision.
The foreign divorce decree is
presumptive evidence of a right that
clothes the party with legal interest to
petition for its recognition in this
jurisdiction
We qualify our above conclusion — i.e., that the second paragraph of Article 26 of
the Family Code bestows no rights in favor of aliens — with the complementary statement that
this conclusion is not sufficient basis to dismiss Gerbert's petition before the RTC. In other
words, the unavailability of the second paragraph of Article 26 of the Family Code to aliens
does not necessarily strip Gerbert of legal interest to petition the RTC for the recognition of
his foreign divorce decree. The foreign divorce decree itself, after its authenticity and
conformity with the alien's national law have been duly proven according to our rules of
evidence, serves as a presumptive evidence of right in favor of Gerbert, pursuant to Section
48, Rule 39 of the Rules of Court which provides for the effect of foreign judgments. This
Section states: aTEScI

SEC. 48. Effect of foreign judgments or final orders. — The effect of a
judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the
judgment or final order is conclusive upon the title of the
thing; and
(b) In case of a judgment or final order against a person,
the judgment or final order is presumptive
evidence of a right as between the parties and their
successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.
To our mind, direct involvement or being the subject of the foreign judgment is sufficient to
clothe a party with the requisite interest to institute an action before our courts for the
recognition of the foreign judgment. In a divorce situation, we have declared, no less, that the
divorce obtained by an alien abroad may be recognized in the Philippines, provided the
divorce is valid according to his or her national law. 27
The starting point in any recognition of a foreign divorce judgment is the
acknowledgment that our courts do not take judicial notice of foreign judgments and laws.
Justice Herrera explained that, as a rule, "no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country." 28 This means that the
foreign judgment and its authenticity must be proven as facts under our rules on evidence,
together with the alien's applicable national law to show the effect of the judgment on the
alien himself or herself. 29 The recognition may be made in an action instituted specifically
for the purpose or in another action where a party invokes the foreign decree as an integral
aspect of his claim or defense.
In Gerbert's case, since both the foreign divorce decree and the national law of the
alien, recognizing his or her capacity to obtain a divorce, purport to be official acts of a
sovereign authority, Section 24, Rule 132 of the Rules of Court comes into play. This Section
requires proof, either by (1) official publications or (2) copies attested by the officer having
legal custody of the documents. If the copies of official records are not kept in the Philippines,
these must be (a) accompanied by a certificate issued by the proper diplomatic or consular
officer in the Philippine foreign service stationed in the foreign country in which the record is
kept and (b) authenticated by the seal of his office.
The records show that Gerbert attached to his petition a copy of the divorce decree,
as well as the required certificates proving its authenticity, 30 but failed to include a copy of
the Canadian law on divorce. 31 Under this situation, we can, at this point, simply dismiss the
petition for insufficiency of supporting evidence, unless we deem it more appropriate to
164
remand the case to the RTC to determine whether the divorce decree is consistent with the
Canadian divorce law. DCASIT
We deem it more appropriate to take this latter course of action, given the Article 26
interests that will be served and the Filipina wife's (Daisylyn's) obvious conformity with the
petition. A remand, at the same time, will allow other interested parties to oppose the foreign
judgment and overcome a petitioner's presumptive evidence of a right by proving want of
jurisdiction, want of notice to a party, collusion, fraud, or clear mistake of law or fact. Needless
to state, every precaution must be taken to ensure conformity with our laws before a
recognition is made, as the foreign judgment, once recognized, shall have the effect of res
judicata 32 between the parties, as provided in Section 48, Rule 39 of the Rules of Court. 33
In fact, more than the principle of comity that is served by the practice of reciprocal
recognition of foreign judgments between nations, the res judicataeffect of the foreign
judgments of divorce serves as the deeper basis for extending judicial recognition and for
considering the alien spouse bound by its terms. This same effect, as discussed above, will not
obtain for the Filipino spouse were it not for the substantive rule that the second paragraph
of Article 26 of the Family Code provides.
Considerations beyond the
recognition of the foreign divorce
decree
As a matter of "housekeeping" concern, we note that the Pasig City Civil Registry
Office has already recorded the divorce decree on Gerbert and Daisylyn's
marriage certificate based on the mere presentation of the decree. 34 We consider
the recording to be legally improper; hence, the need to draw attention of the bench and the
bar to what had been done.
Article 407 of the Civil Code states that "[a]cts, events and judicial decrees
concerning the civil status of persons shall be recorded in the civil register." The law requires
the entry in the civil registry of judicial decrees that produce legal consequences touching
upon a person's legal capacity and status, i.e.,those affecting "all his personal qualities and
relations, more or less permanent in nature, not ordinarily terminable at his own will, such as
his being legitimate or illegitimate, or his being married or not." 35
A judgment of divorce is a judicial decree, although a foreign one, affecting a person's
legal capacity and status that must be recorded. In fact, Act No. 3753 or the Law on Registry
of Civil Status specifically requires the registration of divorce decrees in the civil registry:
Sec. 1. Civil Register. — A civil register is established for recording the
civil status of persons, in which shall be entered:
(a) births;
(b) deaths;
(c) marriages;

(d) annulments of marriages;
(e) divorces; EHDCAI
(f) legitimations;
(g) adoptions;
(h) acknowledgment of natural children;
(i) naturalization; and
(j) changes of name.
xxx xxx xxx
Sec. 4. Civil Register Books. — The local registrars shall keep and preserve in
their offices the following books, in which they shall, respectively make the
proper entries concerning the civil status of persons:
(1) Birth and death register.
(2) Marriage register, in which shall be entered not only the
marriages solemnized but also divorces and dissolved
marriages.
(3) Legitimation, acknowledgment, adoption, change of name and
naturalization register.
But while the law requires the entry of the divorce decree in the civil registry, the law and the
submission of the decree by themselves do not ipso factoauthorize the decree's registration.
The law should be read in relation with the requirement of a judicial recognition of the foreign
judgment before it can be given res judicata effect. In the context of the present case, no
judicial order as yet exists recognizing the foreign divorce decree. Thus, the Pasig City Civil
Registry Office acted totally out of turn and without authority of law when it annotated the
Canadian divorce decree on Gerbert and Daisylyn's marriage certificate, on the strength alone
of the foreign decree presented by Gerbert.
Evidently, the Pasig City Civil Registry Office was aware of the requirement of a court
recognition, as it cited NSO Circular No. 4, series of 1982, 36 and Department of Justice
Opinion No. 181, series of 1982 37 — both of which required a final order from a competent
Philippine court before a foreign judgment, dissolving a marriage, can be registered in the
civil registry, but it, nonetheless, allowed the registration of the decree. For being contrary to
law, the registration of the foreign divorce decree without the requisite judicial recognition is
patently void and cannot produce any legal effect.
Another point we wish to draw attention to is that the recognition that the RTC may
extend to the Canadian divorce decree does not, by itself, authorize the cancellation of the
entry in the civil registry. A petition for recognition of a foreign judgment is not the proper
165
proceeding, contemplated under the Rules of Court, for the cancellation of entries in the civil
registry. STHDAc
Article 412 of the Civil Code declares that "no entry in a civil register shall be changed
or corrected, without judicial order." The Rules of Court supplements Article 412 of the Civil
Code by specifically providing for a special remedial proceeding by which entries in the civil
registry may be judicially cancelled or corrected. Rule 108 of the Rules of Court sets in detail
the jurisdictional and procedural requirements that must be complied with before a judgment,
authorizing the cancellation or correction, may be annotated in the civil registry. It also
requires, among others, that the verified petition must be filed with the RTC of the province
where the corresponding civil registry is located; 38 that the civil registrar and all persons
who have or claim any interest must be made parties to the proceedings; 39 and that the time
and place for hearing must be published in a newspaper of general circulation. 40 As these
basic jurisdictional requirements have not been met in the present case, we cannot consider
the petition Gerbert filed with the RTC as one filed under Rule 108 of the Rules of Court.
We hasten to point out, however, that this ruling should not be construed as
requiring two separate proceedings for the registration of a foreign divorce decree in the civil
registry — one for recognition of the foreign decree and another specifically for cancellation
of the entry under Rule 108 of the Rules of Court. The recognition of the foreign divorce decree
may be made in a Rule 108 proceeding itself, as the object of special proceedings (such as that
in Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or a
particular fact. Moreover, Rule 108 of the Rules of Court can serve as the appropriate
adversarial proceeding 41 by which the applicability of the foreign judgment can be measured
and tested in terms of jurisdictional infirmities, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
WHEREFORE, we GRANT the petition for review
on certiorari, and REVERSE the October 30, 2008 decision of the Regional Trial Court of
Laoag City, Branch 11, as well as its February 17, 2009 order. We order the REMAND of the
case to the trial court for further proceedings in accordance with our ruling above. Let a copy
of this Decision be furnished the Civil Registrar General. No costs.
SO ORDERED.
Carpio Morales, Bersamin, Abad * and Villarama Jr., JJ., concur.
||| (Corpuz v. Sto. Tomas, G.R. No. 186571, [August 11, 2010], 642 PHIL 420-438)

