G.R. No.

122191 October 8, 1998

SAUDI ARABIAN AIRLINES, petitioner,
vs.
COURT OF APPEALS, MILAGROS P. MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding Judge of Branch 89, Regional Trial
Court of Quezon City, respondents.

QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to
annul and set aside the Resolution 1 dated September 27, 1995 and the Decision
2
dated April 10, 1996 of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4 and
the Orders 5 dated August 29, 1994 6 and February 2, 1995 7 that were issued by
the trial court in Civil Case No. Q-93-18394. 8
The pertinent antecedent facts which gave rise to the instant petition, as stated in
the questioned Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for
its airlines based in Jeddah, Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a
disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-Gazzawi,
both Saudi nationals. Because it was almost morning when they returned to their
hotels, they agreed to have breakfast together at the room of Thamer. When they
were in te (sic) room, Allah left on some pretext. Shortly after he did, Thamer
attempted to rape plaintiff. Fortunately, a roomboy and several security personnel
heard her cries for help and rescued her. Later, the Indonesian police came and
arrested Thamer and Allah Al-Gazzawi, the latter as an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go back
to Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA
Legal Officer Sirah Akkad and base manager Baharini negotiated with the police
for the immediate release of the detained crew members but did not succeed
because plaintiff refused to cooperate. She was afraid that she might be tricked
into something she did not want because of her inability to understand the local
dialect. She also declined to sign a blank paper and a document written in the
local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred
her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDI (sic). In
September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief

Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her passport and
allowed her to catch the afternoon flight out of Jeddah.
One year and a half later or on lune 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed to
board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to
appear before the court on June 27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff
did so after receiving assurance from SAUDIA's Manila manager, Aslam Saleemi,
that the investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her
to take flight. At the Inflight Service Office where she was told to go, the secretary
of Mr. Yahya Saddick took away her passport and told her to remain in Jeddah, at
the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court
where the judge, to her astonishment and shock, rendered a decision, translated
to her in English, sentencing her to five months imprisonment and to 286 lashes.
Only then did she realize that the Saudi court had tried her, together with Thamer
and Allah, for what happened in Jakarta. The court found plaintiff guilty of (1)
adultery; (2) going to a disco, dancing and listening to the music in violation of
Islamic laws; and (3) socializing with the male crew, in contravention of Islamic
tradition. 10

Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the
Philippine Embassy in Jeddah to help her while her case is on appeal.
Meanwhile, to pay for her upkeep, she worked on the domestic flight of SAUDIA,
while Thamer and Allah continued to serve in the international
flights. 11
Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to
Manila, 12 she was terminated from the service by SAUDIA, without her being
informed of the cause.

On November 23, 1993, Morada filed a Complaint 13 for damages against

SAUDIA, and Khaled Al-Balawi ("Al-Balawi"), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss 14 which
raised the following grounds, to wit: (1) that the Complaint states no cause of
action against Saudia; (2) that defendant Al-Balawi is not a real party in interest;
(3) that the claim or demand set forth in the Complaint has been waived,
abandoned or otherwise extinguished; and (4) that the trial court has no
jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss) 15.
Saudia filed a reply 16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17 wherein Al-Balawi was
dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation
and Motion to Dismiss Amended Complaint 18.
The trial court issued an Order 19 dated August 29, 1994 denying the Motion to
Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge 20 denying the Motion to Dismiss, SAUDIA
filed on September 20, 1994, its Motion for Reconsideration 21 of the Order dated
August 29, 1994. It alleged that the trial court has no jurisdiction to hear and try
the case on the basis of Article 21 of the Civil Code, since the proper law
applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994,
Morada filed her Opposition 22 (To Defendant's Motion for Reconsideration).
In the Reply 23 filed with the trial court on October 24, 1994, SAUDIA alleged that
since its Motion for Reconsideration raised lack of jurisdiction as its cause of
action, the Omnibus Motion Rule does not apply, even if that ground is raised for
the first time on appeal. Additionally, SAUDIA alleged that the Philippines does
not have any substantial interest in the prosecution of the instant case, and
hence, without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order 24 dated February 2,
1995, denying SAUDIA's Motion for Reconsideration. The pertinent portion of the
assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines
filed, thru counsel, on September 20, 1994, and the Opposition thereto of the
plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply therewith of
defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994,
considering that a perusal of the plaintiffs Amended Complaint, which is one for
the recovery of actual, moral and exemplary damages plus attorney's fees, upon
the basis of the applicable Philippine law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the jurisdiction of this Court as regards the subject
matter, and there being nothing new of substance which might cause the reversal

or modification of the order sought to be reconsidered, the motion for

reconsideration of the defendant, is DENIED.
SO ORDERED. 25

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or
Temporary Restraining Order 26 with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary
Restraining Order 27 dated February 23, 1995, prohibiting the respondent Judge
from further conducting any proceeding, unless otherwise directed, in the interim.
In another Resolution 28 promulgated on September 27, 1995, now assailed, the
appellate court denied SAUDIA's Petition for the Issuance of a Writ of Preliminary
Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is hereby
DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary
Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein
petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al., v.
Court of Appeals, et. Al., 100335, April 7, 1993, Second Division).
SO ORDERED.

On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition
29
for Review with Prayer for Temporary Restraining Order dated October 13,
1995.
However, during the pendency of the instant Petition, respondent Court of
Appeals rendered the Decision 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.
Petitioner SAUDIA raised the following issues:
I

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394
based on Article 21 of the New Civil Code since the proper law applicable is the
law of the Kingdom of Saudi Arabia inasmuch as this case involves what is
known in private international law as a "conflicts problem". Otherwise, the
Republic of the Philippines will sit in judgment of the acts done by another
sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a jurisdictional
requirement. Besides, the matter as to absence of leave of court is now moot and
academic when this Honorable Court required the respondents to comment on
petitioner's April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order Within Ten (10) Days From Notice Thereof. Further,
the Revised Rules of Court should be construed with liberality pursuant to
Section 2, Rule 1 thereof.
III
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP
NO. 36533 entitled "Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al." and
filed its April 30, 1996 Supplemental Petition For Review With Prayer For A
Temporary Restraining Order on May 7, 1996 at 10:29 a.m. or within the 15-day
reglementary period as provided for under Section 1, Rule 45 of the Revised
Rules of Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet
become final and executory and this Honorable Court can take cognizance of this
case. 33

From the foregoing factual and procedural antecedents, the following issues
emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT
THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO
HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED "MILAGROS P.
MORADA V. SAUDI ARABIAN AIRLINES".
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN
THIS CASE PHILIPPINE LAW SHOULD GOVERN.

Petitioner SAUDIA claims that before us is a conflict of laws that must be settled
at the outset. It maintains that private respondent's claim for alleged abuse of
rights occurred in the Kingdom of Saudi Arabia. It alleges that the existence of a
foreign element qualifies the instant case for the application of the law of the
Kingdom of Saudi Arabia, by virtue of the lex loci delicti commissi rule. 34

On the other hand, private respondent contends that since her Amended
Complaint is based on Articles 19 35 and 21 36 of the Civil Code, then the instant
case is properly a matter of domestic law. 37
Under the factual antecedents obtaining in this case, there is no dispute that the
interplay of events occurred in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint
1994:

38

dated June 23,

2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines

corporation doing business in the Philippines. It may be served with summons
and other court processes at Travel Wide Associated Sales (Phils.). Inc., 3rd
Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.
xxx xxx xxx
6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah after
two weeks of detention. Eventually, they were again put in service by defendant
SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors reauested her to see MR. Ali Meniewy, Chief
Legal Officer of SAUDIA in Jeddah, Saudi Arabia. When she saw him, he brought
her to the police station where the police took her passport and questioned her
about the Jakarta incident. Miniewy simply stood by as the police put pressure on
her to make a statement dropping the case against Thamer and Allah. Not until
she agreed to do so did the police return her passport and allowed her to catch
the afternoon flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed to
board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sigh a
document written in Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to
appear before the court on June 27, 1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff
did so after receiving assurance from SAUDIA's Manila manger, Aslam Saleemi,
that the investigation was routinary and that it posed no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her
to take that flight. At the Inflight Service Office where she was told to go, the

secretary of Mr. Yahya Saddick took away her passport and told her to remain in
Jeddah, at the crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and to
286 lashes. Only then did she realize that the Saudi court had tried her, together
with Thamer and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing, and listening to the music in
violation of Islamic laws; (3) socializing with the male crew, in contravention of
Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the
help of the Philippines Embassy in Jeddah. The latter helped her pursue an
appeal from the decision of the court. To pay for her upkeep, she worked on the
domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights. 39

Where the factual antecedents satisfactorily establish the existence of a foreign

element, we agree with petitioner that the problem herein could present a
"conflicts" case.
A factual situation that cuts across territorial lines and is affected by the diverse
laws of two or more states is said to contain a "foreign element". The presence of
a foreign element is inevitable since social and economic affairs of individuals
and associations are rarely confined to the geographic limits of their birth or
conception. 40
The forms in which this foreign element may appear are many. 41 The foreign
element may simply consist in the fact that one of the parties to a contract is an
alien or has a foreign domicile, or that a contract between nationals of one State
involves properties situated in another State. In other cases, the foreign element
may assume a complex form. 42
In the instant case, the foreign element consisted in the fact that private
respondent Morada is a resident Philippine national, and that petitioner SAUDIA
is a resident foreign corporation. Also, by virtue of the employment of Morada
with the petitioner Saudia as a flight stewardess, events did transpire during her
many occasions of travel across national borders, particularly from Manila,
Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a "conflicts"
situation to arise.
We thus find private respondent's assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of
jurisdiction 43 confronts the court a quo.
After a careful study of the private respondent's Amended Complaint, 44 and the
Comment thereon, we note that she aptly predicated her cause of action on
Articles 19 and 21 of the New Civil Code.

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

Art. 19. Every person must, in the exercise of his rights and in the performance of
his duties, act with justice give everyone his due and observe honesty and good
faith.

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

Art. 21. Any person who willfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy shall compensate the latter
for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals, 45 this Court held
that:
The aforecited provisions on human relations were intended to expand the
concept of torts in this jurisdiction by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondent's assertion that violations of
Articles 19 and 21 are actionable, with judicially enforceable remedies in the
municipal forum.
Based on the allegations 46 in the Amended Complaint, read in the light of the
Rules of Court on jurisdiction 47 we find that the Regional Trial Court (RTC) of
Quezon City possesses jurisdiction over the subject matter of the suit. 48 Its
authority to try and hear the case is provided for under Section 1 of Republic Act
No. 7691, to wit:
Sec. 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980", is hereby amended to read as follows:
Sec. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise
exclusive jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses,
and cots or the value of the property in controversy exceeds One
hundred thousand pesos (P100,000.00) or, in such other cases
in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred Thousand pesos
(P200,000.00). (Emphasis ours)
xxx xxx xxx

And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue,
Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now Regional Trial Court]
(a) xxx xxx xxx
(b) Personal actions. All other actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiff resides, at the election of the plaintiff.

Pragmatic considerations, including the convenience of the parties, also weigh

heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the
private interest of the litigant. Enforceability of a judgment if one is obtained is
quite obvious. Relative advantages and obstacles to a fair trial are equally
important. Plaintiff may not, by choice of an inconvenient forum, "vex", "harass",
or "oppress" the defendant, e.g. by inflicting upon him needless expense or
disturbance. But unless the balance is strongly in favor of the defendant, the
plaintiffs choice of forum should rarely be disturbed. 49
Weighing the relative claims of the parties, the court a quo found it best to hear
the case in the Philippines. Had it refused to take cognizance of the case, it
would be forcing plaintiff (private respondent now) to seek remedial action
elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer maintains
substantial connections. That would have caused a fundamental unfairness to
her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of
the plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties
herein. By filing her Complaint and Amended Complaint with the trial court,
private respondent has voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions 50 praying for
the dismissal of Morada's Amended Complaint. SAUDIA also filed an Answer In
Ex Abundante Cautelam dated February 20, 1995. What is very patent and
explicit from the motions filed, is that SAUDIA prayed for other reliefs under the
premises. Undeniably, petitioner SAUDIA has effectively submitted to the trial
court's jurisdiction by praying for the dismissal of the Amended Complaint on
grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.: 51
We observe that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower court's jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that plaintiff's cause of action has

prescribed. By interposing such second ground in its motion to dismiss, Ker and
Co., Ltd. availed of an affirmative defense on the basis of which it prayed the
court to resolve controversy in its favor. For the court to validly decide the said
plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon
the latter's person, who, being the proponent of the affirmative defense, should
be deemed to have abandoned its special appearance and voluntarily submitted
itself to the jurisdiction of the court.

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

When the appearance is by motion for the purpose of objecting to the jurisdiction
of the court over the person, it must be for the sole and separate purpose of
objecting to the jurisdiction of the court. If his motion is for any other purpose
than to object to the jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special appearance by motion made for
the purpose of objecting to the jurisdiction of the court over the person will be
held to be a general appearance, if the party in said motion should, for example,
ask for a dismissal of the action upon the further ground that the court had no
jurisdiction over the subject matter. 52

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and
that its exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to
answer two important questions: (1) What legal system should control a given
situation where some of the significant facts occurred in two or more states; and
(2) to what extent should the chosen legal system regulate the situation. 53
Several theories have been propounded in order to identify the legal system that
should ultimately control. Although ideally, all choice-of-law theories should
intrinsically advance both notions of justice and predictability, they do not always
do so. The forum is then faced with the problem of deciding which of these two
important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what
category a certain set of facts or rules fall. This process is known as
"characterization", or the "doctrine of qualification". It is the "process of deciding
whether or not the facts relate to the kind of question specified in a conflicts rule."
55
The purpose of "characterization" is to enable the forum to select the proper
law. 56
Our starting point of analysis here is not a legal relation, but a factual situation,
event, or operative fact. 57 An essential element of conflict rules is the indication
of a "test" or "connecting factor" or "point of contact". Choice-of-law rules
invariably consist of a factual relationship (such as property right, contract claim)
and a connecting factor or point of contact, such as the situs of the res, the place
of celebration, the place of performance, or the place of wrongdoing. 58

Note that one or more circumstances may be present to serve as the possible
test for the determination of the applicable law. 59 These "test factors" or "points of
contact" or "connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn,
or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be
situated. In particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place
where a contract has been made, a marriage celebrated, a will signed or a tort
committed. The lex loci actus is particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to be
exercised;
(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done.
The lex fori the law of the forum is particularly important because, as we
have seen earlier, matters of "procedure" not going to the substance of the claim
involved are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from application in a
given case for the reason that it falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers
contractual relationships particularly contracts of affreightment. 60 (Emphasis
ours.)

After a careful study of the pleadings on record, including allegations in the

Amended Complaint deemed admitted for purposes of the motion to dismiss, we
are convinced that there is reasonable basis for private respondent's assertion
that although she was already working in Manila, petitioner brought her to
Jeddah on the pretense that she would merely testify in an investigation of the
charges she made against the two SAUDIA crew members for the attack on her
person while they were in Jakarta. As it turned out, she was the one made to face
trial for very serious charges, including adultery and violation of Islamic laws and
tradition.
There is likewise logical basis on record for the claim that the "handing over" or
"turning over" of the person of private respondent to Jeddah officials, petitioner
may have acted beyond its duties as employer. Petitioner's purported act
contributed to and amplified or even proximately caused additional humiliation,

misery and suffering of private respondent. Petitioner thereby allegedly facilitated

the arrest, detention and prosecution of private respondent under the guise of
petitioner's authority as employer, taking advantage of the trust, confidence and
faith she reposed upon it. As purportedly found by the Prince of Makkah, the
alleged conviction and imprisonment of private respondent was wrongful. But
these capped the injury or harm allegedly inflicted upon her person and
reputation, for which petitioner could be liable as claimed, to provide
compensation or redress for the wrongs done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the
"connecting factor" or "point of contact" could be the place or places where the
tortious conduct or lex loci actus occurred. And applying the torts principle in a
conflicts case, we find that the Philippines could be said as a situs of the tort (the
place where the alleged tortious conduct took place). This is because it is in the
Philippines where petitioner allegedly deceived private respondent, a Filipina
residing and working here. According to her, she had honestly believed that
petitioner would, in the exercise of its rights and in the performance of its duties,
"act with justice, give her due and observe honesty and good faith." Instead,
petitioner failed to protect her, she claimed. That certain acts or parts of the injury
allegedly occurred in another country is of no moment. For in our view what is
important here is the place where the over-all harm or the totality of the alleged
injury to the person, reputation, social standing and human rights of complainant,
had lodged, according to the plaintiff below (herein private respondent). All told, it
is not without basis to identify the Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability 61 have been advanced to
offer fresh judicial approaches to arrive at just results. In keeping abreast with the
modern theories on tort liability, we find here an occasion to apply the "State of
the most significant relationship" rule, which in our view should be appropriate to
apply now, given the factual context of this case.
In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated
according to their relative importance with respect to the particular issue: (a) the
place where the injury occurred; (b) the place where the conduct causing the
injury occurred; (c) the domicile, residence, nationality, place of incorporation and
place of business of the parties, and (d) the place where the relationship, if any,
between the parties is centered. 62
As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is
a resident Filipina national, working with petitioner, a resident foreign corporation
engaged here in the business of international air carriage. Thus, the
"relationship" between the parties was centered here, although it should be
stressed that this suit is not based on mere labor law violations. From the record,

the claim that the Philippines has the most significant contact with the matter in
this dispute, 63 raised by private respondent as plaintiff below against defendant
(herein petitioner), in our view, has been properly established.
Prescinding from this premise that the Philippines is the situs of the tort
complained of and the place "having the most interest in the problem", we find,
by way of recapitulation, that the Philippine law on tort liability should have
paramount application to and control in the resolution of the legal issues arising
out of this case. Further, we hold that the respondent Regional Trial Court has
jurisdiction over the parties and the subject matter of the complaint; the
appropriate venue is in Quezon City, which could properly apply Philippine law.
Moreover, we find untenable petitioner's insistence that "[s]ince private
respondent instituted this suit, she has the burden of pleading and proving the
applicable Saudi law on the matter." 64 As aptly said by private respondent, she
has "no obligation to plead and prove the law of the Kingdom of Saudi Arabia
since her cause of action is based on Articles 19 and 21" of the Civil Code of the
Philippines. In her Amended Complaint and subsequent pleadings, she never
alleged that Saudi law should govern this case. 65 And as correctly held by the
respondent appellate court, "considering that it was the petitioner who was
invoking the applicability of the law of Saudi Arabia, then the burden was on it
[petitioner] to plead and to establish what the law of Saudi Arabia is". 66
Lastly, no error could be imputed to the respondent appellate court in upholding
the trial court's denial of defendant's (herein petitioner's) motion to dismiss the
case. Not only was jurisdiction in order and venue properly laid, but appeal after
trial was obviously available, and expeditious trial itself indicated by the nature of
the case at hand. Indubitably, the Philippines is the state intimately concerned
with the ultimate outcome of the case below, not just for the benefit of all the
litigants, but also for the vindication of the country's system of law and justice in a
transnational setting. With these guidelines in mind, the trial court must proceed
to try and adjudge the case in the light of relevant Philippine law, with due
consideration of the foreign element or elements involved. Nothing said herein, of
course, should be construed as prejudging the results of the case in any manner
whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case
No. Q-93-18394 entitled "Milagros P. Morada vs. Saudi Arabia Airlines" is hereby
REMANDED to Regional Trial Court of Quezon City, Branch 89 for further
proceedings.
SO ORDERED.
G.R. No. L-16749

January 31, 1963

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN,

DECEASED.

ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased,

Executor and Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
M. R. Sotelo for executor and heir-appellees.
Leopoldo M. Abellera and Jovito Salonga for oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N.
Cusi, Jr., presiding, in Special Proceeding No. 622 of said court, dated September 14,
1949, approving among things the final accounts of the executor, directing the executor to
reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen
Christensen Garcia as her legacy, and declaring Maria Lucy Christensen entitled to the
residue of the property to be enjoyed during her lifetime, and in case of death without
issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in
accordance with the provisions of the will of the testator Edward E. Christensen. The will
was executed in Manila on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the Philippines
about twenty-eight years ago, and who is now residing at No. 665 Rodger Young
Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants
except my above named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx

xxx

xxx

7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now

married to Eduardo Garcia, about eighteen years of age and who, notwithstanding
the fact that she was baptized Christensen, is not in any way related to me, nor has
she been at any time adopted by me, and who, from all information I have now
resides in Egpit, Digos, Davao, Philippines, the sum of THREE THOUSAND SIX
HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in
trust for the said Maria Helen Christensen with the Davao Branch of the
Philippine National Bank, and paid to her at the rate of One Hundred Pesos
(P100.00), Philippine Currency per month until the principal thereof as well as
any interest which may have accrued thereon, is exhausted..
xxx

xxx

xxx

12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said
MARIA LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as
aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A., all

the income from the rest, remainder, and residue of my property and estate, real,
personal and/or mixed, of whatsoever kind or character, and wheresoever situated,
of which I may be possessed at my death and which may have come to me from
any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account
and project of partition ratified the payment of only P3,600 to Helen Christensen Garcia
and proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen
Garcia, insofar as it deprives her (Helen) of her legitime as an acknowledged natural
child, she having been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural
child of the deceased Edward E. Christensen. The legal grounds of opposition are (a) that
the distribution should be governed by the laws of the Philippines, and (b) that said order
of distribution is contrary thereto insofar as it denies to Helen Christensen, one of two
acknowledged natural children, one-half of the estate in full ownership. In amplification
of the above grounds it was alleged that the law that should govern the estate of the
deceased Christensen should not be the internal law of California alone, but the entire law
thereof because several foreign elements are involved, that the forum is the Philippines
and even if the case were decided in California, Section 946 of the California Civil Code,
which requires that the domicile of the decedent should apply, should be applicable. It
was also alleged that Maria Helen Christensen having been declared an acknowledged
natural child of the decedent, she is deemed for all purposes legitimate from the time of
her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States
and of the State of California at the time of his death, the successional rights and intrinsic
validity of the provisions in his will are to be governed by the law of California, in
accordance with which a testator has the right to dispose of his property in the way he
desires, because the right of absolute dominion over his property is sacred and inviolable
(In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117
Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but these were
denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED
NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN
DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II

THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO

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

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1wph1.t
Being an American citizen, Mr. Christensen was interned by the Japanese Military
Forces in the Philippines during World War II. Upon liberation, in April 1945, he
left for the United States but returned to the Philippines in December, 1945.
Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as Exhibits "AA",
"BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n.,
July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly
after the making of his last will and testament (now in question herein) which he
executed at his lawyers' offices in Manila on March 5, 1951. He died at the St.
Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are
persuaded by the fact that he was born in New York, migrated to California and resided
there for nine years, and since he came to the Philippines in 1913 he returned to
California very rarely and only for short visits (perhaps to relatives), and considering that
he appears never to have owned or acquired a home or properties in that state, which
would indicate that he would ultimately abandon the Philippines and make home in the
State of California.
Sec. 16. Residence is a term used with many shades of meaning from mere
temporary presence to the most permanent abode. Generally, however, it is used
to denote something more than mere physical presence. (Goodrich on Conflict of
Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California
when he resided in Sacramento, California from 1904 to 1913, was never lost by his stay
in the Philippines, for the latter was a territory of the United States (not a state) until 1946
and the deceased appears to have considered himself as a citizen of California by the fact
that when he executed his will in 1951 he declared that he was a citizen of that State; so
that he appears never to have intended to abandon his California citizenship by acquiring
another. This conclusion is in accordance with the following principle expounded by
Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same
thing, a place of permanent abode. But domicile, as has been shown, has acquired
a technical meaning. Thus one may be domiciled in a place where he has never
been. And he may reside in a place where he has no domicile. The man with two
homes, between which he divides his time, certainly resides in each one, while
living in it. But if he went on business which would require his presence for
several weeks or months, he might properly be said to have sufficient connection

with the place to be called a resident. It is clear, however, that, if he treated his
settlement as continuing only for the particular business in hand, not giving up his
former "home," he could not be a domiciled New Yorker. Acquisition of a
domicile of choice requires the exercise of intention as well as physical presence.
"Residence simply requires bodily presence of an inhabitant in a given place,
while domicile requires bodily presence in that place and also an intention to
make it one's domicile." Residence, however, is a term used with many shades of
meaning, from the merest temporary presence to the most permanent abode, and it
is not safe to insist that any one use et the only proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16
of the Civil Code of the Philippines, which is as follows:
ART. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may be the nature of the
property and regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning
of the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the
United States, each state of the Union having its own private law applicable to its citizens
only and in force only within the state. The "national law" indicated in Article 16 of the
Civil Code above quoted can not, therefore, possibly mean or apply to any general
American law. So it can refer to no other than the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal
property? The decision of the court below, sustains the contention of the executorappellee that under the California Probate Code, a testator may dispose of his property by
will in the form and manner he desires, citing the case of Estate of McDaniel, 77 Cal.
Appl. 2d 877, 176 P. 2d 952. But appellant invokes the provisions of Article 946 of the
Civil Code of California, which is as follows:
If there is no law to the contrary, in the place where personal property is situated,
it is deemed to follow the person of its owner, and is governed by the law of his
domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We
have checked it in the California Civil Code and it is there. Appellee, on the other hand,
relies on the case cited in the decision and testified to by a witness. (Only the case of
Kaufman is correctly cited.) It is argued on executor's behalf that as the deceased

Christensen was a citizen of the State of California, the internal law thereof, which is that
given in the abovecited case, should govern the determination of the validity of the
testamentary provisions of Christensen's will, such law being in force in the State of
California of which Christensen was a citizen. Appellant, on the other hand, insists that
Article 946 should be applicable, and in accordance therewith and following the doctrine
of the renvoi, the question of the validity of the testamentary provision in question should
be referred back to the law of the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the
forum refers a jural matter to a foreign law for decision, is the reference to the
purely internal rules of law of the foreign system; i.e., to the totality of the foreign
law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the
renvoi, that is, applied the Conflict of Laws rule of Illinois which referred the
matter back to Michigan law. But once having determined the the Conflict of
Laws principle is the rule looked to, it is difficult to see why the reference back
should not have been to Michigan Conflict of Laws. This would have resulted in
the "endless chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the internal law
of Illinois, thus rejecting the renvoi or the reference back. Yet there seems no
compelling logical reason why the original reference should be the internal law
rather than to the Conflict of Laws rule. It is true that such a solution avoids going
on a merry-go-round, but those who have accepted the renvoi theory avoid this
inextricabilis circulas by getting off at the second reference and at that point
applying internal law. Perhaps the opponents of the renvoi are a bit more
consistent for they look always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead that
greater uniformity will result from adoption of their respective views. And still
more strange is the fact that the only way to achieve uniformity in this choice-oflaw problem is if in the dispute the two states whose laws form the legal basis of
the litigation disagree as to whether the renvoi should be accepted. If both reject,
or both accept the doctrine, the result of the litigation will vary with the choice of
the forum. In the case stated above, had the Michigan court rejected the renvoi,
judgment would have been against the woman; if the suit had been brought in the
Illinois courts, and they too rejected the renvoi, judgment would be for the
woman. The same result would happen, though the courts would switch with
respect to which would hold liability, if both courts accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to land
is in question, and where the validity of a decree of divorce is challenged. In these
cases the Conflict of Laws rule of the situs of the land, or the domicile of the
parties in the divorce case, is applied by the forum, but any further reference goes

only to the internal law. Thus, a person's title to land, recognized by the situs, will
be recognized by every court; and every divorce, valid by the domicile of the
parties, will be valid everywhere. (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving
movable property in Massachusetts, England, and France. The question arises as
to how this property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of the
conflict of laws as to intestate succession to movables calls for an application of
the law of the deceased's last domicile. Since by hypothesis X's last domicile was
France, the natural thing for the Massachusetts court to do would be to turn to
French statute of distributions, or whatever corresponds thereto in French law, and
decree a distribution accordingly. An examination of French law, however, would
show that if a French court were called upon to determine how this property
should be distributed, it would refer the distribution to the national law of the
deceased, thus applying the Massachusetts statute of distributions. So on the
surface of things the Massachusetts court has open to it alternative course of
action: (a) either to apply the French law is to intestate succession, or (b) to
resolve itself into a French court and apply the Massachusetts statute of
distributions, on the assumption that this is what a French court would do. If it
accepts the so-called 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. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The theory
of the doctrine of renvoi is that the court of the forum, in determining the question
before it, must take into account the whole law of the other jurisdiction, but also
its rules as to conflict of laws, and then apply the law to the actual question which
the rules of the other jurisdiction prescribe. This may be the law of the forum. The

doctrine of the renvoi has generally been repudiated by the American authorities.
(2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application
in a country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27,
1917-1918, pp. 529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws
are to be understood as incorporating not only the ordinary or internal law of the
foreign state or country, but its rules of the conflict of laws as well. According to
this theory 'the law of a country' means the whole of its law.
xxx

xxx

xxx

Von Bar presented his views at the meeting of the Institute of International Law, at
Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of
foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall
respect:
(a) The provisions of a foreign law which disclaims the right to bind its
nationals abroad as regards their personal statute, and desires that said
personal statute shall be determined by the law of the domicile, or even by
the law of the place where the act in question occurred.
(b) The decision of two or more foreign systems of law, provided it be
certain that one of them is necessarily competent, which agree in
attributing the determination of a question to the same system of law.
xxx

xxx

xxx

If, for example, the English law directs its judge to distribute the personal estate
of an Englishman who has died domiciled in Belgium in accordance with the law
of his domicile, he must first inquire whether the law of Belgium would distribute
personal property upon death in accordance with the law of domicile, and if he
finds that the Belgian law would make the distribution in accordance with the law
of nationality that is the English law he must accept this reference back to
his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the
rule applied in In re Kaufman, Supra, its internal law. If the law on succession and the
conflict of laws rules of California are to be enforced jointly, each in its own intended and
appropriate sphere, the principle cited In re Kaufman should apply to citizens living in

the State, but Article 946 should apply to such of its citizens as are not domiciled in
California but in other jurisdictions. The rule laid down of resorting to the law of the
domicile in the determination of matters with foreign element involved is in accord with
the general principle of American law that the domiciliary law should govern in most
matters or rights which follow the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a
will directing the manner of distribution of the property, the law of the state where
he was domiciled at the time of his death will be looked to in deciding legal
questions about the will, almost as completely as the law of situs is consulted in
questions about the devise of land. It is logical that, since the domiciliary rules
control devolution of the personal estate in case of intestate succession, the same
rules should determine the validity of an attempted testamentary dispostion of the
property. Here, also, it is not that the domiciliary has effect beyond the borders of
the domiciliary state. The rules of the domicile are recognized as controlling by
the Conflict of Laws rules at the situs property, and the reason for the recognition
as in the case of intestate succession, is the general convenience of the doctrine.
The New York court has said on the point: 'The general principle that a dispostiton
of a personal property, valid at the domicile of the owner, is valid anywhere, is
one of the universal application. It had its origin in that international comity
which was one of the first fruits of civilization, and it this age, when business
intercourse and the process of accumulating property take but little notice of
boundary lines, the practical wisdom and justice of the rule is more apparent than
ever. (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as
the national law is the internal law of California. But as above explained the laws of
California have prescribed two sets of laws for its citizens, one for residents therein and
another for those domiciled in other jurisdictions. Reason demands that We should
enforce the California internal law prescribed for its citizens residing therein, and enforce
the conflict of laws rules for the citizens domiciled abroad. If we must enforce the law of
California as in comity we are bound to go, as so declared in Article 16 of our Civil Code,
then we must enforce the law of California in accordance with the express mandate
thereof and as above explained, i.e., apply the internal law for residents therein, and its
conflict-of-laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the
place where the property is situated" in Sec. 946 of the California Civil Code refers to
Article 16 of the Civil Code of the Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 that the national law of the deceased should
govern. This contention can not be sustained. As explained in the various authorities cited
above the national law mentioned in Article 16 of our Civil Code is the law on conflict of
laws in the California Civil Code, i.e., Article 946, which authorizes the reference or
return of the question to the law of the testator's domicile. The conflict of laws rule in
California, Article 946, Civil Code, precisely refers back the case, when a decedent is not
domiciled in California, to the law of his domicile, the Philippines in the case at bar. The

court of the domicile can not and should not refer the case back to California; such action
would leave the issue incapable of determination because the case will then be like a
football, tossed back and forth between the two states, between the country of which the
decedent was a citizen and the country of his domicile. The Philippine court must apply
its own law as directed in the conflict of laws rule of the state of the decedent, if the
question has to be decided, especially as the application of the internal law of California
provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil
Code of the Philippines, makes natural children legally acknowledged forced heirs of the
parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil.
105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil.
130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision
can not possibly apply in the case at bar, for two important reasons, i.e., the subject in
each case does not appear to be a citizen of a state in the United States but with domicile
in the Philippines, and it does not appear in each case that there exists in the state of
which the subject is a citizen, a law similar to or identical with Art. 946 of the California
Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California,
is the Philippines, the validity of the provisions of his will depriving his acknowledged
natural child, the appellant, should be governed by the Philippine Law, the domicile,
pursuant to Art. 946 of the Civil Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to
the lower court with instructions that the partition be made as the Philippine law on
succession provides. Judgment reversed, with costs against appellees.

G.R. No. L-35694

December 23, 1933

ALLISON G. GIBBS, petitioner-appelle,

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

BUTTE, J.:
This is an appeal from a final order of the Court of First Instance of Manila, requiring the
register of deeds of the City of Manila to cancel certificates of title Nos. 20880, 28336
and 28331, covering lands located in the City of Manila, Philippine Islands, and issue in
lieu thereof new certificates of transfer of title in favor of Allison D. Gibbs without
requiring him to present any document showing that the succession tax due under Article
XI of Chapter 40 of the Administrative Code has been paid.
The said order of the court of March 10, 1931, recites that the parcels of land covered by
said certificates of title formerly belonged to the conjugal partnership of Allison D. Gibbs
and Eva Johnson Gibbs; that the latter died intestate in Palo Alto, California, on
November 28, 1929; that at the time of her death she and her husband were citizens of the
State of California and domiciled therein.
It appears further from said order that Allison D. Gibbs was appointed administrator of
the state of his said deceased wife in case No. 36795 in the same court, entitled "In the
Matter of the Intestate Estate of Eva Johnson Gibbs, Deceased"; that in said intestate
proceedings, the said Allison D. Gibbs, on September 22,1930, filed an ex parte petition
in which he alleged "that the parcels of land hereunder described belong to the conjugal
partnership of your petitioner and his wife, Eva Johnson Gibbs", describing in detail the
three facts here involved; and further alleging that his said wife, a citizen and resident of
California, died on November 28,1929; that in accordance with the law of California, the
community property of spouses who are citizens of California, upon the death of the wife
previous to that of the husband, belongs absolutely to the surviving husband without
administration; that the conjugal partnership of Allison D. Gibbs and Eva Johnson Gibbs,
deceased, has no obligations or debts and no one will be prejudiced by adjucating said
parcels of land (and seventeen others not here involved) to be the absolute property of the
said Allison D. Gibbs as sole owner. The court granted said petition and on September 22,
1930, entered a decree adjucating the said Allison D. Gibbs to be the sole and absolute
owner of said lands, applying section 1401 of the Civil Code of California. Gibbs

presented this decree to the register of deeds of Manila and demanded that the latter issue
to him a "transfer certificate of title".
Section 1547 of Article XI of Chapter 40 of the Administrative Code provides in part
that:
Registers of deeds shall not register in the registry of property any document
transferring real property or real rights therein or any chattel mortgage, by way of
gifts mortis causa, legacy or inheritance, unless the payment of the tax fixed in
this article and actually due thereon shall be shown. And they shall immediately
notify the Collector of Internal Revenue or the corresponding provincial treasurer
of the non payment of the tax discovered by them. . . .
Acting upon the authority of said section, the register of deeds of the City of Manila,
declined to accept as binding said decree of court of September 22,1930, and refused to
register the transfer of title of the said conjugal property to Allison D. Gibbs, on the
ground that the corresponding inheritance tax had not been paid. Thereupon, under date
of December 26, 1930, Allison D. Gibbs filed in the said court a petition for an order
requiring the said register of deeds "to issue the corresponding titles" to the petitioner
without requiring previous payment of any inheritance tax. After due hearing of the
parties, the court reaffirmed said order of September 22, 1930, and entered the order of
March 10, 1931, which is under review on this appeal.
On January 3, 1933, this court remanded the case to the court of origin for new trial upon
additional evidence in regard to the pertinent law of California in force at the time of the
death of Mrs. Gibbs, also authorizing the introduction of evidence with reference to the
dates of the acquisition of the property involved in this suit and with reference to the
California law in force at the time of such acquisition. The case is now before us with the
supplementary evidence.
For the purposes of this case, we shall consider the following facts as established by the
evidence or the admissions of the parties: Allison D. Gibbs has been continuously, since
the year 1902, a citizen of the State of California and domiciled therein; that he and Eva
Johnson Gibbs were married at Columbus, Ohio, in July 1906; that there was no
antenuptial marriage contract between the parties; that during the existence of said
marriage the spouses acquired the following lands, among others, in the Philippine
Islands, as conjugal property:lawphil.net
1. A parcel of land in the City of Manila represented by transfer certificate of title No.
20880, dated March 16, 1920, and registered in the name of "Allison D. Gibbs casado
con Eva Johnson Gibbs".
2. A parcel of land in the City of Manila, represented by transfer certificate of title No.
28336, dated May 14, 1927, in which it is certified "that spouses Allison D. Gibbs and
Eva Johnson Gibbs are the owners in fee simple" of the land therein described.

3. A parcel of land in the City of Manila, represented by transfer certificate of title No.
28331, dated April 6, 1927, which it states "that Allison D. Gibbs married to Eva Johnson
Gibbs" is the owner of the land described therein; that said Eva Johnson Gibbs died
intestate on November 28, 1929, living surviving her her husband, the appellee, and two
sons, Allison J. Gibbs , now age 25 and Finley J. Gibbs, now aged 22, as her sole heirs of
law.
Article XI of Chapter 40 of the Administrative Code entitled "Tax on inheritances,
legacies and other acquisitions mortis causa" provides in section 1536 that "Every
transmission by virtue of inheritance ... of real property ... shall be subject to the
following tax." It results that the question for determination in this case is as follows: Was
Eva Johnson Gibbs at the time of her death the owner of a descendible interest in the
Philippine lands above-mentioned?
The appellee contends that the law of California should determine the nature and extent
of the title, if any, that vested in Eva Johnson Gibbs under the three certificates of title
Nos. 20880, 28336 and 28331 above referred to, citing article 9 of the Civil Code. But
that, even if the nature and extent of her title under said certificates be governed by the
law of the Philippine Islands, the laws of California govern the succession to such title,
citing the second paragraph of article 10 of the Civil Code.
Article 9 of the Civil Code is as follows:
The laws relating to family rights and duties, or to the status, condition, and legal
capacity of persons, are binding upon Spaniards even though they reside in a
foreign country." It is argued that the conjugal right of the California wife in
community real estate in the Philippine Islands is a personal right and must,
therefore, be settled by the law governing her personal status, that is, the law of
California. But our attention has not been called to any law of California that
incapacitates a married woman from acquiring or holding land in a foreign
jurisdiction in accordance with the lex rei sitae. There is not the slightest doubt
that a California married woman can acquire title to land in a common law
jurisdiction like the State of Illinois or the District of Columbia, subject to the
common-law estate by the courtesy which would vest in her husband. Nor is there
any doubt that if a California husband acquired land in such a jurisdiction his wife
would be vested with the common law right of dower, the prerequisite conditions
obtaining. Article 9 of the Civil Code treats of purely personal relations and status
and capacity for juristic acts, the rules relating to property, both personal and real,
being governed by article 10 of the Civil Code. Furthermore, article 9, by its very
terms, is applicable only to "Spaniards" (now, by construction, to citizens of the
Philippine Islands).
The Organic Act of the Philippine Islands (Act of Congress, August 29, 1916,
known as the "Jones Law") as regards the determination of private rights, grants
practical autonomy to the Government of the Philippine Islands. This
Government, therefore, may apply the principles and rules of private international

law (conflicts of laws) on the same footing as an organized territory or state of the
United States. We should, therefore, resort to the law of California, the nationality
and domicile of Mrs. Gibbs, to ascertain the norm which would be applied here as
law were there any question as to her status.
But the appellant's chief argument and the sole basis of the lower court's decision rests
upon the second paragraph of article 10 of the Civil Code which is as follows:
Nevertheless, legal and testamentary successions, in respect to the order of
succession as well as to the amount of the successional rights and the intrinsic
validity of their provisions, shall be regulated by the national law of the person
whose succession is in question, whatever may be the nature of the property or the
country in which it may be situated.
In construing the above language we are met at the outset with some difficulty by the
expression "the national law of the person whose succession is in question", by reason of
the rather anomalous political status of the Philippine Islands. (Cf. Manresa, vol. 1,
Codigo Civil, pp. 103, 104.) We encountered no difficulty in applying article 10 in the
case of a citizen of Turkey. (Miciano vs. Brimo, 50 Phil., 867.) Having regard to the
practical autonomy of the Philippine Islands, as above stated, we have concluded that if
article 10 is applicable and the estate in question is that of a deceased American citizen,
the succession shall be regulated in accordance with the norms of the State of his
domicile in the United States. (Cf. Babcock Templeton vs. Rider Babcock, 52 Phil., 130,
137; In re Estate of Johnson, 39 Phil., 156, 166.)
The trial court found that under the law of California, upon the death of the wife, the
entire community property without administration belongs to the surviving husband; that
he is the absolute owner of all the community property from the moment of the death of
his wife, not by virtue of succession or by virtue of her death, but by virtue of the fact
that when the death of the wife precedes that of the husband he acquires the community
property, not as an heir or as the beneficiary of his deceased wife, but because she never
had more than an inchoate interest or expentancy which is extinguished upon her death.
Quoting the case of Estate of Klumpke (167 Cal., 415, 419), the court said: "The
decisions under this section (1401 Civil Code of California) are uniform to the effect that
the husband does not take the community property upon the death of the wife by
succession, but that he holds it all from the moment of her death as though required by
himself. ... It never belonged to the estate of the deceased wife."
The argument of the appellee apparently leads to this dilemma: If he takes nothing by
succession from his deceased wife, how can the second paragraph of article 10 be
invoked? Can the appellee be heard to say that there is a legal succession under the law of
the Philippine Islands and no legal succession under the law of California? It seems clear
that the second paragraph of article 10 applies only when a legal or testamentary
succession has taken place in the Philippines and in accordance with the law of the
Philippine Islands; and the foreign law is consulted only in regard to the order of
succession or the extent of the successional rights; in other words, the second paragraph

of article 10 can be invoked only when the deceased was vested with a descendible
interest in property within the jurisdiction of the Philippine Islands.
In the case of Clarke vs. Clarke (178 U. S., 186, 191; 44 Law ed., 1028, 1031), the court
said:
It is principle firmly established that to the law of the state in which the land is
situated we must look for the rules which govern its descent, alienation, and
transfer, and for the effect and construction of wills and other conveyances.
(United States vs. Crosby, 7 Cranch, 115; 3 L. ed., 287; Clark vs. Graham, 6
Wheat., 577; 5 L. ed., 334; McGoon vs. Scales, 9 Wall., 23; 19 L. ed., 545; Brine
vs. Hartford F. Ins. Co., 96 U. S., 627; 24 L. ed., 858.)" (See also Estate of Lloyd,
175 Cal., 704, 705.) This fundamental principle is stated in the first paragraph of
article 10 of our Civil Code as follows: "Personal property is subject to the laws
of the nation of the owner thereof; real property to the laws of the country in
which it is situated.
It is stated in 5 Cal. Jur., 478:
In accord with the rule that real property is subject to the lex rei sitae, the
respective rights of husband and wife in such property, in the absence of an
antenuptial contract, are determined by the law of the place where the property is
situated, irrespective of the domicile of the parties or to the place where the
marriage was celebrated. (See also Saul vs. His Creditors, 5 Martin [N. S.], 569;
16 Am. Dec., 212 [La.]; 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 sitae.
It is admitted that the Philippine lands here in question were acquired as community
property of the conjugal partnership of the appellee and his wife. Under the law of the
Philippine Islands, she was vested of a title equal to that of her husband. Article 1407 of
the Civil Code provides:
All the property of the spouses shall be deemed partnership property in the
absence of proof that it belongs exclusively to the husband or to the wife. Article
1395 provides:
"The conjugal partnership shall be governed by the rules of law applicable to the contract
of partnership in all matters in which such rules do not conflict with the express
provisions of this chapter." Article 1414 provides that "the husband may dispose by will
of his half only of the property of the conjugal partnership." Article 1426 provides that
upon dissolution of the conjugal partnership and after inventory and liquidation, "the net
remainder of the partnership property shall be divided share and share alike between the
husband and wife, or their respective heirs." Under the provisions of the Civil Code and