FIRST DIVISION
[G.R. No. 140047. July 13, 2004.]
PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE
CORPORATION, petitioner, vs. V.P. EUSEBIO CONSTRUCTION,
INC.; 3-PLEX INTERNATIONAL, INC.; VICENTE P. EUSEBIO;
SOLEDAD C. EUSEBIO; EDUARDO E. SANTOS; ILUMINADA
SANTOS; AND FIRST INTEGRATED BONDING AND INSURANCE
COMPANY, INC., respondents.
DECISION
DAVIDE, JR., C.J p:
This case is an offshoot of a service contract entered into by a Filipino construction firm with the
Iraqi Government for the construction of the Institute of Physical Therapy-Medical Center, Phase
II, in Baghdad, Iraq, at a time when the Iran-Iraq war was ongoing.
In a complaint filed with the Regional Trial Court of Makati City, docketed as Civil Case No. 91-
1906 and assigned to Branch 58, petitioner Philippine Export and Foreign Loan Guarantee
Corporation 1 (hereinafter Philguarantee) sought reimbursement from the respondents of the
sum of money it paid to Al Ahli Bank of Kuwait pursuant to a guarantee it issued for respondent
V.P. Eusebio Construction, Inc. (VPECI).
The factual and procedural antecedents in this case are as follows:
On 8 November 1980, the State Organization of Buildings (SOB), Ministry of Housing and
Construction, Baghdad, Iraq, awarded the construction of the Institute of Physical Therapy–
Medical Rehabilitation Center, Phase II, in Baghdad, Iraq, (hereinafter the Project) to Ajyal
Trading and Contracting Company (hereinafter Ajyal), a firm duly licensed with the Kuwait
Chamber of Commerce for a total contract price of ID5,416,089/046 (or about US$18,739,668). 2
On 7 March 1981, respondent spouses Eduardo and Iluminada Santos, in behalf of respondent 3-
Plex International, Inc. (hereinafter 3-Plex), a local contractor engaged in construction business,
entered into a joint venture agreement with Ajyal wherein the former undertook the execution of
the entire Project, while the latter would be entitled to a commission of 4% of the contract
price. 3 Later, or on 8 April 1981, respondent 3-Plex, not being accredited by or registered with
the Philippine Overseas Construction Board (POCB), assigned and transferred all its rights and
interests under the joint venture agreement to VPECI, a construction and engineering firm duly
registered with the POCB. 4 However, on 2 May 1981, 3-Plex and VPECI entered into an
agreement that the execution of the Project would be under their joint management. 5
166
The SOB required the contractors to submit (1) a performance bond of ID271,808/610
representing 5% of the total contract price and (2) an advance payment bond of ID541,608/901
representing 10% of the advance payment to be released upon signing of the contract. 6 To comply
with these requirements, respondents 3-Plex and VPECI applied for the issuance of a guarantee
with petitioner Philguarantee, a government financial institution empowered to issue guarantees
for qualified Filipino contractors to secure the performance of approved service contracts
abroad. 7
Petitioner Philguarantee approved respondents' application. Subsequently, letters of
guarantee 8 were issued by Philguarantee to the Rafidain Bank of Baghdad covering 100% of the
performance and advance payment bonds, but they were not accepted by SOB. What SOB required
was a letter-guarantee from Rafidain Bank, the government bank of Iraq. Rafidain Bank then
issued a performance bond in favor of SOB on the condition that another foreign bank, not
Philguarantee, would issue a counter-guarantee to cover its exposure. Al Ahli Bank of Kuwait was,
therefore, engaged to provide a counter-guarantee to Rafidain Bank, but it required a similar
counter-guarantee in its favor from the petitioner. Thus, three layers of guarantees had to be
arranged. 9
Upon the application of respondents 3-Plex and VPECI, petitioner Philguarantee issued in favor
of Al Ahli Bank of Kuwait Letter of Guarantee No. 81-194-F 10 (Performance Bond Guarantee) in
the amount of ID271,808/610 and Letter of Guarantee No. 81-195-F 11 (Advance Payment
Guarantee) in the amount of ID541,608/901, both for a term of eighteen months from 25 May
1981. These letters of guarantee were secured by (1) a Deed of Undertaking 12 executed by
respondents VPECI, Spouses Vicente P. Eusebio and Soledad C. Eusebio, 3-Plex, and Spouses
Eduardo E. Santos and Iluminada Santos; and (2) a surety bond 13issued by respondent First
Integrated Bonding and Insurance Company, Inc. (FIBICI). The Surety Bond was later amended
on 23 June 1981 to increase the amount of coverage from P6.4 million to P6.967 million and to
change the bank in whose favor the petitioner's guarantee was issued, from Rafidain Bank to Al
Ahli Bank of Kuwait. 14
On 11 June 1981, SOB and the joint venture VPECI and Ajyal executed the service contract 15 for
the construction of the Institute of Physical Therapy — Medical Rehabilitation Center, Phase II, in
Baghdad, Iraq, wherein the joint venture contractor undertook to complete the Project within a
period of 547 days or 18 months. Under the Contract, the Joint Venture would supply manpower
and materials, and SOB would refund to the former 25% of the project cost in Iraqi Dinar and the
75% in US dollars at the exchange rate of 1 Dinar to 3.37777 US Dollars. 16
The construction, which was supposed to start on 2 June 1981, commenced only on the last week
of August 1981. Because of this delay and the slow progress of the construction work due to some
setbacks and difficulties, the Project was not completed on 15 November 1982 as scheduled. But
in October 1982, upon foreseeing the impossibility of meeting the deadline and upon the request
of Al Ahli Bank, the joint venture contractor worked for the renewal or extension of the
Performance Bond and Advance Payment Guarantee. Petitioner's Letters of Guarantee Nos. 81-
194-F (Performance Bond) and 81-195-F (Advance Payment Bond) with expiry date of 25
November 1982 were then renewed or extended to 9 February 1983 and 9 March 1983,
respectively. 17 The surety bond was also extended for another period of one year, from 12 May

1982 to 12 May 1983. 18 The Performance Bond was further extended twelve times with validity
of up to 8 December 1986, 19 while the Advance Payment Guarantee was extended three times
more up to 24 May 1984 when the latter was cancelled after full refund or reimbursement by the
joint venture contractor. 20 The surety bond was likewise extended to 8 May 1987. 21
As of March 1986, the status of the Project was 51% accomplished, meaning the structures were
already finished. The remaining 47% consisted in electro-mechanical works and the 2%, sanitary
works, which both required importation of equipment and materials. 22
On 26 October 1986, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full
payment of its performance bond counter-guarantee.
Upon receiving a copy of that telex message on 27 October 1986, respondent VPECI requested Iraq
Trade and Economic Development Minister Mohammad Fadhi Hussein to recall the telex call on
the performance guarantee for being a drastic action in contravention of its mutual agreement
with the latter that (1) the imposition of penalty would be held in abeyance until the completion of
the project; and (2) the time extension would be open, depending on the developments on the
negotiations for a foreign loan to finance the completion of the project. 23 It also wrote SOB
protesting the call for lack of factual or legal basis, since the failure to complete the Project was
due to (1) the Iraqi government's lack of foreign exchange with which to pay its (VPECI's)
accomplishments and (2) SOB's noncompliance for the past several years with the provision in the
contract that 75% of the billings would be paid in US dollars. 24 Subsequently, or on 19 November
1986, respondent VPECI advised the petitioner not to pay yet Al Ahli Bank because efforts were
being exerted for the amicable settlement of the Project. 25
On 14 April 1987, the petitioner received another telex message from Al Ahli Bank stating that it
had already paid to Rafidain Bank the sum of US$876,564 under its letter of guarantee, and
demanding reimbursement by the petitioner of what it paid to the latter bank plus interest thereon
and related expenses. 26
Both petitioner Philguarantee and respondent VPECI sought the assistance of some government
agencies of the Philippines. On 10 August 1987, VPECI requested the Central Bank to hold in
abeyance the payment by the petitioner "to allow the diplomatic machinery to take its course, for
otherwise, the Philippine government, through the Philguarantee and the Central Bank, would
become instruments of the Iraqi Government in consummating a clear act of injustice and inequity
committed against a Filipino contractor." 27
On 27 August 1987, the Central Bank authorized the remittance for its account of the amount of
US$876,564 (equivalent to ID271,808/610) to Al Ahli Bank representing full payment of the
performance counter-guarantee for VPECI's project in Iraq. 28
On 6 November 1987, Philguarantee informed VPECI that it would remit US$876,564 to Al Ahli
Bank, and reiterated the joint and solidary obligation of the respondents to reimburse the
petitioner for the advances made on its counter-guarantee. 29
167
The petitioner thus paid the amount of US$876,564 to Al Ahli Bank of Kuwait on 21 January
1988. 30 Then, on 6 May 1988, the petitioner paid to Al Ahli Bank of Kuwait US$59,129.83
representing interest and penalty charges demanded by the latter bank.31
On 19 June 1991, the petitioner sent to the respondents separate letters demanding full payment
of the amount of P47,872,373.98 plus accruing interest, penalty charges, and 10% attorney's fees
pursuant to their joint and solidary obligations under the deed of undertaking and surety
bond. 32 When the respondents failed to pay, the petitioner filed on 9 July 1991 a civil case for
collection of a sum of money against the respondents before the RTC of Makati City.
After due trial, the trial court ruled against Philguarantee and held that the latter had no valid
cause of action against the respondents. It opined that at the time the call was made on the
guarantee which was executed for a specific period, the guarantee had already lapsed or expired.
There was no valid renewal or extension of the guarantee for failure of the petitioner to secure
respondents' express consent thereto. The trial court also found that the joint venture contractor
incurred no delay in the execution of the Project. Considering the Project owner's violations of the
contract which rendered impossible the joint venture contractor's performance of its undertaking,
no valid call on the guarantee could be made. Furthermore, the trial court held that no valid notice
was first made by the Project owner SOB to the joint venture contractor before the call on the
guarantee. Accordingly, it dismissed the complaint, as well as the counterclaims and cross-claim,
and ordered the petitioner to pay attorney's fees of P100,000 to respondents VPECI and Eusebio
Spouses and P100,000 to 3-Plex and the Santos Spouses, plus costs. 33
In its 14 June 1999 Decision, 34 the Court of Appeals affirmed the trial court's decision,
ratiocinating as follows:
First, appellant cannot deny the fact that it was fully aware of the status of
project implementation as well as the problems besetting the contractors,
between 1982 to 1985, having sent some of its people to Baghdad during that
period. The successive renewals/extensions of the guarantees in fact, was
prompted by delays, not solely attributable to the contractors, and such
extension understandably allowed by the SOB (project owner) which had not
anyway complied with its contractual commitment to tender 75% of payment
in US Dollars, and which still retained overdue amounts collectible by VPECI.
xxx xxx xxx
Second, appellant was very much aware of the violations committed by the
SOB of its contractual undertakings with VPECI, principally, the payment of
foreign currency (US$) for 75% of the total contract price, as well as of the
complications and injustice that will result from its payment of the full
amount of the performance guarantee, as evident in PHILGUARANTEE's
letter dated 13 May 1987 . . .
xxx xxx xxx