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

G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B.
EVANGELISTA, and the rest of 1,767 NAMED-COMPLAINANTS, thru and by
their Attorney-in-fact, Atty. GERARDO A. DEL MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S
ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION, BROWN
& ROOT INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL BUILDERS
CORPORATION, respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO M. CADALIN, ET AL., petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT
INTERNATIONAL, INC. and/or ASIA INTERNATIONAL BUILDERS
CORPORATION, respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT
INTERNATIONAL, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN,
ROLANDO M. AMUL, DONATO B. EVANGELISTA, ROMEO PATAG,
RIZALINO REYES, IGNACIO DE VERA, SOLOMON B. REYES, JOSE M.
ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN, ROMEO ACUPAN,
BENJAMIN ALEJANDRE, WILFREDO D. ALIGADO, MARTIN AMISTAD, JR.,
ROLANDO B. AMUL, AMORSOLO ANADING, ANTONIO T. ANGLO, VICENTE
ARLITA, HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO,
FALCONERO BANAAG, RAMON BARBOSA, FELIX BARCENA, FERNANDO
BAS, MARIO BATACLAN, ROBERTO S. BATICA, ENRICO BELEN, ARISTEO
BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M. BOBIER,
DIONISIO BOBONGO, BAYANI S. BRACAMANTE, PABLITO BUSTILLO,
GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN,
AMANTE CAILAO, IRENEO CANDOR, JOSE CASTILLO, MANUEL
CASTILLO, REMAR CASTROJERES, REYNALDO CAYAS, ROMEO CECILIO,
TEODULO CREUS, BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA
CRUZ, FRANCISCO DE GUZMAN, ONOFRE DE RAMA, IGNACIO DE VERA,
MODESTO DIZON, REYNALDO DIZON, ANTONIO S. DOMINGUEZ, GILBERT
EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR., EDUARTE
ERIDAO, ELADIO ESCOTOTO, JOHN ESGUERRA, EDUARDO ESPIRITU,
ERNESTO ESPIRITU, RODOLFO ESPIRITU, NESTOR M. ESTEVA,

BENJAMIN ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO,

JESUS GABAWAN, ROLANDO GARCIA, ANGEL GUDA, PACITO
HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO
JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U.
LIRIO LORETO LONTOC, ISRAEL LORENZO, ALEJANDRO LORINO, JOSE
MABALAY, HERMIE MARANAN, LEOVIGILDO MARCIAL, NOEL MARTINEZ,
DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO, FRANCIS
MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO
MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR
RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R.
OLIVARES, PEDRO ORBISTA, JR., RICARDO ORDONEZ, ERNIE PANCHO,
JOSE PANCHO, GORGONIO P. PARALA, MODESTO PINPIN, JUANITO
PAREA, ROMEO I. PATAG, FRANCISCO PINPIN, LEONARDO POBLETE,
JAIME POLLOS, DOMINGO PONDALIS, EUGENIO RAMIREZ, LUCIEN M.
RESPALL, GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C.
REYES, RIZALINO REYES, SOLOMON B. REYES, VIRGILIO G. RICAZA,
RODELIO RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS,
PABLO A. ROBLES, JOSE ROBLEZA, QUIRINO RONQUILLO, AVELINO M.
ROQUE, MENANDRO L. SABINO, PEDRO SALGATAR, EDGARDO
SALONGA, NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR.,
GABRIEL SANTOS, JUANITO SANTOS, PAQUITO SOLANTE, CONRADO A.
SOLIS, JR., RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC,
MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO, BENEDICTO
TORRES, MAXIMIANO TORRES, FRANCISCO G. TRIAS, SERGIO A.
URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN VICTORIA,
GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES,
DOMINGO VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ,
DANILO VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA,
JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO AALAGOS, NICANOR
B. ABAD, ANDRES ABANES, REYNALDO ABANES, EDUARDO ABANTE,
JOSE ABARRO, JOSEFINO ABARRO, CELSO S. ABELANIO, HERMINIO
ABELLA, MIGUEL ABESTANO, RODRIGO G. ABUBO, JOSE B. ABUSTAN,
DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN ACTA, EUGENIO C.
ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO ACUPAN,
MANUEL P. ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO,
MANUEL P. AGUINALDO, DANTE AGUIRRE, HERMINIO AGUIRRE,
GONZALO ALBERTO, JR., CONRADO ALCANTARA, LAMBERTO Q.
ALCANTARA, MARIANITO J. ALCANTARA, BENCIO ALDOVER, EULALIO V.
ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L. ALEJANDRO,
MAXIMINO ALEJANDRO, ALBERTO ALMENAR, ARNALDO ALONZO,
AMADO ALORIA, CAMILO ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R.
AMBROCIO, CARLOS AMORES, BERNARD P. ANCHETA, TIMOTEO O.
ANCHETA, JEOFREY ANI, ELINO P. ANTILLON, ARMANDRO B. ANTIPONO,
LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO,
FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO,
PASTOR AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN,

BENJAMIN O. ARATEA, ARTURO V. ARAULLO, PRUDENCIO ARAULLO,

ALEXANDER ARCAIRA, FRANCISCO ARCIAGA, JOSE AREVALO, JUANTO
AREVALO, RAMON AREVALO, RODOLFO AREVALO, EULALIO
ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO
ASUNCION, ARTEMIO M. ASUNCION, EDGARDO ASUNCION, REXY M.
ASUNCION, VICENTE AURELIO, ANGEL AUSTRIA, RICARDO P. AVERILLA,
JR., VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA,
FELIMON BACAL, JOSE L. BACANI, ROMULO R. BALBIERAN, VICENTE
BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O.
BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS,
VIVENCIO C. BAUAN, GAUDENCIO S. BAUTISTA, LEONARDO BAUTISTA,
JOSE D. BAUTISTA, ROSTICO BAUTISTA, RUPERTO B. BAUTISTA,
TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA,
WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B.
BELTRAN, EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO
BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ, ROLANDO I.
BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN, ANGELITO BICOL,
ANSELMO BICOL, CELESTINO BICOL, JR., FRANCISCO BICOL, ROGELIO
BICOL, ROMULO L. BICOL, ROGELIO BILLIONES, TEOFILO N. BITO,
FERNANDO BLANCO, AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S.
BOOC, JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C. BRECINO,
EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO,
ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO
BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO BUTIONG, JR.,
HONESTO P. CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN,
MOISES CABATAY, HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C.
CAGAYAT, ROGELIO L. CALAGOS, REYNALDO V. CALDEJON, OSCAR C.
CALDERON, NESTOR D. CALLEJA, RENATO R. CALMA, NELSON T.
CAMACHO, SANTOS T. CAMACHO, ROBERTO CAMANA, FLORANTE C.
CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS, EPIFANIO A.
CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON, MENANDRO
M. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO L. CASTILLO,
JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO
L. CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO
CASTRO, PRUDENCIO A. CASTRO, RAMO CASTRO, JR., ROMEO A. DE
CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS,
HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN,
ANTONIO C. CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO
COLOMA, TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO
CORALES, RENATO C. CORCUERA, APOLINAR CORONADO, ABELARDO
CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M.
CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA,
FRANCISCO COSTALES, SR., CELEDONIO CREDITO, ALBERTO A. CREUS,
ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR.,
PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ,
TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA,

FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN,

CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE DATOON,
EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S. DAVID,
EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN,
ROMULO DE GUZMAN, LIBERATO DE GUZMAN, JOSE DE LEON,
JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA,
GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ,
LEONARDO DELOS REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX
DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE
DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA, BENJAMIN
DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN
DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE,
GODOFREDO E. EISMA, ARDON B. ELLO, UBED B. ELLO, JOSEFINO
ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS
EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO
ESCOBAR, ROMEO T. ESCUYOS, ANGELITO ESPIRITU, EDUARDO S.
ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN
ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO
R. ESTRO, ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE,
ELISEO FAJARDO, PORFIRIO FALQUEZA, WILFREDO P. FAUSTINO,
EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M. FIGURACION,
ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES,
BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO
FRANCISCO, VALERIANO FRANCISCO, RODOLFO GABAWAN,
ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO N. GALOSO,
GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES
GARCIA, JR., ARMANDO M. GARCIA, EUGENIO GARCIA, MARCELO L.
GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA, PONCIANO G.
GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G.
GAROFIL, RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO
GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H.
GONZALES, ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR., ALEXIS
GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ,
IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H. HABANA,
RAUL G. HERNANDEZ, REYNALDO HERNANDEZ, JOVENIANO D. HILADO,
JUSTO HILAPO, ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO
HIPOLITO, RAUL L. IGNACIO, MANUEL L. ILAGAN, RENATO L. ILAGAN,
CONRADO A. INSIONG, GRACIANO G. ISLA, ARNEL L. JACOB, OSCAR J.
JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES, GENEROSO
IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO JASMIN,
BIENVENIDO JAVIER, ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO
DE JESUS, CARLOS A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C.
JOAQUIN, FELIPE W. JOCSON, FELINO M. JOCSON, PEDRO N. JOCSON,
VALENTINO S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL
JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO S.
KOLIMLIM, SR., LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B.

LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC,

RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO LATANAN,
VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL, ALFREDO
LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO, ARTURO S.
LEGASPI, BENITO DE LEMOS, JR., PEDRO G. DE LEON, MANOLITO C.
LILOC, GERARDO LIMUACO, ERNESTO S. LISING, RENATO LISING,
WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO
LOPERA, CARLITO M. LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE
F. LOPEZ, VIRGILIO M. LOPEZ, BERNARDITO G. LOREJA, DOMINGO B.
LORICO, DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M. LUALHATI,
EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI, SEBASTIAN
LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE
LUMBAN, THOMAS VICENTE O. LUNA, NOLI MACALADLAD, ALFREDO
MACALINO, RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V.
MACARAIG, RODOLFO V. MACARAIG, BENJAMIN MACATANGAY,
HERMOGENES MACATANGAY, RODEL MACATANGAY, ROMULO
MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P. MADRID,
EDELBERTO G. MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT,
ALFREDO C. MAGCALENG, ANTONIO MAGNAYE, ALFONSO MAGPANTAY,
RICARDO C. MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M.
MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V.
MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO, RICARDO
MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI, MANUEL
MANALILI, ANGELO MANALO, AGUILES L. MANALO, LEOPOLDO
MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL
MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N.
MAPA, RAMON MAPILE, ROBERTO C. MARANA, NEMESIO MARASIGAN,
WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO,
JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A. MARQUEZ,
RICARDO MARTINEZ, DIEGO MASICAMPO, AURELIO MATABERDE,
RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M.
MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE, REYNALDO F.
MEMIJE, RODEL MEMIJE, AVELINO MENDOZA, JR., CLARO MENDOZA,
TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED,
RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE, GASPAR
MINIMO, BENJAMIN MIRANDA, FELIXBERTO D. MISA, CLAUDIO A.
MODESTO, JR., OSCAR MONDEDO, GENEROSO MONTON, RENATO
MORADA, RICARDO MORADA, RODOLFO MORADA, ROLANDO M.
MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU
A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ,
ERNESTO NAPALAN, MARCELO A. NARCIZO, REYNALDO NATALIA,
FERNANDO C. NAVARETTE, PACIFICO D. NAVARRO, FLORANTE
NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO
NEPUMUCENO, HERBERT G. NG, FLORENCIO NICOLAS, ERNESTO C.
NINON, AVELINO NUQUI, NEMESIO D. OBA, DANILO OCAMPO, EDGARDO
OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO, REYNALDO P.

OCSON, BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO,

ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, DANILO
R. ORTANEZ, WILFREDO OSIAS, VIRGILIO PA-A, DAVID PAALAN, JESUS N.
PACHECO, ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO
PAGSISIHAN, RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO
PALABRICA, QUINCIANO PALO, JOSE PAMATIAN, GONZALO PAN,
PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V.
PASIA, EDILBERTO PASIMIO, JR., JOSE V. PASION, ANGELITO M. PENA,
DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO M. PERALTA,
ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ,
ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM PEREZ, FERNANDO G.
PERINO, FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR
PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE,
DOMINADOR R. PRIELA, BUENAVENTURA PRUDENTE, CARMELITO
PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO,
ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L. QUINTO, ROMEO
QUINTOS, EDUARDO W. RACABO, RICARDO C. DE RAMA, RICARDO L. DE
RAMA, ROLANDO DE RAMA, FERNANDO A. RAMIREZ, LITO S. RAMIREZ,
RICARDO G. RAMIREZ, RODOLFO V. RAMIREZ, ALBERTO RAMOS,
ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO,
REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D.
RAYMUNDO, ERNESTO E. RECOLASO, ALBERTO REDAZA, ARTHUR
REJUSO, TORIBIO M. RELLAMA, JAIME RELLOSA, EUGENIO A.
REMOQUILLO, GERARDO RENTOZA, REDENTOR C. REY, ALFREDO S.
REYES, AMABLE S. REYES, BENEDICTO R. REYES, GREGORIO B. REYES,
JOSE A. REYES, JOSE C. REYES, ROMULO M. REYES, SERGIO REYES,
ERNESTO F. RICO, FERNANDO M. RICO, EMMANUEL RIETA, RICARDO
RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO ROBLEZA, RODRIGO
ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO
RODRIGUEZ, ELIGIO RODRIGUEZ, ALMONTE ROMEO, ELIAS RONQUILLO,
ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO,
RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO
DEL ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO,
VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA,
ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M. SANCHA,
ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO,
JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS,
EFREN S. SANTOS, RENATO D. SANTOS, MIGUEL SAPUYOT, ALEX S.
SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG,
FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G. SILVA,
EDGARDO M. SILVA, ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON,
DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO
SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS,
EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA,
FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO,
FELICISMO P. TALUSIK, FERMIN TARUC, JR., LEVY S. TEMPLO, RODOLFO

S. TIAMSON, LEONILO TIPOSO, ARNEL TOLENTINO, MARIO M.

TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE
TORRES, GAVINO U. TUAZON, AUGUSTO B. TUNGUIA, FRANCISCO
UMALI, SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO
VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO, EDGARDO C.
VASQUEZ, ELPIDIO VELASQUEZ, NESTOR DE VERA, WILFREDO D. VERA,
BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA,
FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P. VIDALLO,
SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO
G. VILLAFLORES, CEFERINO VILLAGERA, ALEX VILLAHERMOZA, DANILO
A. VILLANUEVA, ELITO VILLANUEVA, LEONARDO M. VILLANUEVA,
MANUEL R. VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL,
FELICISIMO VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA,
FERDINAND VIVO, ROBERTO YABUT, VICENTE YNGENTE, AND ORO C.
ZUNIGA, respondents.
Gerardo A. Del Mundo and Associates for petitioners.
Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for
BRII/AIBC.
Florante M. De Castro for private respondents in 105029-32.

QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v.
Philippine Overseas Employment Administration's Administrator, et. al.," was filed
under Rule 65 of the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the National Labor
Relations Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to render a new
decision: (i) declaring private respondents as in default; (ii) declaring the said
labor cases as a class suit; (iii) ordering Asia International Builders Corporation
(AIBC) and Brown and Root International Inc. (BRII) to pay the claims of the
1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro
guilty of forum-shopping; and (v) dismissing POEA Case No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion
for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-288).

The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v.
Hon. National Labor Relations Commission, et. al.," was filed under Rule 65 of
the Revised Rules of Court:

(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases
Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the
Labor Code of the Philippines instead of the ten-year prescriptive period under
the Civil Code of the Philippines; and (ii) denied the
"three-hour daily average" formula in the computation of petitioners' overtime
pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion
for reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-25;
26-220).

The petition in G.R. Nos. 105029-32, entitled "Asia International Builders

Corporation, et. al., v. National Labor Relations Commission, et. al." was filed
under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases
Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied
the motions for reconsideration of AIBC and BRII (Rollo, pp. 2-59; 61-230).

The Resolution dated September 2, 1991 of NLRC, which modified the decision
of POEA in four labor cases: (1) awarded monetary benefits only to 149
claimants and (2) directed Labor Arbiter Fatima J. Franco to conduct hearings
and to receive evidence on the claims dismissed by the POEA for lack of
substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division
while G.R. Nos. 104911-14 were raffled to the Second Division. In the Resolution
dated July 26, 1993, the Second Division referred G.R. Nos. 104911-14 to the
Third Division (G.R. Nos. 104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the
motion filed in G.R. Nos. 104911-14 for the consolidation of said cases with G.R.
Nos. 104776 and 105029-32, which were assigned to the First Division (G.R.
Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377,
426-432). In the Resolution dated October 27, 1993, the First Division granted
the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R. Nos.
104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p. 1562).
I
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B.
Evangelista, in their own behalf and on behalf of 728 other overseas contract
workers (OCWs) instituted a class suit by filing an "Amended Complaint" with the

Philippine Overseas Employment Administration (POEA) for money claims

arising from their recruitment by AIBC and employment by BRII (POEA Case No.
L-84-06-555). The claimants were represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is
engaged in construction; while AIBC is a domestic corporation licensed as a
service contractor to recruit, mobilize and deploy Filipino workers for overseas
employment on behalf of its foreign principals.
The amended complaint principally sought the payment of the unexpired portion
of the employment contracts, which was terminated prematurely, and secondarily,
the payment of the interest of the earnings of the Travel and Reserved Fund,
interest on all the unpaid benefits; area wage and salary differential pay; fringe
benefits; refund of SSS and premium not remitted to the SSS; refund of
withholding tax not remitted to the BIR; penalties for committing prohibited
practices; as well as the suspension of the license of AIBC and the accreditation
of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint
and was given, together with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the
claimants to file a bill of particulars within ten days from receipt of the order and
the movants to file their answers within ten days from receipt of the bill of
particulars. The POEA Administrator also scheduled a pre-trial conference on
July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation."
On July 23, 1984, AIBC filed a "Motion to Strike Out of the Records", the
"Complaint" and the "Compliance and Manifestation." On July 25, 1984, the
claimants filed their "Rejoinder and Comments," averring, among other matters,
the failure of AIBC and BRII to file their answers and to attend the pre-trial
conference on July 25, 1984. The claimants alleged that AIBC and BRII had
waived their right to present evidence and had defaulted by failing to file their
answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of
the Records" filed by AIBC but required the claimants to correct the deficiencies
in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with the
Order of October 2, 1984 and filed an "Urgent Manifestation," praying that the
POEA Administrator direct the parties to submit simultaneously their position
papers, after which the case should be deemed submitted for decision. On the
same day, Atty. Florante de Castro filed another complaint for the same money

claims and benefits in behalf of several claimants, some of whom were also
claimants in POEA Case No. L-84-06-555 (POEA Case No. 85-10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order dated
October 2, 1984 and an "Urgent Manifestation," praying that the POEA direct the
parties to submit simultaneously their position papers after which the case would
be deemed submitted for decision. On the same day, AIBC asked for time to file
its comment on the "Compliance" and "Urgent Manifestation" of claimants. On
November 6, 1984, it filed a second motion for extension of time to file the
comment.
On November 8, 1984, the POEA Administrator informed AIBC that its motion for
extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for
extension of time and asked that AIBC and BRII be declared in default for failure
to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other
reliefs, that claimants should be ordered to amend their complaint.
On December 27, 1984, the POEA Administrator issued an order directing AIBC
and BRII to file their answers within ten days from receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of
the said order of the POEA Administrator. Claimants opposed the appeal,
claiming that it was dilatory and praying that AIBC and BRII be declared in
default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or
Position Paper" dated March 24, 1985, adding new demands: namely, the
payment of overtime pay, extra night work pay, annual leave differential pay,
leave indemnity pay, retirement and savings benefits and their share of
forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA
Administrator directed AIBC to file its answer to the amended complaint (G.R.
No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On
the same day, the POEA issued an order directing AIBC and BRII to file their
answers to the "Amended Complaint," otherwise, they would be deemed to have
waived their right to present evidence and the case would be resolved on the
basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class
Suit and Motion for Bill of Particulars Re: Amended Complaint dated March 24,
1985." Claimants opposed the motions.