Third, appellant was fully aware that SOB was in fact still obligated to the
Joint Venture and there was still an amount collectible from and still being
retained by the project owner, which amount can be set-off with the sum
covered by the performance guarantee.
xxx xxx xxx
Fourth, well-apprised of the above conditions obtaining at the Project site and
cognizant of the war situation at the time in Iraq, appellant, though earlier
has made representations with the SOB regarding a possible amicable
termination of the Project as suggested by VPECI, made a complete turn-
around and insisted on acting in favor of the unjustified "call" by the foreign
banks. 35
The petitioner then came to this Court via Rule 45 of the Rules of Court claiming that the Court of
Appeals erred in affirming the trial court's ruling that DHSaCAI
. . . RESPONDENTS ARE NOT LIABLE UNDER THE DEED OF
UNDERTAKING THEY EXECUTED IN FAVOR OF PETITIONER IN
CONSIDERATION FOR THE ISSUANCE OF ITS COUNTER-GUARANTEE
AND THAT PETITIONER CANNOT PASS ON TO RESPONDENTS WHAT IT
HAD PAID UNDER THE SAID COUNTER-GUARANTEE.
II
. . . PETITIONER CANNOT CLAIM SUBROGATION.
III
. . . IT IS INIQUITOUS AND UNJUST FOR PETITIONER TO HOLD
RESPONDENTS LIABLE UNDER THEIR DEED OF UNDERTAKING. 36
The main issue in this case is whether the petitioner is entitled to reimbursement of what it paid
under Letter of Guarantee No. 81-194-F it issued to Al Ahli Bank of Kuwait based on the deed of
undertaking and surety bond from the respondents.
The petitioner asserts that since the guarantee it issued was absolute, unconditional, and
irrevocable the nature and extent of its liability are analogous to those of suretyship. Its liability
accrued upon the failure of the respondents to finish the construction of the Institute of Physical
Therapy Buildings in Baghdad.
By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of
the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with
the principal debtor, the contract is called suretyship. 37
Strictly speaking, guaranty and surety are nearly related, and many of the principles are common
to both. In both contracts, there is a promise to answer for the debt or default of another. However,
in this jurisdiction, they may be distinguished thus:
168
1. A surety is usually bound with his principal by the same instrument
executed at the same time and on the same consideration. On the
other hand, the contract of guaranty is the guarantor's own separate
undertaking often supported by a consideration separate from that
supporting the contract of the principal; the original contract of his
principal is not his contract.
2. A surety assumes liability as a regular party to the undertaking; while the
liability of a guarantor is conditional depending on the failure of the
primary debtor to pay the obligation.
3. The obligation of a surety is primary, while that of a guarantor is secondary.
4. A surety is an original promissor and debtor from the beginning, while a
guarantor is charged on his own undertaking.
5. A surety is, ordinarily, held to know every default of his principal; whereas
a guarantor is not bound to take notice of the non-performance of
his principal.
6. Usually, a surety will not be discharged either by the mere indulgence of
the creditor to the principal or by want of notice of the default of the
principal, no matter how much he may be injured thereby. A
guarantor is often discharged by the mere indulgence of the creditor
to the principal, and is usually not liable unless notified of the default
of the principal. 38
In determining petitioner's status, it is necessary to read Letter of Guarantee No. 81-194-F, which
provides in part as follows:
In consideration of your issuing the above performance guarantee/counter-
guarantee, we hereby unconditionally and irrevocably guarantee, under our
Ref. No. LG-81-194 F to pay you on your first written or telex demand Iraq
Dinars Two Hundred Seventy One Thousand Eight Hundred Eight and fils six
hundred ten (ID271,808/610) representing 100% of the performance bond
required of V.P. EUSEBIO for the construction of the Physical Therapy
Institute, Phase II, Baghdad, Iraq, plus interest and other incidental expenses
related thereto.
In the event of default by V.P. EUSEBIO, we shall pay you 100% of the
obligation unpaid but in no case shall such amount exceed Iraq Dinars (ID)
271,808/610 plus interest and other incidental expenses . . . (Emphasis
supplied) 39
Guided by the abovementioned distinctions between a surety and a guaranty, as well as the factual
milieu of this case, we find that the Court of Appeals and the trial court were correct in ruling that
the petitioner is a guarantor and not a surety. That the guarantee issued by the petitioner is