On September 4, 1985, the POEA Administrator reiterated his directive to AIBC

and BRII to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with
a petition for the issuance of a writ of injunction. On September 19, 1985, NLRC
enjoined the POEA Administrator from hearing the labor cases and suspended
the period for the filing of the answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include
additional claimants in the case and to investigate alleged wrongdoings of BRII,
AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint
(POEA Case No. L-85-10-777) against AIBC and BRII with the POEA,
demanding monetary claims similar to those subject of POEA Case No. L-84-06555. 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-84-06555. In a resolution dated November 9, 1987, we dismissed the petition by

informing AIBC that all its technical objections may properly be resolved in the
hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on
September 22, 1988 by claimant Hermie Arguelles and 18 co-claimants against
the POEA Administrator and several NLRC Commissioners. The Ombudsman
merely referred the complaint to the Secretary of Labor and Employment with a
request for the early disposition of POEA Case No. L-84-06-555. The second
was filed on April 28, 1989 by claimants Emigdio P. Bautista and Rolando R.
Lobeta charging AIBC and BRII for violation of labor and social legislations. The
third was filed by Jose R. Santos, Maximino N. Talibsao and Amado B. Bruce
denouncing AIBC and BRII of violations of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC
Resolution dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator its motion
for suspension of the period for filing an answer or motion for extension of time to
file the same until the resolution of its motion for reconsideration of the order of
the NLRC dismissing the two appeals. On April 28, 1987, NLRC en banc denied
the motion for reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At
the same hearing, the parties were given a period of 15 days from said date
within which to submit their respective position papers. On June 24, 1987
claimants filed their "Urgent Motion to Strike Out Answer," alleging that the
answer was filed out of time. On June 29, 1987, claimants filed their "Supplement
to Urgent Manifestational Motion" to comply with the POEA Order of June 19,
1987. On February 24, 1988, AIBC and BRII submitted their position paper. On
March 4, 1988, claimants filed their "Ex-Parte Motion to Expunge from the
Records" the position paper of AIBC and BRII, claiming that it was filed out of
time.
On September 1, 1988, the claimants represented by Atty. De Castro filed their
memorandum in POEA Case No. L-86-05-460. On September 6, 1988, AIBC and
BRII submitted their Supplemental Memorandum. On September 12, 1988, BRII
filed its "Reply to Complainant's Memorandum." On October 26, 1988, claimants
submitted their "Ex-Parte Manifestational Motion and Counter-Supplemental
Motion," together with 446 individual contracts of employments and service
records. On October 27, 1988, AIBC and BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in POEA
Case No. L-84-06-555 and the other consolidated cases, which awarded the
amount of $824,652.44 in favor of only 324 complainants.

On February 10, 1989, claimants submitted their "Appeal Memorandum For

Partial Appeal" from the decision of the POEA. On the same day, AIBC also filed
its motion for reconsideration and/or appeal in addition to the "Notice of Appeal"
filed earlier on February 6, 1989 by another counsel for AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal," praying for the
dismissal of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal
Memorandum," together with their "newly discovered evidence" consisting of
payroll records.
On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating
among other matters that there were only 728 named claimants. On April 20,
1989, the claimants filed their "Counter-Manifestation," alleging that there were
1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the
Decision dated January 30, 1989 on the grounds that BRII had failed to appeal
on time and AIBC had not posted the supersedeas bond in the amount of
$824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor
cases.
On August 21, 1990, claimants filed their "Manifestational Motion," praying that
all the 1,767 claimants be awarded their monetary claims for failure of private
respondents to file their answers within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
WHEREFORE, premises considered, the Decision of the POEA in these
consolidated cases is modified to the extent and in accordance with the following
dispositions:
1. The claims of the 94 complainants identified and listed in
Annex "A" hereof are dismissed for having prescribed;
2. Respondents AIBC and Brown & Root are hereby ordered,
jointly and severally, to pay the 149 complainants, identified and
listed in Annex "B" hereof, the peso equivalent, at the time of
payment, of the total amount in US dollars indicated opposite
their respective names;
3. The awards given by the POEA to the 19 complainants
classified and listed in Annex "C" hereof, who appear to have
worked elsewhere than in Bahrain are hereby set aside.

4. All claims other than those indicated in Annex "B", including

those for overtime work and favorably granted by the POEA, are
hereby dismissed for lack of substantial evidence in support
thereof or are beyond the competence of this Commission to
pass upon.
In addition, this Commission, in the exercise of its powers and authority under
Article 218(c) of the Labor Code, as amended by R.A. 6715, hereby directs Labor
Arbiter Fatima J. Franco of this Commission to summon parties, conduct
hearings and receive evidence, as expeditiously as possible, and thereafter
submit a written report to this Commission (First Division) of the proceedings
taken, regarding the claims of the following:
(a) complainants identified and listed in Annex "D" attached and
made an integral part of this Resolution, whose claims were
dismissed by the POEA for lack of proof of employment in
Bahrain (these complainants numbering 683, are listed in pages
13 to 23 of the decision of POEA, subject of the appeals) and,
(b) complainants identified and listed in Annex "E" attached and
made an integral part of this Resolution, whose awards decreed
by the POEA, to Our mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp. 113-115; G.R. Nos.
104911-14, pp. 85-87; G.R. Nos. 105029-31, pp. 120-122).

On November 27, 1991, claimant Amado S. Tolentino and 12

co-claimants, who were former clients of Atty. Del Mundo, filed a petition for
certiorari with the Supreme Court (G.R. Nos. 120741-44). The petition was
dismissed in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991 Resolution of the
NLRC were filed. The first, by the claimants represented by Atty. Del Mundo; the
second, by the claimants represented by Atty. De Castro; and the third, by AIBC
and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for
reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del Mundo
(G.R. No. 104776), the claimants represented by Atty. De Castro (G.R. Nos.
104911-14) and by AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and AIBC and
BRII have submitted, from time to time, compromise agreements for our approval
and jointly moved for the dismissal of their respective petitions insofar as the

claimants-parties to the compromise agreements were concerned (See Annex A

for list of claimants who signed quitclaims).
Thus the following manifestations that the parties had arrived at a compromise
agreement and the corresponding motions for the approval of the agreements
were filed by the parties and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio Abarquez and 47
co-claimants dated September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263406; 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 coclaimants 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 coclaimants dated January 15, 1993 (G.R. No. 104776, Rollo, pp. 813-836; G.R.
Nos. 104911-14, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista and 4
co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746;
G.R. No. 104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri Banaag and 5
co-claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703;
G.R. Nos. 104911-14, Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15
other co-claimants dated May 4, 1993 (G.R. Nos. 105029-32, Rollo, pp. 906-956;
G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp. 17731814);
9) Joint Manifestation and Motion involving Valerio Evangelista and 3 coclaimants 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. 10661183);
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. 896959);
12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2 coclaimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254; G.R.
Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C. Aceres and 37
co-claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp. 1257-1375;
G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp.
1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 coclaimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano and six coclaimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R.
Nos. 104911-14).

III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more than fifty volumes now
comprising the records of these cases. From the records, it appears that the
complainants-appellants allege that they were recruited by respondent-appellant
AIBC for its accredited foreign principal, Brown & Root, on various dates from
1975 to 1983. They were all deployed at various projects undertaken by Brown &
Root in several countries in the Middle East, such as Saudi Arabia, Libya, United
Arab Emirates and Bahrain, as well as in Southeast Asia, in Indonesia and
Malaysia.
Having been officially processed as overseas contract workers by the Philippine
Government, all the individual complainants signed standard overseas
employment contracts (Records, Vols. 25-32. Hereafter, reference to the records
would be sparingly made, considering their chaotic arrangement) with AIBC
before their departure from the Philippines. These overseas employment
contracts invariably contained the following relevant terms and conditions.
PART B
(1) Employment Position Classification :
(Code) :
(2) Company Employment Status :
(3) Date of Employment to Commence on :
(4) Basic Working Hours Per Week :
(5) Basic Working Hours Per Month :
(6) Basic Hourly Rate :
(7) Overtime Rate Per Hour :
(8) Projected Period of Service
(Subject to C(1) of this [sic]) :

Months and/or
Job Completion
xxx xxx xxx
3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and overtime rate as set out in
Part B of this Document.
b) The hours of work shall be those set forth by the Employer, and Employer
may, at his sole option, change or adjust such hours as maybe deemed
necessary from time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this agreement, the
Employer may, at his sole discretion, terminate employee's service with cause,
under this agreement at any time. If the Employer terminates the services of the
Employee under this Agreement because of the completion or termination, or
suspension of the work on which the Employee's services were being utilized, or
because of a reduction in force due to a decrease in scope of such work, or by
change in the type of construction of such work. The Employer will be
responsible for his return transportation to his country of origin. Normally on the
most expeditious air route, economy class accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or satisfactory completion of
contract, employee shall be entitled to 12-days vacation leave with pay. This shall
be computed at the basic wage rate. Fractions of a year's service will be
computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the employee for every year of
service for non-work connected injuries or illness. If the employee failed to avail
of such leave benefits, the same shall be forfeited at the end of the year in which
said sick leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will be accrued and payable
only upon satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of rest with 8 hours
regular pay. If work is performed on this day, all hours work shall be paid at the
premium rate. However, this offday pay provision is applicable only when the
laws of the Host Country require payments for rest day.

In the State of Bahrain, where some of the individual complainants were

deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain, issued his Amiri
Decree No. 23 on June 16, 1976, otherwise known as the Labour Law for the
Private Sector (Records, Vol. 18). This decree took effect on August 16, 1976.
Some of the provisions of Amiri Decree No. 23 that are relevant to the claims of
the complainants-appellants are as follows (italics supplied only for emphasis):
Art. 79: . . . A worker shall receive payment for each extra hour
equivalent to his wage entitlement increased by a minimum of
twenty-five per centum thereof for hours worked during the day;
and by a minimum of fifty per centum thereof for hours worked
during the night which shall be deemed to being from seven
o'clock in the evening until seven o'clock in the morning. . . .
Art. 80: Friday shall be deemed to be a weekly day of rest on full
pay.
. . . an employer may require a worker, with his consent, to work
on his weekly day of rest if circumstances so require and in
respect of which an additional sum equivalent to 150% of his
normal wage shall be paid to him. . . .
Art. 81: . . . When conditions of work require the worker to work
on any official holiday, he shall be paid an additional sum
equivalent to 150% of his normal wage.
Art. 84: Every worker who has completed one year's continuous
service with his employer shall be entitled to leave on full pay for
a period of not less than 21 days for each year increased to a
period not less than 28 days after five continuous years of
service.
A worker shall be entitled to such leave upon a quantum meruit
in respect of the proportion of his service in that year.
Art. 107: A contract of employment made for a period of indefinite
duration may be terminated by either party thereto after giving
the other party thirty days' prior notice before such termination,
in writing, in respect of monthly paid workers and fifteen days'
notice in respect of other workers. The party terminating a
contract without giving the required notice shall pay to the other
party compensation equivalent to the amount of wages payable
to the worker for the period of such notice or the unexpired
portion thereof.
Art. 111: . . . the employer concerned shall pay to such worker,
upon termination of employment, a leaving indemnity for the
period of his employment calculated on the basis of fifteen days'
wages for each year of the first three years of service and of one
month's wages for each year of service thereafter. Such worker
shall be entitled to payment of leaving indemnity upon a
quantum meruit in proportion to the period of his service
completed within a year.

All the individual complainants-appellants have already been

repatriated to the Philippines at the time of the filing of these
cases (R.R. No. 104776, Rollo, pp. 59-65).

IV
The issues raised before and resolved by the NLRC were:
First: Whether or not complainants are entitled to the benefits provided by
Amiri Decree No. 23 of Bahrain;
(a) Whether or not the complainants who have worked in Bahrain
are entitled to the above-mentioned benefits.
(b) Whether or not Art. 44 of the same Decree (allegedly
prescribing a more favorable treatment of alien employees) bars
complainants from enjoying its benefits.
Second: Assuming that Amiri Decree No. 23 of Bahrain is applicable in these
cases, whether or not complainants' claim for the benefits provided therein have
prescribed.
Third: Whether or not the instant cases qualify as a class suit.
Fourth: Whether or not the proceedings conducted by the POEA, as well as
the decision that is the subject of these appeals, conformed with the
requirements of due process;
(a) Whether or not the respondent-appellant was denied its right
to due process;
(b) Whether or not the admission of evidence by the POEA after
these cases were submitted for decision was valid;
(c) Whether or not the POEA acquired jurisdiction over Brown &
Root International, Inc.;
(d) Whether or not the judgment awards are supported by
substantial evidence;
(e) Whether or not the awards based on the averages and
formula presented by the complainants-appellants are supported
by substantial evidence;
(f) Whether or not the POEA awarded sums beyond what the
complainants-appellants prayed for; and, if so, whether or not
these awards are valid.
Fifth: Whether or not the POEA erred in holding respondents AIBC and Brown
& Root jointly are severally liable for the judgment awards despite the alleged
finding that the former was the employer of the complainants;

(a) Whether or not the POEA has acquired jurisdiction over

Brown & Root;
(b) Whether or not the undisputed fact that AIBC was a licensed
construction contractor precludes a finding that Brown & Root is
liable for complainants claims.
Sixth: Whether or not the POEA Administrator's failure to hold respondents in
default constitutes a reversible error.
Seventh: Whether or not the POEA Administrator erred in dismissing the
following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of at least 100% of basic
pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to SSS;
j. Refund of withholding tax not remitted to BIR;
k. Fringe benefits under B & R's "A Summary of Employee
Benefits" (Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent of the judgment award;
n. Other reliefs, like suspending and/or cancelling the license to
recruit of AIBC and the accreditation of B & R issued by POEA;
o. Penalty for violations of Article 34 (prohibited practices), not
excluding reportorial requirements thereof.
Eighth: Whether or not the POEA Administrator erred in not dismissing POEA
Case No. (L) 86-65-460 on the ground of multiplicity of suits (G.R. Nos. 10491114, Rollo, pp. 25-29, 51-55).

Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised
Rules on Evidence governing the pleading and proof of a foreign law and
admitted in evidence a simple copy of the Bahrain's Amiri Decree No. 23 of 1976
(Labour Law for the Private Sector). NLRC invoked Article 221 of the Labor Code
of the Philippines, vesting on the Commission ample discretion to use every and
all reasonable means to ascertain the facts in each case without regard to the
technicalities of law or procedure. NLRC agreed with the POEA Administrator
that the Amiri Decree No. 23, being more favorable and beneficial to the workers,
should form part of the overseas employment contract of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants,
who worked in Bahrain, and set aside awards of the POEA Administrator in favor
of the claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing of the
claims of the complainants was three years, as provided in Article 291 of the
Labor Code of the Philippines, and not ten years as provided in Article 1144 of
the Civil Code of the Philippines nor one year as provided in the Amiri Decree
No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the labor
cases cannot be treated as a class suit for the simple reason that not all the
complainants worked in Bahrain and therefore, the subject matter of the action,
the claims arising from the Bahrain law, is not of common or general interest to
all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal rules of
administrative due process: namely, (1) the failure of the POEA Administrator to
consider the evidence presented by AIBC and BRII; (2) some findings of fact
were not supported by substantial evidence; and (3) some of the evidence upon
which the decision was based were not disclosed to AIBC and BRII during the
hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII
and AIBC are solidarily liable for the claims of the complainants and held that
BRII was the actual employer of the complainants, or at the very least, the
indirect employer, with AIBC as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA
Administrator through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in
denying the Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the Amiri
Decree No. 23, NLRC ruled:

(1) that the POEA Administrator has no jurisdiction over the claims for refund of
the SSS premiums and refund of withholding taxes and the claimants should file
their claims for said refund with the appropriate government agencies;
(2) the claimants failed to establish that they are entitled to the claims which are
not based on the overseas employment contracts nor the Amiri Decree No. 23 of
1976;
(3) that the POEA Administrator has no jurisdiction over claims for moral and
exemplary damages and nonetheless, the basis for granting said damages was
not established;
(4) that the claims for salaries corresponding to the unexpired portion of their
contract may be allowed if filed within the three-year prescriptive period;
(5) that the allegation that complainants were prematurely repatriated prior to the
expiration of their overseas contract was not established; and
(6) that the POEA Administrator has no jurisdiction over the complaint for the
suspension or cancellation of the AIBC's recruitment license and the cancellation
of the accreditation of BRII.

NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 8665-460 should have been dismissed on the ground that the claimants in said
case were also claimants in POEA Case No. (L) 84-06-555. Instead of dismissing
POEA Case No. (L) 86-65-460, the POEA just resolved the corresponding claims
in POEA Case No. (L) 84-06-555. In other words, the POEA did not pass upon
the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following
grounds:
(1) that they were deprived by NLRC and the POEA of their right to a speedy
disposition of their cases as guaranteed by Section 16, Article III of the 1987
Constitution. The POEA Administrator allowed private respondents to file their
answers in two years (on June 19, 1987) after the filing of the original complaint
(on April 2, 1985) and NLRC, in total disregard of its own rules, affirmed the
action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII
in default and should have rendered summary judgment on the basis of the
pleadings and evidence submitted by claimants;
(3) the NLRC and POEA Administrator erred in not holding that the labor cases
filed by AIBC and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims is ten years; and

(5) that NLRC and the POEA Administrator should have dismissed POEA Case
No. L-86-05-460, the case filed by Atty. Florante de Castro (Rollo, pp. 31-40).

AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of the labor
cases, considering the great difficulty of getting all the records of the more than
1,500 claimants, the piece-meal filing of the complaints and the addition of
hundreds of new claimants by petitioners;
(2) that considering the number of complaints and claimants, it was impossible to
prepare the answers within the ten-day period provided in the NLRC Rules, that
when the motion to declare AIBC in default was filed on July 19, 1987, said party
had already filed its answer, and that considering the staggering amount of the
claims (more than US$50,000,000.00) and the complicated issues raised by the
parties, the ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject matter of the controversy
which was the applicability of the Amiri Decree No. 23. Likewise, the nature of
the claims varied, some being based on salaries pertaining to the unexpired
portion of the contracts while others being for pure money claims. Each claimant
demanded separate claims peculiar only to himself and depending upon the
particular circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that prescribed by Article
291 of the Labor Code of the Philippines (three years) and not the one prescribed
by Article 1144 of the Civil Code of the Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA Case No. L-8605-460 should be dismissed, this being a private quarrel between the two labor
lawyers (Rollo, pp. 292-305).

Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint
manifestations and motions of AIBC and BRII dated September 2 and 11, 1992,
claiming that all the claimants who entered into the compromise agreements
subject of said manifestations and motions were his clients and that Atty. Florante
M. de Castro had no right to represent them in said agreements. He also claimed
that the claimants were paid less than the award given them by NLRC; that Atty.
De Castro collected additional attorney's fees on top of the 25% which he was
entitled to receive; and that the consent of the claimants to the compromise
agreements and quitclaims were procured by fraud (G.R. No. 104776, Rollo, pp.
838-810). In the Resolution dated November 23, 1992, the Court denied the
motion to strike out the Joint Manifestations and Motions dated September 2 and
11, 1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce
Attorney's Lien," alleging that the claimants who entered into compromise

agreements with AIBC and BRII with the assistance of Atty. De Castro, had all
signed a retainer agreement with his law firm (G.R. No. 104776, Rollo, pp. 623624; 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 threeyear prescriptive period under the Labor Code of the Philippines; and (2) it
denied the claimant's formula based on an average overtime pay of three hours a
day (Rollo, pp. 18-22).
The claimants argue that said method was proposed by BRII itself during the
negotiation for an amicable settlement of their money claims in Bahrain as shown
in the Memorandum dated April 16, 1983 of the Ministry of Labor of Bahrain
(Rollo, pp. 21-22).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776
that the prescriptive period in the Labor Code of the Philippines, a special law,
prevails over that provided in the Civil Code of the Philippines, a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of
computing the overtime pay, BRII and AIBC claimed that they were not bound by
what appeared therein, because such memorandum was proposed by a
subordinate Bahrain official and there was no showing that it was approved by
the Bahrain Minister of Labor. Likewise, they claimed that the averaging method
was discussed in the course of the negotiation for the amicable settlement of the
dispute and any offer made by a party therein could not be used as an admission
by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its
discretion when it: (1) enforced the provisions of the Amiri Decree No. 23 of 1976
and not the terms of the employment contracts; (2) granted claims for holiday,
overtime and leave indemnity pay and other benefits, on evidence admitted in
contravention of petitioner's constitutional right to due process; and (3) ordered
the POEA Administrator to hold new hearings for the 683 claimants whose claims
had been dismissed for lack of proof by the POEA Administrator or NLRC itself.
Lastly, they allege that assuming that the Amiri Decree No. 23 of 1976 was
applicable, NLRC erred when it did not apply the one-year prescription provided
in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed
as to the time that should be embraced within the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article
1144 of the Civil Code of the Philippines. NLRC believed otherwise, fixing the
prescriptive period at three years as provided in Article 291 of the Labor Code of
the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different
grounds, insisted that NLRC erred in ruling that the prescriptive period applicable
to the claims was three years, instead of ten years, as found by the POEA
Administrator.
The Solicitor General expressed his personal view that the prescriptive period
was one year as prescribed by the Amiri Decree No. 23 of 1976 but he deferred
to the ruling of NLRC that Article 291 of the Labor Code of the Philippines was
the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to those arising
from the employer's violation of the employee's right as provided by the Labor
Code.
In the instant case, what the respondents violated are not the rights of the
workers as provided by the Labor Code, but the provisions of the Amiri Decree
No. 23 issued in Bahrain, which ipso facto amended the worker's contracts of
employment. Respondents consciously failed to conform to these provisions
which specifically provide for the increase of the worker's rate. It was only after
June 30, 1983, four months after the brown builders brought a suit against B & R
in Bahrain for this same claim, when respondent AIBC's contracts have
undergone amendments in Bahrain for the new hires/renewals (Respondent's
Exhibit 7).

Hence, premises considered, the applicable law of prescription to this instant

case is Article 1144 of the Civil Code of the Philippines, which provides:
Art. 1144. The following actions may be brought within ten years
from the time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the respondents shall
prescribe in ten years from August 16, 1976. Inasmuch as all claims were filed
within the ten-year prescriptive period, no claim suffered the infirmity of being
prescribed (G.R. No. 104776, Rollo, 89-90).

In overruling the POEA Administrator, and holding that the prescriptive period is
three years as provided in Article 291 of the Labor Code of the Philippines, the
NLRC argued as follows:
The Labor Code provides that "all money claims arising from employer-employee
relations . . . shall be filed within three years from the time the cause of action
accrued; otherwise they shall be forever barred" (Art. 291, Labor Code, as
amended). This three-year prescriptive period shall be the one applied here and
which should be reckoned from the date of repatriation of each individual
complainant, considering the fact that the case is having (sic) filed in this country.
We do not agree with the POEA Administrator that this three-year prescriptive
period applies only to money claims specifically recoverable under the Philippine
Labor Code. Article 291 gives no such indication. Likewise, We can not consider
complainants' cause/s of action to have accrued from a violation of their
employment contracts. There was no violation; the claims arise from the benefits
of the law of the country where they worked. (G.R. No. 104776, Rollo, pp.
90-91).

Anent the applicability of the one-year prescriptive period as provided by the

Amiri Decree No. 23 of 1976, NLRC opined that the applicability of said law was
one of characterization, i.e., whether to characterize the foreign law on
prescription or statute of limitation as "substantive" or "procedural." NLRC cited
the decision in Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir.
[1955], where the issue was the applicability of the Panama Labor Code in a
case filed in the State of New York for claims arising from said Code. In said
case, the claims would have prescribed under the Panamanian Law but not
under the Statute of Limitations of New York. The U.S. Circuit Court of Appeals
held that the Panamanian Law was procedural as it was not "specifically intended
to be substantive," hence, the prescriptive period provided in the law of the forum
should apply. The Court observed:
. . . And where, as here, we are dealing with a statute of limitations of a foreign
country, and it is not clear on the face of the statute that its purpose was to limit
the enforceability, outside as well as within the foreign country concerned, of the
substantive rights to which the statute pertains, we think that as a yardstick for
determining whether that was the purpose this test is the most satisfactory one. It

does not lead American courts into the necessity of examining into the unfamiliar
peculiarities and refinements of different foreign legal systems. . .

The court further noted:

xxx xxx xxx
Applying that test here it appears to us that the libelant is entitled to succeed, for
the respondents have failed to satisfy us that the Panamanian period of limitation
in question was specifically aimed against the particular rights which the libelant
seeks to enforce. The Panama Labor Code is a statute having broad objectives,
viz: "The present Code regulates the relations between capital and labor, placing
them on a basis of social justice, so that, without injuring any of the parties, there
may be guaranteed for labor the necessary conditions for a normal life and to
capital an equitable return to its investment." In pursuance of these objectives the
Code gives laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain ones which
are enumerated in Article 621. And there is nothing in the record to indicate that
the Panamanian legislature gave special consideration to the impact of Article
623 upon the particular rights sought to be enforced here, as distinguished from
the other rights to which that Article is also applicable. Were we confronted with
the question of whether the limitation period of Article 621 (which carves out
particular rights to be governed by a shorter limitation period) is to be regarded
as "substantive" or "procedural" under the rule of "specifity" we might have a
different case; but here on the surface of things we appear to be dealing with a
"broad," and not a "specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).

Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor
Code of the Philippines, which was applied by NLRC, refers only to claims
"arising from the employer's violation of the employee's right as provided by the
Labor Code." They assert that their claims are based on the violation of their
employment contracts, as amended by the Amiri Decree No. 23 of 1976 and
therefore the claims may be brought within ten years as provided by Article 1144
of the Civil Code of the Philippines (Rollo, G.R. Nos. 104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70
SCRA 244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the
Amiri Decree No. 23 of 1976, argue that there is in force in the Philippines a
"borrowing law," which is Section 48 of the Code of Civil Procedure and that
where such kind of law exists, it takes precedence over the common-law conflicts
rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of action
based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that
shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not be actionable after the
lapse of one year from the date of the expiry of the contract. (G.R. Nos. 10502931, Rollo, p. 226).

As a general rule, a foreign procedural law will not be applied in the forum.
Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum. This is
true even if the action is based upon a foreign substantive law (Restatement of
the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that
it may be viewed either as procedural or substantive, depending on the
characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court
applied the statute of limitations of New York, instead of the Panamanian law,
after finding that there was no showing that the Panamanian law on prescription
was intended to be substantive. Being considered merely a procedural law even
in Panama, it has to give way to the law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law
becomes irrelevant when the country of the forum has a "borrowing statute." Said
statute has the practical effect of treating the foreign statute of limitation as one
of substance (Goodrich, Conflict of Laws 152-153 [1938]). A "borrowing statute"
directs the state of the forum to apply the foreign statute of limitations to the
pending claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While
there are several kinds of "borrowing statutes," one form provides that an action
barred by the laws of the place where it accrued, will not be enforced in the forum
even though the local statute has not run against it (Goodrich and Scoles,
Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of
this kind. Said Section provides:
If by the laws of the state or country where the cause of action arose, the action
is barred, it is also barred in the Philippines Islands.

Section 48 has not been repealed or amended by the Civil Code of the
Philippines. Article 2270 of said Code repealed only those provisions of the Code
of Civil Procedures as to which were inconsistent with it. There is no provision in
the Civil Code of the Philippines, which is inconsistent with or contradictory to
Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws 104
[7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex
proprio vigore insofar as it ordains the application in this jurisdiction of Section
156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the
forum's public policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40
S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the one-year prescriptive period of
the Amiri Decree No. 23 of 1976 as regards the claims in question would
contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution
emphasized that:
The state shall promote social justice in all phases of national development.
(Sec. 10).
The state affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare (Sec. 18).

In article XIII on Social Justice and Human Rights, the 1987 Constitution
provides:
Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.

Having determined that the applicable law on prescription is the Philippine law,
the next question is whether the prescriptive period governing the filing of the
claims is three years, as provided by the Labor Code or ten years, as provided by
the Civil Code of the Philippines.
The claimants are of the view that the applicable provision is Article 1144 of the
Civil Code of the Philippines, which provides:
The following actions must be brought within ten years from the time the right of
action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.

NLRC, on the other hand, believes that the applicable provision is Article 291 of
the Labor Code of the Philippines, which in pertinent part provides:
Money claims-all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years
from the time the cause of action accrued, otherwise they shall be forever barred.
xxx xxx xxx

The case of Philippine Air Lines Employees Association v. Philippine Air Lines,
Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R. Nos. 104911-14 is
inapplicable to the cases at bench (Rollo, p. 21). The said case involved the
correct computation of overtime pay as provided in the collective bargaining
agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any
reference as to the computation for overtime work under the Eight-Hour Labor
Law (Secs. 3 and 4, CA No. 494) and instead insisted that work computation
provided in the collective bargaining agreements between the parties be
observed. Since the claim for pay differentials is primarily anchored on the written
contracts between the litigants, the ten-year prescriptive period provided by Art.
1144(1) of the New Civil Code should govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No.
19933) provides:
Any action to enforce any cause of action under this Act shall be commenced
within three years after the cause of action accrued otherwise such action shall
be forever barred, . . . .

The court further explained:

The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA No. 444
as amended) will apply, if the claim for differentials for overtime work is solely
based on said law, and not on a collective bargaining agreement or any other
contract. In the instant case, the claim for overtime compensation is not so much
because of Commonwealth Act No. 444, as amended but because the claim is
demandable right of the employees, by reason of the above-mentioned collective
bargaining agreement.

Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing
"actions to enforce any cause of action under said law." On the other hand,
Article 291 of the Labor Code of the Philippines provides the prescriptive period
for filing "money claims arising from employer-employee relations." The claims in
the cases at bench all arose from the employer-employee relations, which is
broader in scope than claims arising from a specific law or from the collective
bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period
under Article 291 of the Labor Code of the Philippines applies only to money
claims specifically recoverable under said Code, does not find support in the
plain language of the provision. Neither is the contention of the claimants in G.R.
Nos. 104911-14 that said Article refers only to claims "arising from the employer's
violation of the employee's right," as provided by the Labor Code supported by
the facial reading of the provision.
VII

G.R. No. 104776

A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver:
(1) that while their complaints were filed on June 6, 1984 with POEA, the case
was decided only on January 30, 1989, a clear denial of their right to a speedy
disposition of the case; and (2) that NLRC and the POEA Administrator should
have declared AIBC and BRII in default (Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which
provides:
Sec. 16. All persons shall have the right to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies.

It is true that the constitutional right to "a speedy disposition of cases" is not
limited to the accused in criminal proceedings but extends to all parties in all
cases, including civil and administrative cases, and in all proceedings, including
judicial and quasi-judicial hearings. Hence, under the Constitution, any party to a
case may demand expeditious action on all officials who are tasked with the
administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy
disposition of cases" is a relative term. Just like the constitutional guarantee of
"speedy trial" accorded to the accused in all criminal proceedings, "speedy
disposition of cases" is a flexible concept. It is consistent with delays and
depends upon the circumstances of each case. What the Constitution prohibits
are unreasonable, arbitrary and oppressive delays which render rights nugatory.
Caballero laid down the factors that may be taken into consideration in
determining whether or not the right to a "speedy disposition of cases" has been
violated, thus:
In the determination of whether or not the right to a "speedy trial" has been
violated, certain factors may be considered and balanced against each other.
These are length of delay, reason for the delay, assertion of the right or failure to
assert it, and prejudice caused by the delay. The same factors may also be
considered in answering judicial inquiry whether or not a person officially charged
with the administration of justice has violated the speedy disposition of cases.

Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:

It must be here emphasized that the right to a speedy disposition of a case, like
the right to speedy trial, is deemed violated only when the proceeding is attended
by vexatious, capricious, and oppressive delays; or when unjustified
postponements of the trial are asked for and secured, or when without cause or
justified motive a long period of time is allowed to elapse without the party having
his case tried.

Since July 25, 1984 or a month after AIBC and BRII were served with a copy of
the amended complaint, claimants had been asking that AIBC and BRII be
declared in default for failure to file their answers within the ten-day period
provided in Section 1, Rule III of Book VI of the Rules and Regulations of the
POEA. At that time, there was a pending motion of AIBC and BRII to strike out of
the records the amended complaint and the "Compliance" of claimants to the
order of the POEA, requiring them to submit a bill of particulars.
The cases at bench are not of the run-of-the-mill variety, such that their final
disposition in the administrative level after seven years from their inception,
cannot be said to be attended by unreasonable, arbitrary and oppressive delays
as to violate the constitutional rights to a speedy disposition of the cases of
complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants.
Said complaint had undergone several amendments, the first being on April 3,
1985.
The claimants were hired on various dates from 1975 to 1983. They were
deployed in different areas, one group in and the other groups outside of,
Bahrain. The monetary claims totalling more than US$65 million according to
Atty. Del Mundo, included:
1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue
(B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits
consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;

13. Attorney's fees of at least ten percent of amounts;

14. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC
and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not excluding
reportorial requirements thereof (NLRC Resolution, September 2, 1991, pp. 1819; G.R. No. 104776, Rollo, pp. 73-74).

Inasmuch as the complaint did not allege with sufficient definiteness and clarity of
some facts, the claimants were ordered to comply with the motion of AIBC for a
bill of particulars. When claimants filed their "Compliance and Manifestation,"
AIBC moved to strike out the complaint from the records for failure of claimants
to submit a proper bill of particulars. While the POEA Administrator denied the
motion to strike out the complaint, he ordered the claimants "to correct the
deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the
records of employment of the more than 1,700 claimants had to be retrieved from
various countries in the Middle East. Some of the records dated as far back as
1975.
The hearings on the merits of the claims before the POEA Administrator were
interrupted several times by the various appeals, first to NLRC and then to the
Supreme Court.
Aside from the inclusion of additional claimants, two new cases were filed against
AIBC and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986
(POEA Case No. L-86-05-460). NLRC, in exasperation, noted that the exact
number of claimants had never been completely established (Resolution, Sept. 2,
1991, G.R. No. 104776, Rollo, p. 57). All the three new cases were consolidated
with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the
proceedings, thus:
These cases could have been spared the long and arduous route towards
resolution had the parties and their counsel been more interested in pursuing the
truth and the merits of the claims rather than exhibiting a fanatical reliance on
technicalities. Parties and counsel have made these cases a litigation of emotion.
The intransigence of parties and counsel is remarkable. As late as last month,
this Commission made a last and final attempt to bring the counsel of all the
parties (this Commission issued a special order directing respondent Brown &
Root's resident agent/s to appear) to come to a more conciliatory stance. Even
this failed (Rollo,
p. 58).

The squabble between the lawyers of claimants added to the delay in the
disposition of the cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these consolidated
cases appear to be not only the individual complainants, on the one hand, and
AIBC and Brown & Root, on the other hand. The two lawyers for the
complainants, Atty. Gerardo Del Mundo and Atty. Florante De Castro, have yet to
settle the right of representation, each one persistently claiming to appear in
behalf of most of the complainants. As a result, there are two appeals by the
complainants. Attempts by this Commission to resolve counsels' conflicting
claims of their respective authority to represent the complainants prove futile. The
bickerings by these two counsels are reflected in their pleadings. In the charges
and countercharges of falsification of documents and signatures, and in the
disbarment proceedings by one against the other. All these have, to a large
extent, abetted in confounding the issues raised in these cases, jumble the
presentation of evidence, and even derailed the prospects of an amicable
settlement. It would not be far-fetched to imagine that both counsel, unwittingly,
perhaps, painted a rainbow for the complainants, with the proverbial pot of gold
at its end containing more than US$100 million, the aggregate of the claims in
these cases. It is, likewise, not improbable that their misplaced zeal and
exuberance caused them to throw all caution to the wind in the matter of
elementary rules of procedure and evidence (Rollo, pp. 58-59).

Adding to the confusion in the proceedings before NLRC, is the listing of some of
the complainants in both petitions filed by the two lawyers. As noted by NLRC,
"the problem created by this situation is that if one of the two petitions is
dismissed, then the parties and the public respondents would not know which
claim of which petitioner was dismissed and which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class
suit" because "all the named complainants have similar money claims and similar
rights sought irrespective of whether they worked in Bahrain, United Arab
Emirates or in Abu Dhabi, Libya or in any part of the Middle East" (Rollo, pp. 3538).
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 selfappointed 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 antiforum shopping rule to the lower courts and administrative agencies, said circular
took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical conduct
against Atty. De Castro because NLRC and POEA have no jurisdiction to
investigate charges of unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was
filed by Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for
legal services rendered in favor of the claimants (G.R. No. 104776, Rollo, pp.
841-844).
A statement of a claim for a charging lien shall be filed with the court or
administrative agency which renders and executes the money judgment secured
by the lawyer for his clients. The lawyer shall cause written notice thereof to be
delivered to his clients and to the adverse party (Revised Rules of Court, Rule
138, Sec. 37). The statement of the claim for the charging lien of Atty. Del Mundo
should have been filed with the administrative agency that rendered and
executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and
Atty. Katz Tierra for violation of the Code of Professional Responsibility should be
filed in a separate and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting their
formula of "Three Hours Average Daily Overtime" in computing the overtime
payments. They claim that it was BRII itself which proposed the formula during
the negotiations for the settlement of their claims in Bahrain and therefore it is in
estoppel to disclaim said offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated
April 16, 1983, which in pertinent part states:
After the perusal of the memorandum of the Vice President and the Area
Manager, Middle East, of Brown & Root Co. and the Summary of the
compensation offered by the Company to the employees in respect of the
difference of pay of the wages of the overtime and the difference of vacation
leave and the perusal of the documents attached thereto i.e., minutes of the
meetings between the Representative of the employees and the management of
the Company, the complaint filed by the employees on 14/2/83 where they have
claimed as hereinabove stated, sample of the Service Contract executed

between one of the employees and the company through its agent in (sic)
Philippines, Asia International Builders Corporation where it has been provided
for 48 hours of work per week and an annual leave of 12 days and an overtime
wage of 1 & 1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35 months for
the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in all public holidays and
weekends.
4. Payment of US$8.72 per months (sic) of service as compensation for the
difference of the wages of the overtime done for each Philippino (sic)
employee . . . (Rollo, p.22).

BRII and AIBC countered: (1) that the Memorandum was not prepared by them
but by a subordinate official in the Bahrain Department of Labor; (2) that there
was no showing that the Bahrain Minister of Labor had approved said
memorandum; and (3) that the offer was made in the course of the negotiation
for an amicable settlement of the claims and therefore it was not admissible in
evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing the rule on
presenting official documents of a foreign government as provided in Section 24,
Rule 132 of the 1989 Revised Rules on Evidence, it can be admitted in evidence
in proceedings before an administrative body. The opposing parties have a copy
of the said memorandum, and they could easily verify its authenticity and
accuracy.
The admissibility of the offer of compromise made by BRII as contained in the
memorandum is another matter. Under Section 27, Rule 130 of the 1989 Revised
Rules on Evidence, an offer to settle a claim is not an admission that anything is
due.
Said Rule provides:
Offer of compromise not admissible. In civil cases, an offer of compromise is
not an admission of any liability, and is not admissible in evidence against the
offeror.

This Rule is not only a rule of procedure to avoid the cluttering of the record with
unwanted evidence but a statement of public policy. There is great public interest
in having the protagonists settle their differences amicable before these ripen into

litigation. Every effort must be taken to encourage them to arrive at a settlement.

The submission of offers and counter-offers in the negotiation table is a step in
the right direction. But to bind a party to his offers, as what claimants would make
this Court do, would defeat the salutary purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater
benefits than those stipulated in the overseas-employment contracts of the
claimants. It was of the belief that "where the laws of the host country are more
favorable and beneficial to the workers, then the laws of the host country shall
form part of the overseas employment contract." It quoted with approval the
observation of the POEA Administrator that ". . . in labor proceedings, all doubts
in the implementation of the provisions of the Labor Code and its implementing
regulations shall be resolved in favor of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it
refused to enforce the overseas-employment contracts, which became the law of
the parties. They contend that the principle that a law is deemed to be a part of a
contract applies only to provisions of Philippine law in relation to contracts
executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC and BRII
themselves, provided that the laws of the host country became applicable to said
contracts if they offer terms and conditions more favorable that those stipulated
therein. It was stipulated in said contracts that:
The Employee agrees that while in the employ of the Employer, he will not
engage in any other business or occupation, nor seek employment with anyone
other than the Employer; that he shall devote his entire time and attention and his
best energies, and abilities to the performance of such duties as may be
assigned to him by the Employer; that he shall at all times be subject to the
direction and control of the Employer; and that the benefits provided to Employee
hereunder are substituted for and in lieu of all other benefits provided by any
applicable law, provided of course, that total remuneration and benefits do not fall
below that of the host country regulation or custom, it being understood that
should applicable laws establish that fringe benefits, or other such benefits
additional to the compensation herein agreed cannot be waived, Employee
agrees that such compensation will be adjusted downward so that the total
compensation hereunder, plus the non-waivable benefits shall be equivalent to
the compensation herein agreed (Rollo, pp. 352-353).

The overseas-employment contracts could have been drafted more felicitously.