unconditional and irrevocable does not make the petitioner a surety. As a guaranty, it is still
characterized by its subsidiary and conditional quality because it does not take effect until the
fulfillment of the condition, namely, that the principal obligor should fail in his obligation at the
time and in the form he bound himself. 40 In other words, an unconditional guarantee is still
subject to the condition that the principal debtor should default in his obligation first before resort
to the guarantor could be had. A conditional guaranty, as opposed to an unconditional guaranty,
is one which depends upon some extraneous event, beyond the mere default of the principal, and
generally upon notice of the principal's default and reasonable diligence in exhausting proper
remedies against the principal. 41
It appearing that Letter of Guarantee No. 81-194-F merely stated that in the event of default by
respondent VPECI the petitioner shall pay, the obligation assumed by the petitioner was simply
that of an unconditional guaranty, not conditional guaranty. But as earlier ruled the fact that
petitioner's guaranty is unconditional does not make it a surety. Besides, surety is never presumed.
A party should not be considered a surety where the contract itself stipulates that he is acting only
as a guarantor. It is only when the guarantor binds himself solidarily with the principal debtor that
the contract becomes one of suretyship. 42
Having determined petitioner's liability as guarantor, the next question we have to grapple with is
whether the respondent contractor has defaulted in its obligations that would justify resort to the
guaranty. This is a mixed question of fact and law that is better addressed by the lower courts,
since this Court is not a trier of facts.
It is a fundamental and settled rule that the findings of fact of the trial court and the Court of
Appeals are binding or conclusive upon this Court unless they are not supported by the evidence
or unless strong and cogent reasons dictate otherwise. 43 The factual findings of the Court of
Appeals are normally not reviewable by us under Rule 45 of the Rules of Court except when they
are at variance with those of the trial court. 44 The trial court and the Court of Appeals were in
unison that the respondent contractor cannot be considered to have defaulted in its obligations
because the cause of the delay was not primarily attributable to it.
A corollary issue is what law should be applied in determining whether the respondent contractor
has defaulted in the performance of its obligations under the service contract. The question of
whether there is a breach of an agreement, which includes default or mora, 45 pertains to the
essential or intrinsic validity of a contract. 46
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule
followed by most legal systems, however, is that the intrinsic validity of a contract must be
governed by the lex contractus or "proper law of the contract." This is the law voluntarily agreed
upon by the parties (the lex loci voluntatis) or the law intended by them either expressly or
implicitly (the lex loci intentionis). The law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or domicile of the
parties. 47 Philippine courts would do well to adopt the first and most basic rule in most legal
systems, namely, to allow the parties to select the law applicable to their contract, subject to the
limitation that it is not against the law, morals, or public policy of the forum and that the chosen
law must bear a substantive relationship to the transaction. 48
169
It must be noted that the service contract between SOB and VPECI contains no express choice of
the law that would govern it. In the United States and Europe, the two rules that now seem to have
emerged as "kings of the hill" are (1) the parties may choose the governing law; and (2) in the
absence of such a choice, the applicable law is that of the State that "has the most significant
relationship to the transaction and the parties." 49 Another authority proposed that all matters
relating to the time, place, and manner of performance and valid excuses for non-performance are
determined by the law of the place of performance or lex loci solutionis, which is useful because it
is undoubtedly always connected to the contract in a significant way. 50
In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties
is the Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether
respondent VPECI defaulted in its obligations may be determined by the laws of Iraq. However,
since that foreign law was not properly pleaded or proved, the presumption of identity or similarity,
otherwise known as the processual presumption, comes into play. Where foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as
ours. 51
Our law, specifically Article 1169, last paragraph, of the Civil Code, provides: "In reciprocal
obligations, neither party incurs in delay if the other party does not comply or is not ready to
comply in a proper manner with what is incumbent upon him."
Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by reason
of a cause imputable to the former. 52 It is the non-fulfillment of an obligation with respect to
time. 53
It is undisputed that only 51.7% of the total work had been accomplished. The 48.3% unfinished
portion consisted in the purchase and installation of electro-mechanical equipment and materials,
which were available from foreign suppliers, thus requiring US Dollars for their importation. The
monthly billings and payments made by SOB 54 reveal that the agreement between the parties
was a periodic payment by the Project owner to the contractor depending on the percentage of
accomplishment within the period. 55 The payments were, in turn, to be used by the contractor to
finance the subsequent phase of the work. 56 However, as explained by VPECI in its letter to the
Department of Foreign Affairs (DFA), the payment by SOB purely in Dinars adversely affected the
completion of the project; thus: IaEHSD
4. Despite protests from the plaintiff, SOB continued paying the
accomplishment billings of the Contractor purely in Iraqi Dinars and which
payment came only after some delays.
5. SOB is fully aware of the following:
xxx xxx xxx
5.2 That Plaintiff is a foreign contractor in Iraq and as such, would need
foreign currency (US$), to finance the purchase of various equipment,
materials, supplies, tools and to pay for the cost of project management,

supervision and skilled labor not available in Iraq and therefore have to be
imported and or obtained from the Philippines and other sources outside Iraq.
5.3 That the Ministry of Labor and Employment of the Philippines requires
the remittance into the Philippines of 70% of the salaries of Filipino workers
working abroad in US Dollars;
xxx xxx xxx
5.5 That the Iraqi Dinar is not a freely convertible currency such that the same
cannot be used to purchase equipment, materials, supplies, etc. outside of
Iraq;
5.6 That most of the materials specified by SOB in the CONTRACT are not
available in Iraq and therefore have to be imported;
5.7 That the government of Iraq prohibits the bringing of local currency
(Iraqui Dinars) out of Iraq and hence, imported materials, equipment, etc.,
cannot be purchased or obtained using Iraqui Dinars as medium of
acquisition.
xxx xxx xxx
8. Following the approved construction program of the CONTRACT, upon
completion of the civil works portion of the installation of equipment for the
building, should immediately follow, however, the CONTRACT specified that
these equipment which are to be installed and to form part of the PROJECT
have to be procured outside Iraq since these are not being locally
manufactured. Copy of the relevant portion of the Technical Specification is
hereto attached as Annex "C" and made an integral part hereof;
xxx xxx xxx
10. Due to the lack of Foreign currency in Iraq for this purpose, and if only to
assist the Iraqi government in completing the PROJECT, the Contractor
without any obligation on its part to do so but with the knowledge and consent
of SOB and the Ministry of Housing & Construction of Iraq, offered to arrange
on behalf of SOB, a foreign currency loan, through the facilities of Circle
International S.A., the Contractor's Sub-contractor and SACE MEDIO
CREDITO which will act as the guarantor for this foreign currency loan.
Arrangements were first made with Banco di Roma. Negotiation started in
June 1985. SOB is informed of the developments of this negotiation, attached
is a copy of the draft of the loan Agreement between SOB as the Borrower and
Agent. The Several Banks, as Lender, and counter-guaranteed by Istituto
Centrale Per II Credito A Medio Termine (Mediocredito) Sezione Speciale Per
L'Assicurazione Del Credito All' Exportazione (Sace). Negotiations went on
and continued until it suddenly collapsed due to the reported default by Iraq
170
in the payment of its obligations with Italian government, copy of the news
clipping dated June 18, 1986 is hereto attached as Annex "D" to form an
integral part hereof;
15. On September 15, 1986, Contractor received information from Circle
International S.A. that because of the news report that Iraq defaulted in its
obligations with European banks, the approval by Banco di Roma of the loan
to SOB shall be deferred indefinitely, a copy of the letter of Circle
International together with the news clippings are hereto attached as Annexes
"F" and "F-1", respectively. 57
As found by both the Court of Appeals and the trial court, the delay or the non-completion of the
Project was caused by factors not imputable to the respondent contractor. It was rather due mainly
to the persistent violations by SOB of the terms and conditions of the contract, particularly its
failure to pay 75% of the accomplished work in US Dollars. Indeed, where one of the parties to a
contract does not perform in a proper manner the prestation which he is bound to perform under
the contract, he is not entitled to demand the performance of the other party. A party does not
incur in delay if the other party fails to perform the obligation incumbent upon him.
The petitioner, however, maintains that the payments by SOB of the monthly billings in purely
Iraqi Dinars did not render impossible the performance of the Project by VPECI. Such posture is
quite contrary to its previous representations. In his 26 March 1987 letter to the Office of the
Middle Eastern and African Affairs (OMEAA), DFA, Manila, petitioner's Executive Vice-President
Jesus M. Tañedo stated that while VPECI had taken every possible measure to complete the Project,
the war situation in Iraq, particularly the lack of foreign exchange, was proving to be a great
obstacle; thus:
VPECI has taken every possible measure for the completion of the project but
the war situation in Iraq particularly the lack of foreign exchange is proving
to be a great obstacle. Our performance counterguarantee was called last 26
October 1986 when the negotiations for a foreign currency loan with the
Italian government through Banco de Roma bogged down following news
report that Iraq has defaulted in its obligation with major European banks.
Unless the situation in Iraq is improved as to allay the bank's apprehension,
there is no assurance that the project will ever be completed. 58
In order that the debtor may be in default it is necessary that the following requisites be present:
(1) that the obligation be demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance because it must appear that the
tolerance or benevolence of the creditor must have ended. 59
As stated earlier, SOB cannot yet demand complete performance from VPECI because it has not
yet itself performed its obligation in a proper manner, particularly the payment of the 75% of the
cost of the Project in US Dollars. The VPECI cannot yet be said to have incurred in delay. Even
assuming that there was delay and that the delay was attributable to VPECI, still the effects of that
delay ceased upon the renunciation by the creditor, SOB, which could be implied when the latter
granted several extensions of time to the former. 60 Besides, no demand has yet been made by