While a part thereof provides that the compensation to the employee may be
"adjusted downward so that the total computation (thereunder) plus the nonwaivable 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, holidaypay differential, annual-leave differential and leave indemnity pay to the claimants
listed in Annex B of the Resolution. At first, NLRC reversed the resolution of the
POEA Administrator granting these benefits on a finding that the POEA
Administrator failed to consider the evidence presented by AIBC and BRII, that
some findings of fact of the POEA Administrator were not supported by the
evidence, and that some of the evidence were not disclosed to AIBC and BRII
(Rollo, pp. 35-36; 106-107). But instead of remanding the case to the POEA
Administrator for a new hearing, which means further delay in the termination of
the case, NLRC decided to pass upon the validity of the claims itself. It is this
procedure that AIBC and BRII complain of as being irregular and a "reversible
error."
They pointed out that NLRC took into consideration evidence submitted on
appeal, the same evidence which NLRC found to have been "unilaterally
submitted by the claimants and not disclosed to the adverse parties" (Rollo, pp.
37-39).
NLRC noted that so many pieces of evidentiary matters were submitted to the
POEA administrator by the claimants after the cases were deemed submitted for
resolution and which were taken cognizance of by the POEA Administrator in
resolving the cases. While AIBC and BRII had no opportunity to refute said
evidence of the claimants before the POEA Administrator, they had all the
opportunity to rebut said evidence and to present their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves

were able to present before NLRC additional evidence which they failed to
present before the POEA Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use
every and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure, all in the
interest of due process."
In deciding to resolve the validity of certain claims on the basis of the evidence of
both parties submitted before the POEA Administrator and NLRC, the latter
considered that it was not expedient to remand the cases to the POEA
Administrator for that would only prolong the already protracted legal
controversies.
Even the Supreme Court has decided appealed cases on the merits instead of
remanding them to the trial court for the reception of evidence, where the same
can be readily determined from the uncontroverted facts on record (Development
Bank of the Philippines v. Intermediate Appellate Court, 190 SCRA 653 [1990];
Pagdonsalan v. National Labor Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered
the POEA Administrator to hold new hearings for 683 claimants listed in Annex D
of the Resolution dated September 2, 1991 whose claims had been denied by
the POEA Administrator "for lack of proof" and for 69 claimants listed in Annex E
of the same Resolution, whose claims had been found by NLRC itself as not
"supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines,
which empowers it "[to] conduct investigation for the determination of a question,
matter or controversy, within its jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c)
to remand a case involving claims which had already been dismissed because
such provision contemplates only situations where there is still a question or
controversy to be resolved (Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of
procedure and evidence do not apply to the proceedings conducted by
administrative agencies (First Asian Transport & Shipping Agency, Inc. v. Ople,
142 SCRA 542 [1986]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219
[1987]). This principle is enshrined in Article 221 of the Labor Code of the
Philippines and is now the bedrock of proceedings before NLRC.
Notwithstanding the non-applicability of technical rules of procedure and
evidence in administrative proceedings, there are cardinal rules which must be
observed by the hearing officers in order to comply with the due process

requirements of the Constitution. These cardinal rules are collated in Ang Tibay
v. Court of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court on the
grounds that NLRC had committed grave abuse of discretion amounting to lack
of jurisdiction in issuing the questioned orders. We find no such abuse of
discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.

G.R. No. L-68470 October 8, 1985

ALICE REYES VAN DORN, petitioner,
vs.
HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX,
Regional Trial Court of the National Capital Region Pasay City and
RICHARD UPTON respondents.

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

capriciously and whimsically, then it devolves upon this Court in a certiorari

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

3. 'I'hat there are no community obligations to be adjudicated by the court.

xxx xxx xxx 4

There can be no question as to the validity of that Nevada divorce in any of the
States of the United States. The decree is binding on private respondent as an
American citizen. For instance, private respondent cannot sue petitioner, as her
husband, in any State of the Union. What he is contending in this case is that the
divorce is not valid and binding in this jurisdiction, the same being contrary to
local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, 5 only Philippine nationals are covered by the policy against absolute
divorces the same being considered contrary to our concept of public police and
morality. However, aliens may obtain divorces abroad, which may be recognized
in the Philippines, provided they are valid according to their national law. 6 In this
case, the divorce in Nevada released private respondent from the marriage from
the standards of American law, under which divorce dissolves the marriage. As
stated by the Federal Supreme Court of the United States in Atherton vs.
Atherton, 45 L. Ed. 794, 799:
The purpose and effect of a decree of divorce from the bond of matrimony by a
court of competent jurisdiction are to change the existing status or domestic
relation of husband and wife, and to free them both from the bond. The marriage
tie when thus severed as to one party, ceases to bind either. A husband without a
wife, or a wife without a husband, is unknown to the law. When the law provides,
in the nature of a penalty. that the guilty party shall not marry again, that party, as
well as the other, is still absolutely freed from the bond of the former marriage.

Thus, pursuant to his national law, private respondent is no longer the husband
of petitioner. He would have no standing to sue in the case below as petitioner's
husband entitled to exercise control over conjugal assets. As he is bound by the
Decision of his own country's Court, which validly exercised jurisdiction over him,
and whose decision he does not repudiate, he is estopped by his own
representation before said Court from asserting his right over the alleged
conjugal property.
To maintain, as private respondent does, that, under our laws, petitioner has to
be considered still married to private respondent and still subject to a wife's
obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner
should not be obliged to live together with, observe respect and fidelity, and
render support to private respondent. The latter should not continue to be one of
her heirs with possible rights to conjugal property. She should not be
discriminated against in her own country if the ends of justice are to be served.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered
to dismiss the Complaint filed in Civil Case No. 1075-P of his Court.

Without costs.
SO ORDERED.

G.R. No. 80116 June 30, 1989

IMELDA MANALAYSAY PILAPIL, petitioner,
vs.
HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the
Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his
capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING,
respondents.

REGALADO, J.:
An ill-starred marriage of a Filipina and a foreigner which ended in a foreign
absolute divorce, only to be followed by a criminal infidelity suit of the latter
against the former, provides Us the opportunity to lay down a decisional rule on
what hitherto appears to be an unresolved jurisdictional question.
On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen,
and private respondent Erich Ekkehard Geiling, a German national, were married
before the Registrar of Births, Marriages and Deaths at Friedensweiler in the
Federal Republic of Germany. The marriage started auspiciously enough, and
the couple lived together for some time in Malate, Manila where their only child,
Isabella Pilapil Geiling, was born on April 20, 1980. 1
Thereafter, marital discord set in, with mutual recriminations between the
spouses, followed by a separation de facto between them.
After about three and a half years of marriage, such connubial disharmony
eventuated in private respondent initiating a divorce proceeding against petitioner
in Germany before the Schoneberg Local Court in January, 1983. He claimed
that there was failure of their marriage and that they had been living apart since
April, 1982. 2
Petitioner, on the other hand, filed an action for legal separation, support and
separation of property before the Regional Trial Court of Manila, Branch XXXII,
on January 23, 1983 where the same is still pending as Civil Case No. 83-15866.
3

On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal

Republic of Germany, promulgated a decree of divorce on the ground of failure of
marriage of the spouses. The custody of the child was granted to petitioner. The
records show that under German law said court was locally and internationally
competent for the divorce proceeding and that the dissolution of said marriage

was legally founded on and authorized by the applicable law of that foreign
jurisdiction. 4
On June 27, 1986, or more than five months after the issuance of the divorce
decree, private respondent filed two complaints for adultery before the City Fiscal
of Manila alleging that, while still married to said respondent, petitioner "had an
affair with a certain William Chia as early as 1982 and with yet another man
named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes,
Jr., after the corresponding investigation, recommended the dismissal of the
cases on the ground of insufficiency of evidence. 5 However, upon review, the
respondent city fiscal approved a resolution, dated January 8, 1986, directing the
filing of two complaints for adultery against the petitioner. 6 The complaints were
accordingly filed and were eventually raffled to two branches of the Regional Trial
Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil
and William Chia", docketed as Criminal Case No. 87-52435, was assigned to
Branch XXVI presided by the respondent judge; while the other case, "People of
the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case
No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the
same court. 7
On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking
that the aforesaid resolution of respondent fiscal be set aside and the cases
against her be dismissed. 8 A similar petition was filed by James Chua, her coaccused in Criminal Case No. 87-52434. The Secretary of Justice, through the
Chief State Prosecutor, gave due course to both petitions and directed the
respondent city fiscal to inform the Department of Justice "if the accused have
already been arraigned and if not yet arraigned, to move to defer further
proceedings" and to elevate the entire records of both cases to his office for
review. 9
Petitioner thereafter filed a motion in both criminal cases to defer her arraignment
and to suspend further proceedings thereon. 10 As a consequence, Judge
Leonardo Cruz suspended proceedings in Criminal Case No. 87-52434. On the
other hand, respondent judge merely reset the date of the arraignment in
Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date,
petitioner moved for the cancellation of the arraignment and for the suspension of
proceedings in said Criminal Case No. 87-52435 until after the resolution of the
petition for review then pending before the Secretary of Justice. 11 A motion to
quash was also filed in the same case on the ground of lack of jurisdiction, 12
which motion was denied by the respondent judge in an order dated September
8, 1987. The same order also directed the arraignment of both accused therein,
that is, petitioner and William Chia. The latter entered a plea of not guilty while
the petitioner refused to be arraigned. Such refusal of the petitioner being
considered by respondent judge as direct contempt, she and her counsel were
fined and the former was ordered detained until she submitted herself for
arraignment. 13 Later, private respondent entered a plea of not guilty. 14

On October 27, 1987, petitioner filed this special civil action for certiorari and
prohibition, with a prayer for a temporary restraining order, seeking the
annulment of the order of the lower court denying her motion to quash. The
petition is anchored on the main ground that the court is without jurisdiction "to try
and decide the charge of adultery, which is a private offense that cannot be
prosecuted de officio (sic), since the purported complainant, a foreigner, does not
qualify as an offended spouse having obtained a final divorce decree under his
national law prior to his filing the criminal complaint." 15
On October 21, 1987, this Court issued a temporary restraining order enjoining
the respondents from implementing the aforesaid order of September 8, 1987
and from further proceeding with Criminal Case No. 87-52435. Subsequently, on
March 23, 1988 Secretary of Justice Sedfrey A. Ordoez acted on the aforesaid
petitions for review and, upholding petitioner's ratiocinations, issued a resolution
directing the respondent city fiscal to move for the dismissal of the complaints
against the petitioner. 16
We find this petition meritorious. The writs prayed for shall accordingly issue.
Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as
four other crimes against chastity, cannot be prosecuted except upon a sworn
written complaint filed by the offended spouse. It has long since been
established, with unwavering consistency, that compliance with this rule is a
jurisdictional, and not merely a formal, requirement. 18 While in point of strict law
the jurisdiction of the court over the offense is vested in it by the Judiciary Law,
the requirement for a sworn written complaint is just as jurisdictional a mandate
since it is that complaint which starts the prosecutory proceeding 19 and without
which the court cannot exercise its jurisdiction to try the case.
Now, the law specifically provides that in prosecutions for adultery and
concubinage the person who can legally file the complaint should be the
offended spouse, and nobody else. Unlike the offenses of seduction, abduction,
rape and acts of lasciviousness, no provision is made for the prosecution of the
crimes of adultery and concubinage by the parents, grandparents or guardian of
the offended party. The so-called exclusive and successive rule in the
prosecution of the first four offenses above mentioned do not apply to adultery
and concubinage. It is significant that while the State, as parens patriae, was
added and vested by the 1985 Rules of Criminal Procedure with the power to
initiate the criminal action for a deceased or incapacitated victim in the aforesaid
offenses of seduction, abduction, rape and acts of lasciviousness, in default of
her parents, grandparents or guardian, such amendment did not include the
crimes of adultery and concubinage. In other words, only the offended spouse,
and no other, is authorized by law to initiate the action therefor.
Corollary to such exclusive grant of power to the offended spouse to institute the
action, it necessarily follows that such initiator must have the status, capacity or

legal representation to do so at the time of the filing of the criminal action. This is
a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as
a ground for a motion to dismiss in civil cases, is determined as of the filing of the
complaint or petition.
The absence of an equivalent explicit rule in the prosecution of criminal cases
does not mean that the same requirement and rationale would not apply.
Understandably, it may not have been found necessary since criminal actions are
generally and fundamentally commenced by the State, through the People of the
Philippines, the offended party being merely the complaining witness therein.
However, in the so-called "private crimes" or those which cannot be prosecuted
de oficio, and the present prosecution for adultery is of such genre, the offended
spouse assumes a more predominant role since the right to commence the
action, or to refrain therefrom, is a matter exclusively within his power and option.
This policy was adopted out of consideration for the aggrieved party who might
prefer to suffer the outrage in silence rather than go through the scandal of a
public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised
Penal Code thus presupposes that the marital relationship is still subsisting at the
time of the institution of the criminal action for, adultery. This is a logical
consequence since the raison d'etre of said provision of law would be absent
where the supposed offended party had ceased to be the spouse of the alleged
offender at the time of the filing of the criminal case. 21
In these cases, therefore, it is indispensable that the status and capacity of the
complainant to commence the action be definitely established and, as already
demonstrated, such status or capacity must indubitably exist as of the time he
initiates the action. It would be absurd if his capacity to bring the action would be
determined by his status before or subsequent to the commencement thereof,
where such capacity or status existed prior to but ceased before, or was acquired
subsequent to but did not exist at the time of, the institution of the case. We
would thereby have the anomalous spectacle of a party bringing suit at the very
time when he is without the legal capacity to do so.
To repeat, there does not appear to be any local precedential jurisprudence on
the specific issue as to when precisely the status of a complainant as an
offended spouse must exist where a criminal prosecution can be commenced
only by one who in law can be categorized as possessed of such status. Stated
differently and with reference to the present case, the inquiry ;would be whether it
is necessary in the commencement of a criminal action for adultery that the
marital bonds between the complainant and the accused be unsevered and
existing at the time of the institution of the action by the former against the latter.
American jurisprudence, on cases involving statutes in that jurisdiction which are
in pari materia with ours, yields the rule that after a divorce has been decreed,
the innocent spouse no longer has the right to institute proceedings against the

offenders where the statute provides that the innocent spouse shall have the
exclusive right to institute a prosecution for adultery. Where, however,
proceedings have been properly commenced, a divorce subsequently granted
can have no legal effect on the prosecution of the criminal proceedings to a
conclusion. 22
In the cited Loftus case, the Supreme Court of Iowa held that
'No prosecution for adultery can be commenced except on the complaint of the
husband or wife.' Section 4932, Code. Though Loftus was husband of defendant
when the offense is said to have been committed, he had ceased to be such
when the prosecution was begun; and appellant insists that his status was not
such as to entitle him to make the complaint. We have repeatedly said that the
offense is against the unoffending spouse, as well as the state, in explaining the
reason for this provision in the statute; and we are of the opinion that the
unoffending spouse must be such when the prosecution is commenced.
(Emphasis supplied.)

We see no reason why the same doctrinal rule should not apply in this case and
in our jurisdiction, considering our statutory law and jural policy on the matter. We
are convinced that in cases of such nature, the status of the complainant vis-avis the accused must be determined as of the time the complaint was filed. Thus,
the person who initiates the adultery case must be an offended spouse, and by
this is meant that he is still married to the accused spouse, at the time of the filing
of the complaint.
In the present case, the fact that private respondent obtained a valid divorce in
his country, the Federal Republic of Germany, is admitted. Said divorce and its
legal effects may be recognized in the Philippines insofar as private respondent
is concerned 23 in view of the nationality principle in our civil law on the matter of
status of persons.
Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was
granted by a United States court between Alice Van Dornja Filipina, and her
American husband, the latter filed a civil case in a trial court here alleging that
her business concern was conjugal property and praying that she be ordered to
render an accounting and that the plaintiff be granted the right to manage the
business. Rejecting his pretensions, this Court perspicuously demonstrated the
error of such stance, thus:
There can be no question as to the validity of that Nevada divorce in any of the
States of the United States. The decree is binding on private respondent as an
American citizen. For instance, private respondent cannot sue petitioner, as her
husband, in any State of the Union. ...
It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the policy against absolute
divorces the same being considered contrary to our concept of public policy and

morality. However, aliens may obtain divorces abroad, which may be recognized
in the Philippines, provided they are valid according to their national law. ...
Thus, pursuant to his national law, private respondent is no longer the husband
of petitioner. He would have no standing to sue in the case below as petitioner's
husband entitled to exercise control over conjugal assets. ... 25

Under the same considerations and rationale, private respondent, being no

longer the husband of petitioner, had no legal standing to commence the adultery
case under the imposture that he was the offended spouse at the time he filed
suit.
The allegation of private respondent that he could not have brought this case
before the decree of divorce for lack of knowledge, even if true, is of no legal
significance or consequence in this case. When said respondent initiated the
divorce proceeding, he obviously knew that there would no longer be a family nor
marriage vows to protect once a dissolution of the marriage is decreed. Neither
would there be a danger of introducing spurious heirs into the family, which is
said to be one of the reasons for the particular formulation of our law on adultery,
26
since there would thenceforth be no spousal relationship to speak of. The
severance of the marital bond had the effect of dissociating the former spouses
from each other, hence the actuations of one would not affect or cast obloquy on
the other.
The aforecited case of United States vs. Mata cannot be successfully relied upon
by private respondent. In applying Article 433 of the old Penal Code, substantially
the same as Article 333 of the Revised Penal Code, which punished adultery
"although the marriage be afterwards declared void", the Court merely stated that
"the lawmakers intended to declare adulterous the infidelity of a married woman
to her marital vows, even though it should be made to appear that she is entitled
to have her marriage contract declared null and void, until and unless she
actually secures a formal judicial declaration to that effect". Definitely, it cannot
be logically inferred therefrom that the complaint can still be filed after the
declaration of nullity because such declaration that the marriage is void ab initio
is equivalent to stating that it never existed. There being no marriage from the
beginning, any complaint for adultery filed after said declaration of nullity would
no longer have a leg to stand on. Moreover, what was consequently
contemplated and within the purview of the decision in said case is the situation
where the criminal action for adultery was filed before the termination of the
marriage by a judicial declaration of its nullity ab initio. The same rule and
requisite would necessarily apply where the termination of the marriage was
effected, as in this case, by a valid foreign divorce.
Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore
cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case
reveals that the offended spouse therein had duly and seasonably filed a
complaint for adultery, although an issue was raised as to its sufficiency but

which was resolved in favor of the complainant. Said case did not involve a
factual situation akin to the one at bar or any issue determinative of the
controversy herein.
WHEREFORE, the questioned order denying petitioner's motion to quash is SET
ASIDE and another one 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.

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

PAULA T. LLORENTE, petitioner, vs. COURT OF APPEALS and ALICIA F.
LLORENTE, respondents.
DECISION
PARDO, J.:
The Case
The case raises a conflict of laws issue.
What is before us is an appeal from the decision of the Court of Appeals
modifying that of the Regional Trial Court, Camarines Sur, Branch 35, Iriga City
declaring respondent Alicia F. Llorente (herinafter referred to as Alicia), as coowners of whatever property she and the deceased Lorenzo N. Llorente
(hereinafter referred to as Lorenzo) may have acquired during the twenty-five
(25) years that they lived together as husband and wife.
The Facts
The deceased Lorenzo N. Llorente was an enlisted serviceman of the United
States Navy from March 10, 1927 to September 30, 1957.
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.
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.
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.
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. He discovered that his wife Paula was pregnant and was living
in and having an adulterous relationship with his brother, Ceferino Llorente.
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 fathers name was left blank.

Lorenzo refused to forgive Paula and live with her. In fact, on February 2, 1946,
the couple drew a written agreement to the effect that (1) all the family
allowances allotted by the United States Navy as part of Lorenzos salary and all
other obligations for Paulas 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 Paulas father and stepmother. The
agreement was notarized by Notary Public Pedro Osabel.
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.
On December 4, 1952, the divorce decree became final.
In the meantime, Lorenzo returned to the Philippines.
On January 16, 1958, Lorenzo married Alicia F. Llorente in Manila. Apparently,
Alicia had no knowledge of the first marriage even if they resided in the same
town as Paula, who did not oppose the marriage or cohabitation.
From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife. Their
twenty-five (25) year union produced three children, Raul, Luz and Beverly, all
surnamed Llorente.
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 Llorentes Side should ever bother and disturb in any manner whatsoever my
wife Alicia R. Fortunato and my children with respect to any real or personal
properties I gave and bequeathed respectively to each one of them by virtue of
this Last Will and Testament.
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.
On January 18, 1984, the trial court denied the motion for the reason that the
testator Lorenzo was still alive.
On January 24, 1984, finding that the will was duly executed, the trial court
admitted the will to probate.
On June 11, 1985, before the proceedings could be terminated, Lorenzo died.
On September 4, 1985, Paula filed with the same court a petition for letters of
administration over Lorenzos estate in her favor. Paula contended (1) that she

was Lorenzos surviving spouse, (2) that the various property were acquired
during their marriage, (3) that Lorenzos will disposed of all his property in favor
of Alicia and her children, encroaching on her legitime and 1/2 share in the
conjugal property.
On December 13, 1985, Alicia filed in the testate proceeding (Sp. Proc. No. IR755), a petition for the issuance of letters testamentary.
On October 14, 1985, without terminating the testate proceedings, the trial court
gave due course to Paulas petition in Sp. Proc. No. IR-888.
On November 6, 13 and 20, 1985, the order was published in the newspaper
Bicol Star.
On May 18, 1987, the Regional Trial Court issued a joint decision, thus:
Wherefore, considering that this court has so found that the divorce decree
granted to the late Lorenzo Llorente is void and inapplicable in the Philippines,
therefore the marriage he contracted with Alicia Fortunato on January 16, 1958 at
Manila is likewise void. This being so the petition of Alicia F. Llorente for the
issuance of letters testamentary is denied. Likewise, she is not entitled to
receive any share from the estate even if the will especially said so her
relationship with Lorenzo having gained the status of paramour which is under
Art. 739 (1).
On the other hand, the court finds the petition of Paula Titular Llorente,
meritorious, and so declares the intrinsic disposition of the will of Lorenzo
Llorente dated March 13, 1981 as void and declares her entitled as conjugal
partner and entitled to one-half of their conjugal properties, and as primary
compulsory heir, Paula T. Llorente is also entitled to one-third of the estate and
then one-third should go to the illegitimate children, Raul, Luz and Beverly, all
surname (sic) Llorente, for them to partition in equal shares and also entitled to
the remaining free portion in equal shares.
Petitioner, Paula Llorente is appointed legal administrator of the estate of the
deceased, Lorenzo Llorente. As such let the corresponding letters of
administration issue in her favor upon her filing a bond in the amount (sic) of
P100,000.00 conditioned for her to make a return to the court within three (3)
months a true and complete inventory of all goods, chattels, rights, and credits,
and estate which shall at any time come to her possession or to the possession
of any other person for her, and from the proceeds to pay and discharge all
debts, legacies and charges on the same, or such dividends thereon as shall be
decreed or required by this court; to render a true and just account of her
administration to the court within one (1) year, and at any other time when
required by the court and to perform all orders of this court by her to be
performed.

On the other matters prayed for in respective petitions for want of evidence
could not be granted.
SO ORDERED.
In time, Alicia filed with the trial court a motion for reconsideration of the
aforequoted decision.
On September 14, 1987, the trial court denied Alicias motion for reconsideration
but modified its earlier decision, stating that Raul and Luz Llorente are not
children legitimate or otherwise of Lorenzo since they were not legally adopted
by him. 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.
On September 28, 1987, respondent appealed to the Court of Appeals.
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.
On August 25, 1995, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision.
On March 21, 1996, the Court of Appeals, denied the motion for lack of merit.
Hence, this petition.
The Issue
Stripping the petition of its legalese and sorting through the various arguments
raised, the issue is simple. Who are entitled to inherit from the late Lorenzo N.
Llorente?
We do not agree with the decision of the Court of Appeals. We remand the case
to the trial court for ruling on the intrinsic validity of the will of the deceased.
The Applicable Law

The fact that the late Lorenzo N. Llorente became an American citizen long
before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3)
execution of his will; and (4) death, is duly established, admitted and undisputed.
Thus, as a rule, issues arising from these incidents are necessarily governed by
foreign law.
The Civil Code clearly provides:
Art. 15. Laws relating to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon citizens of the Philippines, even
though living abroad.
Art. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary succession, both with respect to the order
of succession and to the amount of 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. (emphasis ours)
True, foreign laws do not prove themselves in our jurisdiction and our courts are
not authorized to take judicial notice of them. Like any other fact, they must be
alleged and proved.
While the substance of the foreign law was pleaded, the Court of Appeals did not
admit the foreign law. The Court of Appeals and the trial court called to the fore
the renvoi doctrine, where the case was referred back to the law of the
decedents domicile, in this case, Philippine law.
We note that while the trial court stated that the law of New York was not
sufficiently proven, in the same breath it made the categorical, albeit equally
unproven statement that American law follows the domiciliary theory hence,
Philippine law applies when determining the validity of Lorenzos will.
First, there is no such thing as one American law. The "national law" indicated in
Article 16 of the Civil Code cannot possibly apply to general American law. There
is no such law governing the validity of testamentary provisions in the United
States. Each State of the union has its own law applicable to its citizens and in
force only within the State. It can therefore refer to no other than the law of the
State of which the decedent was a resident. Second, there is no showing that
the application of the renvoi doctrine is called for or required by New York State
law.

The trial court held that the will was intrinsically invalid since it contained
dispositions in favor of Alice, who in the trial courts opinion was a mere
paramour. The trial court threw the will out, leaving Alice, and her two children,
Raul and Luz, with nothing.
The Court of Appeals also disregarded the will. It declared Alice entitled to one
half (1/2) of whatever property she and Lorenzo acquired during their
cohabitation, applying Article 144 of the Civil Code of the Philippines.
The hasty application of Philippine law and the complete disregard of the will,
already probated as duly executed in accordance with the formalities of
Philippine law, is fatal, especially in light of the factual and legal
circumstances here obtaining.
Validity of the Foreign Divorce
In Van Dorn v. Romillo, Jr. 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.
Validity of the Will
The Civil Code provides:

Art. 17. The forms and solemnities of contracts, wills, and other public
instruments shall be governed by the laws of the country in which they are
executed.
When the acts referred to are executed before the diplomatic or consular
officials of the Republic of the Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in their execution.
(underscoring ours)
The clear intent of Lorenzo to bequeath his property to his second wife and
children by her is glaringly shown in the will he executed. We do not wish to
frustrate his wishes, since he was a foreigner, not covered by our laws on family
rights and duties, status, condition and legal capacity.
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.
Having thus ruled, we find it unnecessary to pass upon the other issues raised.
The Fallo
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals
in CA-G. R. SP No. 17446 promulgated on July 31, 1995 is SET ASIDE.
In lieu thereof, the Court REVERSES the decision of the Regional Trial Court and
RECOGNIZES as VALID the decree of divorce granted in favor of the deceased
Lorenzo N. Llorente by the Superior Court of the State of California in and for the
County of San Diego, made final on December 4, 1952.
Further, the Court REMANDS the cases to the court of origin for determination of
the intrinsic validity of Lorenzo N. Llorentes will and determination of the parties
successional rights allowing proof of foreign law with instructions that the trial
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.

G.R. No. 138322

October 2, 2001

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner,

vs.
REDERICK A. RECIO, respondents.
PANGANIBAN, J.:
A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such decree is valid according to the
national law of the foreigner. However, the divorce decree and the governing personal law of the alien spouse who obtained the
divorce must be proven. Our courts do not take judicial notice of foreign laws and judgment; hence, like any other facts, both the
divorce decree and the national law of the alien must be alleged and proven according to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify the January 7, 1999 Decision 1 and the
March 24, 1999 Order2 of the Regional Trial Court of Cabanatuan City, Branch 28, in Civil Case No. 3026-AF. The assailed
Decision disposed as follows:
"WHEREFORE, this Court declares the marriage between Grace J. Garcia and Rederick A. Recio solemnized on
January 12, 1994 at Cabanatuan City as dissolved and both parties can now remarry under existing and applicable
laws to any and/or both parties."3
The assailed Order denied reconsideration of the above-quoted Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in Malabon, Rizal, on March 1, 1987. 4 They
lived together as husband and wife in Australia. On May 18, 1989, 5 a decree of divorce, purportedly dissolving the marriage, was
issued by an Australian family court.
On June 26, 1992, respondent became an Australian citizen, as shown by a "Certificate of Australian Citizenship" issued by the
Australian government.6 Petitioner a Filipina and respondent were married on January 12, 1994 in Our Lady of Perpetual Help
Church in Cabanatuan City.7 In their application for a marriage license, respondent was declared as "single" and "Filipino." 8
Starting October 22, 1995, petitioner and respondent lived separately without prior judicial dissolution of their marriage. While the
two were still in Australia, their conjugal assets were divided on May 16, 1996, in accordance with their Statutory Declarations
secured in Australia.9
On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage 10 in the court a quo, on the ground of bigamy
respondent allegedly had a prior subsisting marriage at the time he married her on January 12, 1994. She claimed that she
learned of respondent's marriage to Editha Samson only in November, 1997.
In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner his prior marriage and its subsequent
dissolution.11 He contended that his first marriage to an Australian citizen had been validly dissolved by a divorce decree obtained
in Australian in 1989;12 thus, he was legally capacitated to marry petitioner in 1994.1wphi1.nt
On July 7, 1998 or about five years after the couple's wedding and while the suit for the declaration of nullity was pending
respondent was able to secure a divorce decree from a family court in Sydney, Australia because the "marriage ha[d] irretrievably
broken down."13
Respondent prayed in his Answer that the Complained be dismissed on the ground that it stated no cause of action. 14 The Office
of the Solicitor General agreed with respondent. 15 The court marked and admitted the documentary evidence of both parties. 16
After they submitted their respective memoranda, the case was submitted for resolution. 17
Thereafter, the trial court rendered the assailed Decision and Order.
Ruling of the Trial Court

The trial court declared the marriage dissolved on the ground that the divorce issued in Australia was valid and recognized in the
Philippines. It deemed the marriage ended, but not on the basis of any defect in an essential element of the marriage; that is,
respondent's alleged lack of legal capacity to remarry. Rather, it based its Decision on the divorce decree obtained by respondent.
The Australian divorce had ended the marriage; thus, there was no more martial union to nullify or annual.
Hence, this Petition.18
Issues
Petitioner submits the following issues for our consideration:
"I
The trial court gravely erred in finding that the divorce decree obtained in Australia by the respondent ipso facto
terminated his first marriage to Editha Samson thereby capacitating him to contract a second marriage with the
petitioner.
"2
The failure of the respondent, who is now a naturalized Australian, to present a certificate of legal capacity to marry
constitutes absence of a substantial requisite voiding the petitioner' marriage to the respondent.
"3
The trial court seriously erred in the application of Art. 26 of the Family Code in this case.
"4
The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35, 40, 52 and 53 of the Family Code as
the applicable provisions in this case.
"5
The trial court gravely erred in pronouncing that the divorce gravely erred in pronouncing that the divorce decree
obtained by the respondent in Australia ipso facto capacitated the parties to remarry, without first securing a recognition
of the judgment granting the divorce decree before our courts." 19
The Petition raises five issues, but for purposes of this Decision, we shall concentrate on two pivotal ones: (1) whether the divorce
between respondent and Editha Samson was proven, and (2) whether respondent was proven to be legally capacitated to marry
petitioner. Because of our ruling on these two, there is no more necessity to take up the rest.
The Court's Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial court's recognition of the divorce between respondent and Editha Samson. Citing Adong v. Cheong
Seng Gee,20 petitioner argues that the divorce decree, like any other foreign judgment, may be given recognition in this jurisdiction
only upon proof of the existence of (1) the foreign law allowing absolute divorce and (2) the alleged divorce decree itself. She
adds that respondent miserably failed to establish these elements.
Petitioner adds that, based on the first paragraph of Article 26 of the Family Code, marriages solemnized abroad are governed by
the law of the place where they were celebrated (the lex loci celebrationist). In effect, the Code requires the presentation of the
foreign law to show the conformity of the marriage in question to the legal requirements of the place where the marriage was
performed.
At the outset, we lay the following basic legal principles as the take-off points for our discussion. Philippine law does not provide
for absolute divorce; hence, our courts cannot grant it. 21 A marriage between two Filipinos cannot be dissolved even by a divorce

obtained abroad, because of Articles 1522 and 1723 of the Civil Code.24 In mixed marriages involving a Filipino and a foreigner,
Article 2625 of the Family Code allows the former to contract a subsequent marriage in case the divorce is "validly obtained abroad
by the alien spouse capacitating him or her to remarry." 26 A divorce obtained abroad by a couple, who are both aliens, may be
recognized in the Philippines, provided it is consistent with their respective national laws. 27
A comparison between marriage and divorce, as far as pleading and proof are concerned, can be made. Van Dorn v. Romillo Jr.
decrees that "aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to
their national law." 28 Therefore, before a foreign divorce decree can be recognized by our courts, the party pleading it must prove
the divorce as a fact and demonstrate its conformity to the foreign law allowing it. 29 Presentation solely of the divorce decree is
insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in evidence, it must first comply with the registration requirements
under Articles 11, 13 and 52 of the Family Code. These articles read as follows:
"ART. 11. Where a marriage license is required, each of the contracting parties shall file separately a sworn application
for such license with the proper local civil registrar which shall specify the following:
xxx

xxx

xxx

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

xxx

xxx

"ART. 13. In case either of the contracting parties has been previously married, the applicant shall be required to
furnish, instead of the birth of baptismal certificate required in the last preceding article, the death certificate of the
deceased spouse or the judicial decree of annulment or declaration of nullity of his or her previous marriage. x x x.
"ART. 52. The judgment of annulment or of absolute nullity of the marriage, the partition and distribution of the
properties of the spouses, and the delivery of the children's presumptive legitimes shall be recorded in the appropriate
civil registry and registries of property; otherwise, the same shall not affect their persons."
Respondent, on the other hand, argues that the Australian divorce decree is a public document a written official act of an
Australian family court. Therefore, it requires no further proof of its authenticity and due execution.
Respondent is getting ahead of himself. Before a foreign judgment is given presumptive evidentiary value, the document must first
be presented and admitted in evidence.30 A divorce obtained abroad is proven by the divorce decree itself. Indeed the best
evidence of a judgment is the judgment itself. 31 The decree purports to be a written act or record of an act of an officially body or
tribunal of a foreign country.32
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven as a public or official record of a
foreign country by either (1) an official publication or (2) a copy thereof attested 33 by the officer having legal custody of the
document. If the record is not kept in the Philippines, such copy must be (a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign service stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office.34
The divorce decree between respondent and Editha Samson appears to be an authentic one issued by an Australian family
court.35 However, appearance is not sufficient; compliance with the aforemetioned rules on evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was submitted in evidence, counsel for petitioner
objected, not to its admissibility, but only to the fact that it had not been registered in the Local Civil Registry of Cabanatuan City. 36
The trial court ruled that it was admissible, subject to petitioner's qualification. 37 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.38
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary; respondent was no longer bound by
Philippine personal laws after he acquired Australian citizenship in 1992. 39 Naturalization is the legal act of adopting an alien and
clothing him with the political and civil rights belonging to a citizen. 40 Naturalized citizens, freed from the protective cloak of their
former states, don the attires of their adoptive countries. By becoming an Australian, respondent severed his allegiance to the
Philippines and the vinculum juris that had tied him to Philippine personal laws.
Burden of Proving Australian Law

Respondent contends that the burden to prove Australian divorce law falls upon petitioner, because she is the party challenging
the validity of a foreign judgment. He contends that petitioner was satisfied with the original of the divorce decree and was
cognizant of the marital laws of Australia, because she had lived and worked in that country for quite a long time. Besides, the
Australian divorce law is allegedly known by Philippine courts: thus, judges may take judicial notice of foreign laws in the exercise
of sound discretion.
We are not persuaded. The burden of proof lies with "the party who alleges the existence of a fact or thing necessary in the
prosecution or defense of an action."41 In civil cases, plaintiffs have the burden of proving the material allegations of the complaint
when those are denied by the answer; and defendants have the burden of proving the material allegations in their answer when
they introduce new matters.42 Since the divorce was a defense raised by respondent, the burden of proving the pertinent
Australian law validating it falls squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign laws. 43 Like any other facts, they must be
alleged and proved. Australian marital laws are not among those matters that judges are supposed to know by reason of their
judicial function.44 The power of judicial notice must be exercised with caution, and every reasonable doubt upon the subject
should be resolved in the negative.
Second Issue:
Respondent's Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the divorce, respondent was legally incapacitated to marry her in 1994.
Hence, she concludes that their marriage was void ab initio.
Respondent replies that the Australian divorce decree, which was validly admitted in evidence, adequately established his legal
capacity to marry under Australian law.
Respondent's contention is untenable. In its strict legal sense, divorce means the legal dissolution of a lawful union for a cause
arising after marriage. But divorces are of different types. The two basic ones are (1) absolute divorce or a vinculo matrimonii and
(2) limited divorce or a mensa et thoro. The first kind terminates the marriage, while the second suspends it and leaves the bond
in full force.45 There is no showing in the case at bar which type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory decree a conditional or provisional judgment of divorce. It is in effect the
same as a separation from bed and board, although an absolute divorce may follow after the lapse of the prescribed period during
which no reconciliation is effected.46
Even after the divorce becomes absolute, the court may under some foreign statutes and practices, still restrict remarriage. Under
some other jurisdictions, remarriage may be limited by statute; thus, the guilty party in a divorce which was granted on the ground
of adultery may be prohibited from remarrying again. The court may allow a remarriage only after proof of good behavior. 47
On its face, the herein Australian divorce decree contains a restriction that reads:
"1. A party to a marriage who marries again before this decree becomes absolute (unless the other party has died)
commits the offence of bigamy."48
This quotation bolsters our contention that the divorce obtained by respondent may have been restricted. It did not absolutely
establish his legal capacity to remarry according to his national law. Hence, we find no basis for the ruling of the trial court, which
erroneously assumed that the Australian divorce ipso facto restored respondent's capacity to remarry despite the paucity of
evidence on this matter.
We also reject the claim of respondent that the divorce decree raises a disputable presumption or presumptive evidence as to his
civil status based on Section 48, Rule 3949 of the Rules of Court, for the simple reason that no proof has been presented on the
legal effects of the divorce decree obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of the Family Code was not submitted together with the
application for a marriage license. According to her, its absence is proof that respondent did not have legal capacity to remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by the national law of the party concerned. The
certificate mentioned in Article 21 of the Family Code would have been sufficient to establish the legal capacity of respondent, had
he duly presented it in court. A duly authenticated and admitted certificate is prima facie evidence of legal capacity to marry on the
part of the alien applicant for a marriage license. 50

As it is, however, there is absolutely no evidence that proves respondent's legal capacity to marry petitioner. A review of the
records before this Court shows that only the following exhibits were presented before the lower court: (1) for petitioner: (a) Exhibit
"A" Complaint;51 (b) Exhibit "B" Certificate of Marriage Between Rederick A. Recto (Filipino-Australian) and Grace J. Garcia
(Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija; 52 (c) Exhibit "C" Certificate of Marriage Between Rederick A.
Recio (Filipino) and Editha D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila; 53 (d) Exhibit "D" Office of the
City Registrar of Cabanatuan City Certification that no information of annulment between Rederick A. Recto and Editha D.
Samson was in its records;54 and (e) Exhibit "E" Certificate of Australian Citizenship of Rederick A. Recto; 55 (2) for respondent:
(Exhibit "1" Amended Answer;56 (b) Exhibit "S" Family Law Act 1975 Decree Nisi of Dissolution of Marriage in the Family Court
of Australia;57 (c) Exhibit "3" Certificate of Australian Citizenship of Rederick A. Recto; 58 (d) Exhibit "4" Decree Nisi of
Dissolution of Marriage in the Family Court of Australia Certificate; 59 and Exhibit "5" Statutory Declaration of the Legal
Separation Between Rederick A. Recto and Grace J. Garcia Recio since October 22, 1995. 60
Based on the above records, we cannot conclude that respondent, who was then a naturalized Australian citizen, was legally
capacitated to marry petitioner on January 12, 1994. We agree with petitioner's contention that the court a quo erred in finding that
the divorce decree ipso facto clothed respondent with the legal capacity to remarry without requiring him to adduce sufficient
evidence to show the Australian personal law governing his status; or at the very least, to prove his legal capacity to contract the
second marriage.
Neither can we grant petitioner's prayer to declare her marriage to respondent null and void on the ground of bigamy. After all, it
may turn out that under Australian law, he was really capacitated to marry petitioner as a direct result of the divorce decree.
Hence, we believe that the most judicious course is to remand this case to the trial court to receive evidence, if any, which show
petitioner's legal capacity to marry petitioner. Failing in that, then the court a quo may declare a nullity of the parties' marriage on
the ground of bigamy, there being already in evidence two existing marriage certificates, which were both obtained in the
Philippines, one in Malabon, Metro Manila dated March 1, 1987 and the other, in Cabanatuan City dated January 12, 1994.
WHEREFORE, in the interest of orderly procedure and substantial justice, we REMAND the case to the court a quo for the
purpose of receiving evidence which conclusively show respondent's legal capacity to marry petitioner; and failing in that, of
declaring the parties' marriage void on the ground of bigamy, as above discussed. No costs.
SO ORDERED.

REPUBLIC OF THE
PHILIPPINES,

G.R. No. 152577

Petitioner,
Present:

PUNO,
Chairman,
AUSTRIA-MARTINEZ,

- versus-

CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

Promulgated:

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

September 21, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari under Rule 45 of the Rules

of Court, petitioner Republic of the Philippines, represented by the Office of
the Solicitor General, prays for the reversal of the Decision of the Court of
Appeals in CA-G.R. CV No. 62539, dated 30 July 2001,[1] affirming the
Judgment of the Regional Trial Court (RTC) of Cebu City, Branch 22, in
Civil Case No. CEB-20077, dated 30 October 1998,[2] declaring the
marriage between respondent Crasus L. Iyoy and Fely Ada Rosal-Iyoy null
and void on the basis of Article 36 of the Family Code of the Philippines.