SOB against the respondent contractor. Demand is generally necessary even if a period has been
fixed in the obligation. And default generally begins from the moment the creditor demands
judicially or extra-judicially the performance of the obligation. Without such demand, the effects
of default will not arise. 61
Moreover, the petitioner as a guarantor is entitled to the benefit of excussion, that is, it cannot be
compelled to pay the creditor SOB unless the property of the debtor VPECI has been exhausted
and all legal remedies against the said debtor have been resorted to by the creditor. 62 It could
also set up compensation as regards what the creditor SOB may owe the principal debtor
VPECI. 63 In this case, however, the petitioner has clearly waived these rights and remedies by
making the payment of an obligation that was yet to be shown to be rightfully due the creditor and
demandable of the principal debtor.
As found by the Court of Appeals, the petitioner fully knew that the joint venture contractor had
collectibles from SOB which could be set off with the amount covered by the performance
guarantee. In February 1987, the OMEAA transmitted to the petitioner a copy of a telex dated 10
February 1987 of the Philippine Ambassador in Baghdad, Iraq, informing it of the note
verbale sent by the Iraqi Ministry of Foreign Affairs stating that the past due obligations of the
joint venture contractor from the petitioner would "be deducted from the dues of the two
contractors." 64
Also, in the project situationer attached to the letter to the OMEAA dated 26 March 1987, the
petitioner raised as among the arguments to be presented in support of the cancellation of the
counter-guarantee the fact that the amount of ID281,414/066 retained by SOB from the Project
was more than enough to cover the counter-guarantee of ID271,808/610; thus:
6.1 Present the following arguments in cancelling the counterguarantee:
• The Iraqi Government does not have the foreign exchange to fulfill
its contractual obligations of paying 75% of progress
billings in US dollars.
xxx xxx xxx
• It could also be argued that the amount of ID281,414/066 retained
by SOB from the proposed project is more than the amount
of the outstanding counterguarantee. 65
In a nutshell, since the petitioner was aware of the contractor's outstanding receivables from SOB,
it should have set up compensation as was proposed in its project situationer. IHTASa
Moreover, the petitioner was very much aware of the predicament of the respondents. In fact, in
its 13 May 1987 letter to the OMEAA, DFA, Manila, it stated:
171
VPECI also maintains that the delay in the completion of the project was
mainly due to SOB's violation of contract terms and as such, call on the
guarantee has no basis.
While PHILGUARANTEE is prepared to honor its commitment under the
guarantee, PHILGUARANTEE does not want to be an instrument in any case
of inequity committed against a Filipino contractor. It is for this reason that
we are constrained to seek your assistance not only in ascertaining the
veracity of Al Ahli Bank's claim that it has paid Rafidain Bank but possibly
averting such an event. As any payment effected by the banks will complicate
matters, we cannot help underscore the urgency of VPECI's bid for
government intervention for the amicable termination of the contract and
release of the performance guarantee. 66
But surprisingly, though fully cognizant of SOB's violations of the service contract and VPECI's
outstanding receivables from SOB, as well as the situation obtaining in the Project site
compounded by the Iran-Iraq war, the petitioner opted to pay the second layer guarantor not only
the full amount of the performance bond counter-guarantee but also interests and penalty charges.
This brings us to the next question: May the petitioner as a guarantor secure reimbursement from
the respondents for what it has paid under Letter of Guarantee No. 81-194-F?
As a rule, a guarantor who pays for a debtor should be indemnified by the latter 67 and would be
legally subrogated to the rights which the creditor has against the debtor. 68 However, a person
who makes payment without the knowledge or against the will of the debtor has the right to recover
only insofar as the payment has been beneficial to the debtor. 69 If the obligation was subject to
defenses on the part of the debtor, the same defenses which could have been set up against the
creditor can be set up against the paying guarantor. 70
From the findings of the Court of Appeals and the trial court, it is clear that the payment made by
the petitioner guarantor did not in any way benefit the principal debtor, given the project status
and the conditions obtaining at the Project site at that time. Moreover, the respondent contractor
was found to have valid defenses against SOB, which are fully supported by evidence and which
have been meritoriously set up against the paying guarantor, the petitioner in this case. And even
if the deed of undertaking and the surety bond secured petitioner's guaranty, the petitioner is
precluded from enforcing the same by reason of the petitioner's undue payment on the guaranty.
Rights under the deed of undertaking and the surety bond do not arise because these contracts
depend on the validity of the enforcement of the guaranty.
The petitioner guarantor should have waited for the natural course of guaranty: the debtor VPECI
should have, in the first place, defaulted in its obligation and that the creditor SOB should have
first made a demand from the principal debtor. It is only when the debtor does not or cannot pay,
in whole or in part, that the guarantor should pay. 71 When the petitioner guarantor in this case
paid against the will of the debtor VPECI, the debtor VPECI may set up against it defenses available
against the creditor SOB at the time of payment. This is the hard lesson that the petitioner must
learn.
 172

As the government arm in pursuing its objective of providing "the necessary support and
assistance in order to enable . . . [Filipino exporters and contractors to operate viably under the
prevailing economic and business conditions," 72 the petitioner should have exercised prudence
and caution under the circumstances. As aptly put by the Court of Appeals, it would be the height
of inequity to allow the petitioner to pass on its losses to the Filipino contractor VPECI which had
sternly warned against paying the Al Ahli Bank and constantly apprised it of the developments in
the Project implementation.
WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit, and the
decision of the Court of appeals in CA-G.R. CV No. 39302 is AFFIRMED.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 193707 December 10, 2014
NORMA A. DEL SOCORRO, for and in behalf of her minor child RODERIGO
NORJO VAN WILSEM, Petitioner,
vs.
ERNST JOHAN BRINKMAN VAN WILSEM, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to reverse and set aside the Orders1 dated February 19, 2010 and September 1, 2010,
respectively, of the Regional Trial Court of Cebu City (RTC-Cebu), which dismissed the criminal
case entitled People of the Philippines v. Ernst Johan Brinkman Van Wilsem, docketed as
Criminal Case No. CBU-85503, for violation of Republic Act (R.A.) No. 9262, otherwise known
as the Anti-Violence Against Women and Their Children Act of 2004.
The following facts are culled from the records:
Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman Van Wilsem contracted
marriage in Holland on September 25, 1990.2 On January 19, 1994, they were blessed with a son
named Roderigo Norjo Van Wilsem, who at the time of the filing of the instant petition was
sixteen (16) years of age.3
Unfortunately, their marriage bond ended on July 19, 1995 by virtue of a Divorce Decree issued
by the appropriate Court of Holland.4 At that time, their son was only eighteen (18) months
old.5 Thereafter, petitioner and her son came home to the Philippines.6
According to petitioner, respondent made a promise to provide monthly support to their son in
the amount of Two Hundred Fifty (250) Guildene (which is equivalent to Php17,500.00 more or
less).7 However, since the arrival of petitioner and her son in the Philippines, respondent never
gave support to the son, Roderigo.8
173
Not long thereafter, respondent cameto the Philippines and remarried in Pinamungahan, Cebu,
and since then, have been residing thereat.9 Respondent and his new wife established a business
known as Paree Catering, located at Barangay Tajao, Municipality of Pinamungahan, Cebu
City.10 To date, all the parties, including their son, Roderigo, are presently living in Cebu City.11
On August 28, 2009, petitioner, through her counsel, sent a letter demanding for support from
respondent. However, respondent refused to receive the letter.12
Because of the foregoing circumstances, petitioner filed a complaint affidavit with the Provincial
Prosecutor of Cebu City against respondent for violation of Section 5, paragraph E(2) of R.A. No.
9262 for the latter’s unjust refusal to support his minor child with petitioner.13 Respondent
submitted his counter-affidavit thereto, to which petitioner also submitted her reply-
affidavit.14 Thereafter, the Provincial Prosecutor of Cebu City issued a Resolution recommending
the filing of an information for the crime charged against herein respondent.
The information, which was filed with the RTC-Cebu and raffled to Branch 20 thereof, states
that:
That sometime in the year 1995 and up to the present, more or less, in the Municipality of
Minglanilla, Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused, did then and there wilfully, unlawfully and deliberately deprive,
refuse and still continue to deprive his son RODERIGO NORJO VAN WILSEM, a fourteen (14)
year old minor, of financial support legally due him, resulting in economic abuse to the victim.
CONTRARY TO LAW.15
Upon motion and after notice and hearing, the RTC-Cebu issued a Hold Departure Order against
respondent.16Consequently, respondent was arrested and, subsequently, posted bail.17 Petitioner
also filed a Motion/Application of Permanent Protection Order to which respondent filed his
Opposition.18 Pending the resolution thereof, respondent was arraigned.19 Subsequently, without
the RTC-Cebu having resolved the application of the protection order, respondent filed a Motion
to Dismiss on the ground of: (1) lack of jurisdiction over the offense charged; and (2)
prescription of the crime charged.20
On February 19, 2010, the RTC-Cebu issued the herein assailed Order,21 dismissing the instant
criminal case against respondent on the ground that the facts charged in the information do not
constitute an offense with respect to the respondent who is an alien, the dispositive part of which
states:
WHEREFORE, the Court finds that the facts charged in the information do not constitute an
offense with respect to the accused, he being an alien, and accordingly, orders this case
DISMISSED.

The bail bond posted by accused Ernst Johan Brinkman Van Wilsem for his provisional liberty is
hereby cancelled (sic) and ordered released.
SO ORDERED.
Cebu City, Philippines, February 19, 2010.22
Thereafter, petitioner filed her Motion for Reconsideration thereto reiterating respondent’s
obligation to support their child under Article 19523 of the Family Code, thus, failure to do so
makes him liable under R.A. No. 9262 which "equally applies to all persons in the Philippines
who are obliged to support their minor children regardless of the obligor’s nationality."24
On September 1, 2010, the lower court issued an Order25 denying petitioner’s Motion for
Reconsideration and reiterating its previous ruling. Thus:
x x x The arguments therein presented are basically a rehash of those advanced earlier in the
memorandum of the prosecution. Thus, the court hereby reiterates its ruling that since the
accused is a foreign national he is not subject to our national law (The Family Code) in regard to
a parent’s duty and obligation to givesupport to his child. Consequently, he cannot be charged of
violating R.A. 9262 for his alleged failure to support his child. Unless it is conclusively
established that R.A. 9262 applies to a foreigner who fails to give support tohis child,
notwithstanding that he is not bound by our domestic law which mandates a parent to give such
support, it is the considered opinion of the court that no prima faciecase exists against the
accused herein, hence, the case should be dismissed.
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.
Cebu City, Philippines, September 1, 2010.26
Hence, the present Petition for Review on Certiorari raising the following issues:
1. Whether or not a foreign national has an obligation to support his minor child under
Philippine law; and
2. Whether or not a foreign national can be held criminally liable under R.A. No. 9262
for his unjustified failure to support his minor child.27
At the outset, let it be emphasized that We are taking cognizance of the instant petition despite
the fact that the same was directly lodged with the Supreme Court, consistent with the ruling in
174
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
175
after the issuance of a divorce decree), because Llorente v. Court of Appeals, 42 has already
enunciated that:
True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized
to takejudicial notice of them. Like any other fact, they must be alleged and proved.43
In view of respondent’s failure to prove the national law of the Netherlands in his favor, the
doctrine of processual presumption shall govern. Under this doctrine, if the foreign law involved
is not properly pleaded and proved, our courts will presume that the foreign law is the same as
our local or domestic or internal law.44 Thus, since the law of the Netherlands as regards the
obligation to support has not been properly pleaded and proved in the instant case, it is
presumed to be the same with Philippine law, which enforces the obligation of parents to support
their children and penalizing the non-compliance therewith.
Moreover, while in Pilapil v. Ibay-Somera,45 the Court held that a divorce obtained in a foreign
land as well as its legal effects may be recognized in the Philippines in view of the nationality
principle on the matter of status of persons, the Divorce Covenant presented by respondent does
not completely show that he is notliable to give support to his son after the divorce decree was
issued. Emphasis is placed on petitioner’s allegation that under the second page of the aforesaid
covenant, respondent’s obligation to support his child is specifically stated,46 which was not
disputed by respondent.
We likewise agree with petitioner that notwithstanding that the national law of respondent states
that parents have no obligation to support their children or that such obligation is not
punishable by law, said law would still not find applicability,in light of the ruling in Bank of
America, NT and SA v. American Realty Corporation,47 to wit:
In the instant case, assuming arguendo that the English Law on the matter were properly
pleaded and proved in accordance with Section 24, Rule 132 of the Rules of Court and the
jurisprudence laid down in Yao Kee, et al. vs. Sy-Gonzales, said foreign law would still not find
applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and established public
policy of the forum, the said foreign law, judgment or order shall not be applied.
Additionally, prohibitive laws concerning persons, their acts or property, and those which have
for their object public order, public policy and good customs shall not be rendered ineffective by
laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign
country.
The public policy sought to be protected in the instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a single cause of action.

Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
— child has the right to engage in, or attempting to restrict or restricting the woman's or her child's
If two or more suits are instituted on the basis of the same cause of action, the filing of one or a
judgment upon the merits in any one is available as a ground for the dismissal of the others.
Moreover, foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. To give justice is the most important function
of law; hence, a law, or judgment or contract that is obviously unjust negates the fundamental
principles of Conflict of Laws.48
Applying the foregoing, even if the laws of the Netherlands neither enforce a parent’s obligation
to support his child nor penalize the noncompliance therewith, such obligation is still duly
enforceable in the Philippines because it would be of great injustice to the child to be denied of
financial support when the latter is entitled thereto.
We emphasize, however, that as to petitioner herself, respondent is no longer liable to support
his former wife, in consonance with the ruling in San Luis v. San Luis,49 to wit:
As to the effect of the divorce on the Filipino wife, the Court ruled that she should no longerbe
considered marriedto the alien spouse. Further, she should not be required to perform her
marital duties and obligations. It held:
To maintain, as private respondent does, that, under our laws, petitioner has to be considered
still married to private respondent and still subject to a wife's obligations under Article 109, et.
seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with,
observe respect and fidelity, and render support to private respondent. The latter should not
continue to be one of her heirs with possible rights to conjugal property. She should not be
discriminated against in her own country if the ends of justice are to be served. (Emphasis
added)50
Based on the foregoing legal precepts, we find that respondent may be made liable under Section
5(e) and (i) of R.A. No. 9262 for unjustly refusing or failing to give support topetitioner’s son, to
wit:
SECTION 5. Acts of Violence Against Women and Their Children.- The crime of violence against
women and their children is committed through any of the following acts:
xxxx
176
(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
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.
 177

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.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 205487 November 12, 2014
ORION SAVINGS BANK, Petitioner,
vs.
SHIGEKANE SUZUKI, Respondent.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari1 filed by petitioner Orion Savings Bank (Orion)
under Rule 45 of the Rules of Court, assailing the decision2 dated August 23, 2012 and the
resolution3 dated January 25, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 94104.
The Factual Antecedents
In the first week of August 2003, respondent Shigekane Suzuki (Suzuki), a Japanese national,
met with Ms. Helen Soneja (Soneja) to inquire about a condominium unit and a parking slot at
Cityland Pioneer, Mandaluyong City, allegedly owned by Yung Sam Kang (Kang), a Korean
national and a Special Resident Retiree's Visa (SRRV) holder.
At the meeting, Soneja informed Suzuki that Unit No. 536 [covered by Condominium Certificate
of Title (CCT) No. 18186]4 and Parking Slot No. 42 [covered by CCT No. 9118]5 were for sale for
₱3,000,000.00. Soneja likewise assured Suzuki that the titles to the unit and the parking slot
were clean. After a brief negotiation, the parties agreed to reduce the price to ₱2,800,000.00. On
August 5, 2003, Suzuki issued Kang a Bank of the Philippine Island (BPI) Check No. 833496 for
One Hundred Thousand Pesos (₱100,000.00) as reservation fee.7 On August 21, 2003, Suzuki
issued Kang another check, BPI Check No. 83350,8 this time for ₱2,700,000.00 representing the
remaining balance of the purchase price. Suzuki and Kang then executed a Deed of Absolute Sale
dated August 26, 20039covering Unit No. 536 and Parking Slot No. 42. Soon after, Suzuki took
possession of the condominium unit and parking lot, and commenced the renovation of the
interior of the condominium unit.
Kang thereafter made several representations with Suzuki to deliver the titles to the properties,
which were then allegedly in possession of Alexander Perez (Perez, Orion’s Loans Officer) for
178
safekeeping. Despite several verbal demands, Kang failed to deliver the documents. Suzuki later
on learned that Kang had left the country, prompting Suzuki to verify the status of the properties
with the Mandaluyong City Registry of Deeds.
Before long, Suzuki learned that CCT No. 9118 representing the title to the Parking Slot No. 42
contained no annotations although it remained under the name of Cityland Pioneer. This
notwithstanding, Cityland Pioneer, through Assistant Vice President Rosario D. Perez, certified
that Kang had fully paid the purchase price of Unit. No. 53610 and Parking Slot No. 42.11 CCT No.
18186 representing the title to the condominium unit had no existing encumbrance, except for
anannotation under Entry No. 73321/C-10186 which provided that any conveyance or
encumbrance of CCT No. 18186 shall be subject to approval by the Philippine Retirement
Authority (PRA). Although CCT No. 18186 contained Entry No. 66432/C-10186 dated February
2, 1999 representing a mortgage in favor of Orion for a ₱1,000,000.00 loan, that annotation was
subsequently cancelled on June 16, 2000 by Entry No. 73232/T. No. 10186. Despite the
cancellation of the mortgage to Orion, the titles to the properties remained in possession of
Perez.
To protect his interests, Suzuki thenexecuted an Affidavit of Adverse Claim12 dated September 8,
2003, withthe Registry of Deeds of Mandaluyong City, annotated as Entry No. 3292/C-No. 18186
in CCT No. 18186. Suzuki then demanded the delivery of the titles.13 Orion, (through Perez),
however, refused to surrender the titles, and cited the need to consult Orion’s legal counsel as its
reason.
On October 14, 2003, Suzuki received a letter from Orion’s counsel dated October 9, 2003,
stating that Kang obtained another loan in the amount of ₱1,800,000.00. When Kang failed to
pay, he executed a Dacion en Pagodated February 2, 2003, in favorof Orion covering Unit No.
536. Orion, however, did not register the Dacion en Pago, until October 15, 2003.
On October 28, 2003, Suzuki executed an Affidavit of Adverse Claim over Parking Slot No. 42
(covered by CCT No. 9118) and this was annotated as Entry No. 4712/C-No. 9118 in the parking
lot’s title.
On January 27, 2004, Suzuki filed a complaint for specific performance and damages against
Kang and Orion. At the pre-trial, the parties made the following admissions and stipulations:
1. That as of August 26, 2003, Kang was the registered owner of Unit No. 536 and
Parking Slot No. 42;
2. That the mortgage in favor ofOrion supposedly executed by Kang, with Entry No.
66432/C-10186 dated February 2, 1999, was subsequently cancelled by Entry No.
73232/T No. 10186 dated June 16, 2000;

3. That the alleged Dacion en Pagowas never annotated in CCT Nos. 18186 and 9118;
4. That Orion only paid the appropriate capital gains tax and the documentary stamp
tax for the alleged Dacion en Pago on October 15, 2003;
5. That Parking Slot No. 42, covered by CCT No. 9118, was never mortgaged to Orion;
and
6. That when Suzuki bought the properties, he went to Orion to obtain possession of the
titles.
The RTC Ruling
In its decision14 dated June 29, 2009, the Regional Trial Court (RTC), Branch 213, Mandaluyong
City ruled infavor of Suzuki and ordered Orion to deliver the CCT Nos. 18186 and 9118 to Suzuki.
The court found that Suzuki was an innocent purchaser for value whose rights over the
properties prevailed over Orion’s. The RTC further noted that Suzuki exerted efforts to verify the
status of the properties but he did not find any existing encumbrance inthe titles. Although Orion
claims to have purchased the property by way of a Dacion en Pago, Suzuki only learned about it
two (2) months after he bought the properties because Orion never bothered to register or
annotate the Dacion en Pagoin CCT Nos. 18186 and 9116.
The RTC further ordered Orion and Kang to jointly and severally pay Suzuki moral damages,
exemplary damages, attorney’s fees, appearance fees, expenses for litigation and cost ofsuit.
Orion timely appealed the RTC decision with the CA.
The CA Ruling
On August 23, 2012, the CA partially granted Orion’s appeal and sustained the RTC insofar as it
upheld Suzuki’s right over the properties. The CA further noted that Entry No. 73321/C-10186
pertaining to the withdrawal of investment of an SRRV only serves as a warning to an SRRV
holder about the implications of a conveyance of a property investment. It deviated from the RTC
ruling, however, by deleting the award for moral damages, exemplary damages, attorney’s fees,
expenses for litigation and cost of suit.
Orion sought a reconsideration of the CA decision but the CA denied the motion in its January
25, 2013 resolution. Orion then filed a petition for review on certiorariunder Rule 45 with this
Court.
179
The Petition and Comment
Orion’s petition is based on the following grounds/arguments:15
1. The Deed of Sale executed by Kang in favor of Suzuki is null and void. Under Korean
law, any conveyance of a conjugal property should be made with the consent of both
spouses;
2. Suzuki is not a buyer in good faith for he failed to check the owner’s duplicate copies
of the CCTs;
3. Knowledge of the PRA restriction under Entry No. 73321/C-10186, which prohibits
any conveyance or encumbrance of the property investment, defeats the alleged claim of
good faith by Suzuki; and
4. Orion should not be faulted for exercising due diligence.
In his Comment,16 Suzuki asserts that the issue on spousal consent was belatedly raised on
appeal. Moreover, proof of acquisition during the marital coverture is a condition sine qua
nonfor the operation of the presumption of conjugal ownership.17 Suzuki additionally maintains
that he is a purchaser in good faith, and is thus entitled to the protection of the law.
The Court’s Ruling
We deny the petition for lack of merit.
The Court may inquire into conclusions of fact when the inference made is manifestly mistaken
In a Rule 45 petition, the latitude of judicial review generally excludes a factual and evidentiary
re-evaluation, and the Court ordinarily abides by the uniform factual conclusions of the trial
court and the appellate court.18 In the present case, while the courts below both arrived at the
same conclusion, there appears tobe an incongruence in their factual findings and the legal
principle they applied to the attendant factual circumstances. Thus, we are compelled to examine
certain factual issues in the exercise of our sound discretion to correct any mistaken inference
that may have been made.19
Philippine Law governs the transfer of real property
Orion believes that the CA erred in not ruling on the issue of spousal consent. We cannot uphold
this position, however, because the issue of spousal consent was only raised on appeal to the CA.
It is a well-settled principle that points of law, theories, issues, and arguments not brought to the

attention of the trial court cannot be raised for the first time on appeal and considered by a
reviewing court.20 To consider these belated arguments would violate basic principles of fairplay,
justice, and due process.
Having said these, we shall nonetheless discuss the issues Orion belatedly raised, if only to put
an end to lingering doubts on the correctness of the denial of the present petition.
It is a universal principle thatreal or immovable property is exclusively subject to the laws of the
country or state where it is located.21 The reason is found in the very nature of immovable
property — its immobility. Immovables are part of the country and so closely connected to it that
all rights over them have their natural center of gravity there.22
Thus, all matters concerning the titleand disposition ofreal property are determined by what is
known as the lex loci rei sitae, which can alone prescribe the mode by which a title canpass from
one person to another, or by which an interest therein can be gained or lost.23 This general
principle includes all rules governing the descent, alienation and transfer of immovable property
and the validity, effect and construction of wills and other conveyances.24
This principle even governs the capacity of the person making a deed relating to immovable
property, no matter what its nature may be. Thus, an instrument will be ineffective to transfer
title to land if the person making it is incapacitated by the lex loci rei sitae, even though under
the law of his domicile and by the law of the place where the instrument is actually made, his
capacity is undoubted.25
On the other hand, property relations between spouses are governed principally by the national
law of the spouses.26 However, the party invoking the application of a foreign law has the burden
of proving the foreign law. The foreign law is a question of fact to be properly pleaded and proved
as the judge cannot take judicial notice of a foreign law.27 He is presumed to know only domestic
or the law of the forum.28
To prove a foreign law, the party invoking it must present a copy thereof and comply with
Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:
SEC. 24. Proof of official record. — The record of public documents referred to in paragraph (a)
of Section 19, when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul general, consul, vice
consul, or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country inwhich the record is kept, and authenticated by the seal of his office.
(Emphasis supplied)
180
SEC. 25. What attestation ofcopy must state. — Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state, in substance, that the copy is
a correct copy of the original, or a specific part thereof, as the case may be. The attestation must
be under the official seal of the attesting officer, if there be any, or if he be the clerk of a court
having a seal, under the seal of such court.
Accordingly, matters concerning the title and disposition of real property shall be governed by
Philippine law while issues pertaining to the conjugal natureof the property shall be governed by
South Korean law, provided it is proven as a fact.
In the present case, Orion, unfortunately failed to prove the South Korean law on the conjugal
ownership ofproperty. It merely attached a "Certification from the Embassy of the Republic of
Korea"29 to prove the existence of Korean Law. This certification, does not qualify as sufficient
proof of the conjugal nature of the property for there is no showing that it was properly
authenticated bythe seal of his office, as required under Section 24 of Rule 132.30
Accordingly, the International Law doctrine of presumed-identity approachor processual
presumption comes into play, i.e., where a foreign law is not pleaded or, evenif pleaded, is not
proven, the presumption is that foreign law is the same as Philippine Law.31
Under Philippine Law, the phrase "Yung Sam Kang ‘married to' Hyun Sook Jung" is merely
descriptive of the civil status of Kang.32 In other words, the import from the certificates of title is
that Kang is the owner of the properties as they are registered in his name alone, and that he is
married to Hyun Sook Jung.
We are not unmindful that in numerous cases we have held that registration of the property in
the name of only one spouse does not negate the possibility of it being conjugal or community
property.33 In those cases, however, there was proof that the properties, though registered in the
name of only one spouse, were indeed either conjugal or community properties.34 Accordingly,
we see no reason to declare as invalid Kang’s conveyance in favor of Suzuki for the supposed lack
of spousal consent.
The petitioner failed to adduce sufficient evidence to prove the due execution of the Dacion en
Pago
Article 1544 of the New Civil Codeof the Philippines provides that:
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
The application of Article 1544 of the New Civil Code presupposes the existence of two or more
duly executed contracts of sale. In the present case, the Deed of Sale dated August 26,
200335 between Suzuki and Kang was admitted by Orion36 and was properly identified by
Suzuki’s witness Ms. Mary Jane Samin (Samin).37
It is not disputed, too, that the Deed of Sale dated August 26, 2003 was consummated. In a
contract of sale, the seller obligates himself to transfer the ownership of the determinate thing
sold, and to deliver the same to the buyer, who obligates himself to pay a price certain to the
seller.38 The execution of the notarized deed of saleand the actual transfer of possession
amounted to delivery that produced the legal effect of transferring ownership to Suzuki.39
On the other hand, although Orion claims priority in right under the principle of prius tempore,
potior jure (i.e.,first in time, stronger in right), it failedto prove the existence and due execution
of the Dacion en Pagoin its favor.
At the outset, Orion offered the Dacion en Pagoas Exhibit "5"with submarkings "5-a" to "5-c" to
prove the existence of the February 6, 2003 transaction in its Formal Offer dated July 20, 2008.
Orion likewise offered in evidence the supposed promissory note dated September 4, 2002 as
Exhibit "12"to prove the existence of the additional ₱800,000.00 loan. The RTC, however,
denied the admission of Exhibits "5" and "12,"among others, in its order dated August 19, 2008
"since the same [were] not identified in court by any witness."40
Despite the exclusion of its most critical documentary evidence, Orion failed to make a tender
ofexcluded evidence, as provided under Section 40, Rule 132 of the Rules of Court. For this
reason alone, we are prevented from seriously considering Exhibit "5" and its submarkings and
Exhibit "12" in the present petition.
Moreover, even if we consider Exhibit "5" and its submarkings and Exhibit "12" in the present
petition, the copious inconsistencies and contradictions in the testimonial and documentary
evidence of Orion, militate against the conclusion that the Dacion en Pagowas duly executed.
First, there appears to be no due and demandable obligation when the Dacion en Pago was
executed, contrary to the allegations of Orion. Orion’s witness Perez tried to impress upon the
RTC that Kang was in default in his ₱1,800,000.00 loan. During his direct examination, he
stated:
181
ATTY. CRUZAT:
Q: Okay, so this loan of ₱1.8 million, what happened to this loan, Mr. Witness?
A: Well it became past due, there has been delayed interest payment by Mr. Kangand...
Q: So what did you do after there were defaults[?]
A: We have to secure the money or the investment of the bank through loans and we have executed
a dacion en pagobecause Mr. Kang said he has no money. So we just execute[d] the dacion en pago
rather than going through the Foreclosure proceedings.
xxxx
Q: Can you tell the court when was this executed?
A: February 6, 2003, your Honor.41
A reading of the supposed promissory note, however, shows that there was nodefault to speak of
when the supposed Dacion en Pagowas executed.
Based on the promissory note, Kang’s loan obligation wouldmature only on August 27, 2003.
Neither can Orion claim that Kang had been in default in his installment payments because the
wordings of the promissory note provide that "[t]he principal of this loanand its interest and
other charges shall be paid by me/us in accordance hereunder: SINGLE PAYMENT
LOANS.42 "There was thus no due and demandable loan obligation when the alleged Dacion en
Pago was executed.
Second, Perez, the supposed person who prepared the Dacion en Pago,appears to only have a
vague idea of the transaction he supposedly prepared. During his cross-examination, he testified:
ATTY. DE CASTRO:
Q: And were you the one who prepared this [dacion en pago] Mr. witness?
A: Yes, sir. I personally prepared this.
xxxx
Q: So this 1.8 million pesos is already inclusive of all the penalties, interest and surcharge due from
Mr. Yung Sam Kang?
 182

A: It’s just the principal, sir.
Q: So you did not state the interest [and] penalties?
A: In the [dacion en pago], we do not include interest, sir. We may actually includethat but....
Q: Can you read the Second Whereas Clause, Mr. Witness?
Notably, even the October 9, 2003 letter contained material inconsistencies in its recital of facts
surrounding the execution of the Dacion en Pago. In particular, it mentioned that "on
[September 4, 2002], after paying the original loan, [Kang] applied and was granted a new
Credit Line Facility by [Orion] x x x for ONE MILLION EIGHT HUNDRED THOUSAND PESOS
(₱1,800,000.00)." Perez, however, testified that there was "no cash movement" in the original
₱1,000,000.00 loan. In his testimony, he said:
COURT:

A: Whereas the first party failed to pay the said loan to the second party and as of February 10,
2003, the outstanding obligation which is due and demandable principal and interest and other xxxx
charges included amounts to ₱1,800,000.00 pesos, sir.
Q: Would you remember what was the subject matter of that real estate mortgage for that first
xxxx ₱1,000,000.00 loan?

Q: You are now changing your answer[.] [I]t now includes interest and other charges, based on this A: It’s a condominium Unit in Cityland, sir.
document?
xxxx
A: Yes, based on that document, sir.43
Q: Would you recall if there was any payment by Mr. Yung Sam Kang of this ₱1,000,000.00 loan?
Third, the Dacion en Pago,mentioned that the ₱1,800,000.00 loan was secured by a real estate
mortgage. However, no document was ever presented to prove this real estate mortgage aside from A: None sir.
it being mentioned in the Dacion en Pago itself.

Q: No payments?
ATTY. DE CASTRO:

A: None sir.
Q: Would you know if there is any other document like a supplement to that Credit Line
Agreement referring to this 1.8 million peso loan by Mr. Yung Sam Kang which says that there was
a subsequent collateralization or security given by Mr. Yung [Sam] Q: And from 1999 to 2002, there was no payment, either by way of payment to the principal, by
way ofpayment of interest, there was no payment by Mr. Yung Sam Kang of this loan?
Kang for the loan?
A: Literally, there was no actual cash movement, sir.
xxxx
Q: There was no actual cash?
A: The [dacion en pago], sir.44
A: Yes, sir.

Fourth,the Dacion en Pago was first mentioned only two (2) months after Suzuki and Samin
demanded the delivery of the titles sometime in August 2003,and after Suzuki caused the Q: And yet despite no payment, the bank Orion Savings Bank still extended an ₱800,000.00
additional right?
annotation of his affidavit of adverse claim. Records show that it was only on October 9, 2003,
when Orion, through its counsel, Cristobal Balbin Mapile & Associates first spoke of the Dacion
en Pago.45 Not even Perez mentioned any Dacion en Pago on October 1, 2003, when he A: Yes, sir.47
personally received a letter demanding the delivery of the titles.Instead, Perez refused to accept
the letter and opted to first consult with his lawyer.46

Fifth, it is undisputed that notwithstanding the supposed execution of theDacion en Pago on
February 2, 2003, Kang remained in possession of the condominium unit. In fact, nothing in the
records shows that Orion even bothered to take possession of the property even six (6) months
after the supposed date of execution of the Dacion en Pago. Kang was even able to transfer
possession of the condominium unit to Suzuki, who then made immediate improvements
thereon. If Orion really purchased the condominium unit on February 2, 2003 and claimed to be
its true owner, why did it not assert its ownership immediately after the alleged sale took place?
Why did it have to assert its ownership only after Suzuki demanded the delivery of the titles?
These gaps have remained unanswered and unfilled.
In Suntay v. CA,48 we held that the most prominent index of simulation is the complete absence
of anattempt on the part of the vendee to assert his rights of ownership over the property in
question. After the sale, the vendee should have entered the land and occupied the premises. The
absence of any attempt on the part of Orion to assert its right of dominion over the property
allegedly soldto it is a clear badge of fraud. That notwithstanding the execution of the Dacion en
Pago, Kang remained in possession of the disputed condominium unit – from the time of the
execution of the Dacion en Pagountil the property’s subsequent transfer to Suzuki –
unmistakably strengthens the fictitious nature of the Dacion en Pago.
These circumstances, aside from the glaring inconsistencies in the documents and testimony of
Orion’s witness, indubitably prove the spurious nature of the Dacion en Pago.
The fact that the Dacion en Pago
is a notarized document does not
support the conclusion that the
sale it embodies is a true
conveyance
Public instruments are evidence of the facts that gave rise to their execution and are to be
considered as containing all the terms of the agreement.49 While a notarized document enjoys
this presumption, "the fact that a deed is notarized is not a guarantee of the validity of its
contents."50 The presumption of regularity of notarized documents is not absolute and may be
rebutted by clear and convincing evidence to the contrary.51
In the present case, the presumption cannot apply because the regularity in the execution of the
Dacion en Pago and the loan documents was challenged in the proceedings below where their
prima facievalidity was overthrown by the highly questionable circumstances surrounding their
execution.52
Effect of the PRA restriction on
the validity of Suzuki’s title to the
property
183
Orion argues that the PRA restriction in CCT No. 18186 affects the conveyance to Suzuki. In
particular, Orion assails the status of Suzuki as a purchaser in good faith in view of the express
PRA restriction contained in CCT No. 18186.53
We reject this suggested approachoutright because, to our mind, the PRA restriction cannot
affect the conveyance in favor of Suzuki. On this particular point, we concur withthe following
findings of the CA:
x x x the annotation merely servesas a warning to the owner who holds a Special Resident
Retiree’s Visa(SRRV) that he shall lose his visa if he disposes his property which serves as his
investment in order to qualify for such status. Section 14 of the Implementing Investment
Guidelines under Rule VIII-A of the Rules and Regulations Implementing Executive Order No.
1037, Creating the Philippine Retirement Park System Providing Funds Therefor and For Other
Purpose ( otherwise known as the Philippine Retirement Authority) states:
Section 14. Should the retiree-investor withdraw his investment from the Philippines, or transfer
the same to another domestic enterprise, orsell, convey or transfer his condominium unit or
units to another person, natural or juridical without the prior approval of the Authority, the
Special Resident Retiree’s Visa issued to him, and/or unmarried minor child or children[,] may
be cancelled or revoked by the Philippine Government, through the appropriate government
department or agency, upon recommendation of the Authority.54
Moreover, Orion should not be allowed to successfully assail the good faith of Suzuki on the basis
of the PRA restriction. Orion knew of the PRA restriction when it transacted with Kang.
Incidentally, Orion admitted accommodating Kang’s request to cancel the mortgage annotation
despite the lack of payment to circumvent the PRA restriction. Orion, thus, is estopped from
impugning the validity of the conveyance in favor of Suzuki on the basis of the PRA restriction
that Orion itself ignored and "attempted" to circumvent.
With the conclusion that Orion failed to prove the authenticity of the Dacion en Pago, we see no
reason for the application of the rules on double sale under Article 1544 of the New Civil Code.
Suzuki, moreover, successfully adduced sufficient evidence to establish the validity of
conveyance in his favor.
WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs against
petitioner Orion Savings Bank.
SO ORDERED.