The proceedings before the RTC commenced with the filing of a

Complaint[3] for declaration of nullity of marriage by respondent Crasus on
25 March 1997. According to the said Complaint, respondent Crasus
married Fely on 16 December 1961 at Bradford Memorial Church, Jones
Avenue, Cebu City. As a result of their union, they had five children
Crasus, Jr., Daphne, Debbie, Calvert, and Carlos who are now all of legal
ages. After the celebration of their marriage, respondent Crasus discovered
that Fely was hot-tempered, a nagger and extravagant. In 1984, Fely left
the Philippines for the United States of America (U.S.A.), leaving all of their

five children, the youngest then being only six years old, to the care of
respondent Crasus. Barely a year after Fely left for the U.S.A., respondent
Crasus received a letter from her requesting that he sign the enclosed divorce
papers; he disregarded the said request. Sometime in 1985, respondent
Crasus learned, through the letters sent by Fely to their children, that Fely
got married to an American, with whom she eventually had a child. In 1987,
Fely came back to the Philippines with her American family, staying at Cebu
Plaza Hotel in Cebu City. Respondent Crasus did not bother to talk to Fely
because he was afraid he might not be able to bear the sorrow and the pain
she had caused him. Fely returned to the Philippines several times more: in
1990, for the wedding of their eldest child, Crasus, Jr.; in 1992, for the brain
operation of their fourth child, Calvert; and in 1995, for unknown reasons.
Fely continued to live with her American family in New Jersey, U.S.A. She
had been openly using the surname of her American husband in the
Philippines and in the U.S.A. For the wedding of Crasus, Jr., Fely herself
had invitations made in which she was named as Mrs. Fely Ada Micklus.
At the time the Complaint was filed, it had been 13 years since Fely left and
abandoned respondent Crasus, and there was no more possibility of
reconciliation between them. Respondent Crasus finally alleged in his
Complaint that Felys acts brought danger and dishonor to the family, and

clearly demonstrated her psychological incapacity to perform the essential

obligations of marriage. Such incapacity, being incurable and continuing,
constitutes a ground for declaration of nullity of marriage under Article 36,
in relation to Articles 68, 70, and 72, of the Family Code of the Philippines.

Fely filed her Answer and Counterclaim[4] with the RTC on 05 June 1997. She asserted
therein that she was already an American citizen since 1988 and was now married to
Stephen Micklus. While she admitted being previously married to respondent Crasus and
having five children with him, Fely refuted the other allegations made by respondent
Crasus in his Complaint. She explained that she was no more hot-tempered than any
normal person, and she may had been indignant at respondent Crasus on certain
occasions but it was because of the latters drunkenness, womanizing, and lack of sincere
effort to find employment and to contribute to the maintenance of their household. She
could not have been extravagant since the family hardly had enough money for basic
needs. Indeed, Fely left for abroad for financial reasons as respondent Crasus had no job
and what she was then earning as the sole breadwinner in the Philippines was insufficient
to support their family. Although she left all of her children with respondent Crasus, she
continued to provide financial support to them, as well as, to respondent Crasus.
Subsequently, Fely was able to bring her children to the U.S.A., except for one, Calvert,
who had to stay behind for medical reasons. While she did file for divorce from
respondent Crasus, she denied having herself sent a letter to respondent Crasus requesting
him to sign the enclosed divorce papers. After securing a divorce from respondent

Crasus, Fely married her American husband and acquired American citizenship. She
argued that her marriage to her American husband was legal because now being an
American citizen, her status shall be governed by the law of her present nationality. Fely
also pointed out that respondent Crasus himself was presently living with another woman
who bore him a child. She also accused respondent Crasus of misusing the amount of
P90,000.00 which she advanced to him to finance the brain operation of their son,
Calvert. On the basis of the foregoing, Fely also prayed that the RTC declare her
marriage to respondent Crasus null and void; and that respondent Crasus be ordered to
pay to Fely the P90,000.00 she advanced to him, with interest, plus, moral and exemplary
damages, attorneys fees, and litigation expenses.

After respondent Crasus and Fely had filed their respective Pre-Trial
Briefs,[5] the RTC afforded both parties the opportunity to present their
evidence. Petitioner Republic participated in the trial through the Provincial
Prosecutor of Cebu.[6]

Respondent Crasus submitted the following pieces of evidence in

support of his Complaint: (1) his own testimony on 08 September 1997, in
which he essentially reiterated the allegations in his Complaint;[7] (2) the
Certification, dated 13 April 1989, by the Health Department of Cebu City,

on the recording of the Marriage Contract between respondent Crasus and

Fely in the Register of Deeds, such marriage celebration taking place on 16
December 1961;[8] and (3) the invitation to the wedding of Crasus, Jr., their
eldest son, wherein Fely openly used her American husbands surname,
Micklus.[9]

Felys counsel filed a Notice,[10] and, later on, a Motion,[11] to take

the deposition of witnesses, namely, Fely and her children, Crasus, Jr. and
Daphne, upon written interrogatories, before the consular officers of the
Philippines in New York and California, U.S.A, where the said witnesses
reside. Despite the Orders[12] and Commissions[13] issued by the RTC to
the Philippine Consuls of New York and California, U.S.A., to take the
depositions of the witnesses upon written interrogatories, not a single
deposition was ever submitted to the RTC. Taking into account that it had
been over a year since respondent Crasus had presented his evidence and
that Fely failed to exert effort to have the case progress, the RTC issued an
Order, dated 05 October 1998,[14] considering Fely to have waived her right
to present her evidence. The case was thus deemed submitted for decision.

Not long after, on 30 October 1998, the RTC promulgated its

Judgment declaring the marriage of respondent Crasus and Fely null and
void ab initio, on the basis of the following findings

The ground bearing defendants psychological incapacity

deserves a reasonable consideration. As observed, plaintiffs
testimony is decidedly credible. The Court finds that defendant had
indeed exhibited unmistakable signs of psychological incapacity to
comply with her marital duties such as striving for family unity,
observing fidelity, mutual love, respect, help and support. From the
evidence presented, plaintiff adequately established that the
defendant practically abandoned him. She obtained a divorce decree
in the United States of America and married another man and has
establish [sic] another family of her own. Plaintiff is in an
anomalous situation, wherein he is married to a wife who is already
married to another man in another country.
Defendants intolerable traits may not have been apparent or
manifest before the marriage, the FAMILY CODE nonetheless
allows the annulment of the marriage provided that these were
eventually manifested after the wedding. It appears to be the case in
this instance.
Certainly defendants posture being an irresponsible wife
erringly reveals her very low regard for that sacred and inviolable
institution of marriage which is the foundation of human society
throughout the civilized world. It is quite evident that the defendant
is bereft of the mind, will and heart to comply with her marital
obligations, such incapacity was already there at the time of the
marriage in question is shown by defendants own attitude towards
her marriage to plaintiff.
In sum, the ground invoked by plaintiff which is defendants
psychological incapacity to comply with the essential marital
obligations which already existed at the time of the marriage in
question has been satisfactorily proven. The evidence in herein case

establishes the irresponsibility of defendant Fely Ada Rosal Iyoy,

firmly.
Going over plaintiffs testimony which is decidedly credible,
the Court finds that the defendant had indeed exhibited unmistakable
signs of such psychological incapacity to comply with her marital
obligations. These are her excessive disposition to material things
over and above the marital stability. That such incapacity was
already there at the time of the marriage in question is shown by
defendants own attitude towards her marriage to plaintiff. And for
these reasons there is a legal ground to declare the marriage of
plaintiff Crasus L. Iyoy and defendant Fely Ada Rosal Iyoy null and
void ab initio.[15]

Petitioner Republic, believing that the afore-quoted Judgment of the

RTC was contrary to law and evidence, filed an appeal with the Court of
Appeals. The appellate court, though, in its Decision, dated 30 July 2001,
affirmed the appealed Judgment of the RTC, finding no reversible error
therein. It even offered additional ratiocination for declaring the marriage
between respondent Crasus and Fely null and void, to wit

Defendant secured a divorce from plaintiff-appellee abroad,

has remarried, and is now permanently residing in the United States.
Plaintiff-appellee categorically stated this as one of his reasons for
seeking the declaration of nullity of their marriage

Article 26 of the Family Code provides:

Art. 26. All marriages solemnized outside the

Philippines in accordance with the laws in force in the
country where they were solemnized, and valid there
as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
WHERE A MARRIAGE BETWEEN A
FILIPINO CITIZEN AND A FOREIGNER IS
VALIDLY CELEBRATED AND A DIVORCE IS
THEREAFTER VALIDLY OBTAINED ABROAD BY
THE ALIEN SPOUSE CAPACITATING HIM OR
HER TO REMARRY, THE FILIPINO SPOUSE
SHALL LIKEWISE HAVE CAPACITY TO
REMARRY UNDER PHILIPPINE LAW.

The rationale behind the second paragraph of the abovequoted provision is to avoid the absurd and unjust situation of a
Filipino citizen still being married to his or her alien spouse,
although the latter is no longer married to the Filipino spouse
because he or she has obtained a divorce abroad. In the case at
bench, the defendant has undoubtedly acquired her American
husbands citizenship and thus has become an alien as well. This
Court cannot see why the benefits of Art. 26 aforequoted can not be
extended to a Filipino citizen whose spouse eventually embraces
another citizenship and thus becomes herself an alien.
It would be the height of unfairness if, under these
circumstances, plaintiff would still be considered as married to
defendant, given her total incapacity to honor her marital covenants
to the former. To condemn plaintiff to remain shackled in a marriage
that in truth and in fact does not exist and to remain married to a
spouse who is incapacitated to discharge essential marital covenants,
is verily to condemn him to a perpetual disadvantage which this
Court finds abhorrent and will not countenance. Justice dictates that
plaintiff be given relief by affirming the trial courts declaration of
the nullity of the marriage of the parties.[16]

After the Court of Appeals, in a Resolution, dated 08 March 2002,[17] denied its Motion
for Reconsideration, petitioner Republic filed the instant Petition before this Court, based
on the following arguments/grounds

I. Abandonment by and sexual infidelity of respondents wife do

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

In his Comment[19] to the Petition, respondent Crasus maintained that Felys

psychological incapacity was clearly established after a full-blown trial, and that
paragraph 2 of Article 26 of the Family Code of the Philippines was indeed applicable to
the marriage of respondent Crasus and Fely, because the latter had already become an
American citizen. He further questioned the personality of petitioner Republic,
represented by the Office of the Solicitor General, to institute the instant Petition, because
Article 48 of the Family Code of the Philippines authorizes the prosecuting attorney or
fiscal assigned to the trial court, not the Solicitor General, to intervene on behalf of the
State, in proceedings for annulment and declaration of nullity of marriages.

After having reviewed the records of this case and the applicable laws and
jurisprudence, this Court finds the instant Petition to be meritorious.

The totality of evidence presented during trial is insufficient to support the

finding of psychological incapacity of Fely.

Article 36, concededly one of the more controversial provisions of the Family Code of
the Philippines, reads

ART. 36. A marriage contracted by any party who, at the time of the
celebration, was psychologically incapacitated to comply with the
essential marital obligations of marriage, shall likewise be void even
if such incapacity becomes manifest only after its solemnization.

Issues most commonly arise as to what constitutes psychological incapacity.

In a series of cases, this Court laid down guidelines for determining its
existence.

In Santos v. Court of Appeals,[20] the term psychological incapacity

was defined, thus

. . . [P]sychological incapacity should refer to no less than

a mental (not physical) incapacity that causes a party to be truly
cognitive of the basic marital covenants that concomitantly must be
assumed and discharged by the parties to the marriage which, as so
expressed by Article 68 of the Family Code, include their mutual
obligations to live together, observe love, respect and fidelity and
render help and support. There is hardly any doubt that the
intendment of the law has been to confine the meaning of
psychological incapacity to the most serious cases of personality
disorders clearly demonstrative of an utter insensitivity or inability
to give meaning and significance to the marriage. This
psychological condition must exist at the time the marriage is
celebrated[21]

The psychological incapacity must be characterized by

(a)

Gravity It must be grave or serious such that the party would

be incapable of carrying out the ordinary duties required in a marriage;

(b)

Juridical Antecedence It must be rooted in the history of the

party antedating the marriage, although the overt manifestations may emerge
only after the marriage; and

(c)

Incurability It must be incurable or, even if it were otherwise,

the cure would be beyond the means of the party involved.[22]

More definitive guidelines in the interpretation and application of

Article 36 of the Family Code of the Philippines were handed down by this
Court in Republic v. Court of Appeals and Molina,[23] which, although quite
lengthy, by its significance, deserves to be reproduced below

(1) The burden of proof to show the nullity of the marriage

belongs to the plaintiff. Any doubt should be resolved in favor of the
existence and continuation of the marriage and against its dissolution
and nullity. This is rooted in the fact that both our Constitution and
our laws cherish the validity of marriage and unity of the family.
Thus, our Constitution devotes an entire Article on the Family,
recognizing it as the foundation of the nation. It decrees marriage
as legally inviolable, thereby protecting it from dissolution at the
whim of the parties. Both the family and marriage are to be
protected by the state.
The Family Code echoes this constitutional edict on marriage
and the family and emphasizes their permanence, inviolability and
solidarity.
(2) The root cause of the psychological incapacity must be (a)
medically or clinically identified, (b) alleged in the complaint, (c)
sufficiently proven by experts and (d) clearly explained in the
decision. Article 36 of the Family Code requires that the incapacity
must be psychological - not physical, although its manifestations
and/or symptoms may be physical. The evidence must convince the
court that the parties, or one of them, was mentally or psychically ill

to such an extent that the person could not have known the
obligations he was assuming, or knowing them, could not have given
valid assumption thereof. Although no example of such incapacity
need be given here so as not to limit the application of the provision
under the principle of ejusdem generis, nevertheless such root cause
must be identified as a psychological illness and its incapacitating
nature fully explained. Expert evidence may be given by qualified
psychiatrists and clinical psychologists.
(3) The incapacity must be proven to be existing at the time
of the celebration of the marriage. The evidence must show that the
illness was existing when the parties exchanged their I do's. The
manifestation of the illness need not be perceivable at such time, but
the illness itself must have attached at such moment, or prior thereto.
(4) Such incapacity must also be shown to be medically or
clinically permanent or incurable. Such incurability may be absolute
or even relative only in regard to the other spouse, not necessarily
absolutely against everyone of the same sex. Furthermore, such
incapacity must be relevant to the assumption of marriage
obligations, not necessarily to those not related to marriage, like the
exercise of a profession or employment in a job
(5) Such illness must be grave enough to bring about the
disability of the party to assume the essential obligations of
marriage. Thus, mild characteriological peculiarities, mood
changes, occasional emotional outbursts cannot be accepted as root
causes. The illness must be shown as downright incapacity or
inability, not a refusal, neglect or difficulty, much less ill will. In
other words, there is a natal or supervening disabling factor in the
person, an adverse integral element in the personality structure that
effectively incapacitates the person from really accepting and
thereby complying with the obligations essential to marriage.
(6) The essential marital obligations must be those embraced
by Articles 68 up to 71 of the Family Code as regards the husband
and wife as well as Articles 220, 221 and 225 of the same Code in
regard to parents and their children. Such non-complied marital
obligation(s) must also be stated in the petition, proven by evidence
and included in the text of the decision.
(7) Interpretations given by the National Appellate
Matrimonial Tribunal of the Catholic Church in the Philippines,

while not controlling or decisive, should be given great respect by

our courts
(8) The trial court must order the prosecuting attorney or
fiscal and the Solicitor General to appear as counsel for the state. No
decision shall be handed down unless the Solicitor General issues a
certification, which will be quoted in the decision, briefly stating
therein his reasons for his agreement or opposition, as the case may
be, to the petition. The Solicitor General, along with the prosecuting
attorney, shall submit to the court such certification within fifteen
(15) days from the date the case is deemed submitted for resolution
of the court. The Solicitor General shall discharge the equivalent
function of the defensor vinculi contemplated under Canon 1095.
[24]

A later case, Marcos v. Marcos,[25] further clarified that there is no

requirement that the defendant/respondent spouse should be personally
examined by a physician or psychologist as a condition sine qua non for the
declaration of nullity of marriage based on psychological incapacity. Such
psychological incapacity, however, must be established by the totality of the
evidence presented during the trial.

Using the guidelines established by the afore-mentioned jurisprudence, this Court finds
that the totality of evidence presented by respondent Crasus failed miserably to establish
the alleged psychological incapacity of his wife Fely; therefore, there is no basis for
declaring their marriage null and void under Article 36 of the Family Code of the
Philippines.

The only substantial evidence presented by respondent Crasus before the RTC was his
testimony, which can be easily put into question for being self-serving, in the absence of
any other corroborating evidence. He submitted only two other pieces of evidence: (1)
the Certification on the recording with the Register of Deeds of the Marriage Contract
between respondent Crasus and Fely, such marriage being celebrated on 16 December
1961; and (2) the invitation to the wedding of Crasus, Jr., their eldest son, in which Fely
used her American husbands surname. Even considering the admissions made by Fely
herself in her Answer to respondent Crasuss Complaint filed with the RTC, the evidence
is not enough to convince this Court that Fely had such a grave mental illness that
prevented her from assuming the essential obligations of marriage.

It is worthy to emphasize that Article 36 of the Family Code of the Philippines

contemplates downright incapacity or inability to take cognizance of and to assume the
basic marital obligations; not a mere refusal, neglect or difficulty, much less, ill will, on
the part of the errant spouse.[26] Irreconcilable differences, conflicting personalities,
emotional immaturity and irresponsibility, physical abuse, habitual alcoholism, sexual
infidelity or perversion, and abandonment, by themselves, also do not warrant a finding
of psychological incapacity under the said Article.[27]

As has already been stressed by this Court in previous cases, Article 36 is not to
be confused with a divorce law that cuts the marital bond at the time the causes therefore
manifest themselves. It refers to a serious psychological illness afflicting a party even
before the celebration of marriage. It is a malady so grave and so permanent as to
deprive one of awareness of the duties and responsibilities of the matrimonial bond one is
about to assume.[28]

The evidence may have proven that Fely committed acts that hurt and embarrassed
respondent Crasus and the rest of the family. Her hot-temper, nagging, and extravagance;
her abandonment of respondent Crasus; her marriage to an American; and even her
flaunting of her American family and her American surname, may indeed be
manifestations of her alleged incapacity to comply with her marital obligations;
nonetheless, the root cause for such was not identified. If the root cause of the incapacity
was not identified, then it cannot be satisfactorily established as a psychological or
mental defect that is serious or grave; neither could it be proven to be in existence at the
time of celebration of the marriage; nor that it is incurable. While the personal
examination of Fely by a psychiatrist or psychologist is no longer mandatory for the
declaration of nullity of their marriage under Article 36 of the Family Code of the
Philippines, by virtue of this Courts ruling in Marcos v. Marcos,[29] respondent Crasus
must still have complied with the requirement laid down in Republic v. Court of Appeals
and Molina[30] that the root cause of the incapacity be identified as a psychological
illness and that its incapacitating nature be fully explained.

In any case, any doubt shall be resolved in favor of the validity of the marriage.

[31] No less than the Constitution of 1987 sets the policy to protect and strengthen the
family as the basic social institution and marriage as the foundation of the family.[32]

II
Article 26, paragraph 2 of the Family Code of the Philippines is not
applicable to the case at bar.

According to Article 26, paragraph 2 of the Family Code of the Philippines

Where a marriage between a Filipino citizen and a foreigner

is validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law.

As it is worded, Article 26, paragraph 2, refers to a special situation wherein one of the
couple getting married is a Filipino citizen and the other a foreigner at the time the
marriage was celebrated. By its plain and literal interpretation, the said provision
cannot be applied to the case of respondent Crasus and his wife Fely because at the
time Fely obtained her divorce, she was still a Filipino citizen. Although the exact
date was not established, Fely herself admitted in her Answer filed before the RTC that

she obtained a divorce from respondent Crasus sometime after she left for the United
States in 1984, after which she married her American husband in 1985. In the same
Answer, she alleged that she had been an American citizen since 1988. At the time she
filed for divorce, Fely was still a Filipino citizen, and pursuant to the nationality
principle embodied in Article 15 of the Civil Code of the Philippines, she was still bound
by Philippine laws on family rights and duties, status, condition, and legal capacity, even
when she was already living abroad. Philippine laws, then and even until now, do not
allow and recognize divorce between Filipino spouses. Thus, Fely could not have validly
obtained a divorce from respondent Crasus.

III
The Solicitor General is authorized to intervene, on behalf of
the Republic, in proceedings for annulment and declaration of
nullity of marriages.

Invoking Article 48 of the Family Code of the Philippines, respondent Crasus argued that
only the prosecuting attorney or fiscal assigned to the RTC may intervene on behalf of
the State in proceedings for annulment or declaration of nullity of marriages; hence, the
Office of the Solicitor General had no personality to file the instant Petition on behalf of
the State. Article 48 provides

ART. 48. In all cases of annulment or declaration of absolute nullity

of marriage, the Court shall order the prosecuting attorney or fiscal
assigned to it to appear on behalf of the State to take steps to prevent
collusion between the parties and to take care that the evidence is not
fabricated or suppressed.

That Article 48 does not expressly mention the Solicitor General does not bar him
or his Office from intervening in proceedings for annulment or declaration of nullity of
marriages. Executive Order No. 292, otherwise known as the Administrative Code of
1987, appoints the Solicitor General as the principal law officer and legal defender of the
Government.[33] His Office is tasked to represent the Government of the Philippines,
its agencies and instrumentalities and its officials and agents in any litigation, proceeding,
investigation or matter requiring the services of lawyers. The Office of the Solicitor
General shall constitute the law office of the Government and, as such, shall discharge
duties requiring the services of lawyers.[34]

The intent of Article 48 of the Family Code of the Philippines is to ensure that the
interest of the State is represented and protected in proceedings for annulment and
declaration of nullity of marriages by preventing collusion between the parties, or the
fabrication or suppression of evidence; and, bearing in mind that the Solicitor General is
the principal law officer and legal defender of the land, then his intervention in such
proceedings could only serve and contribute to the realization of such intent, rather than
thwart it.

Furthermore, the general rule is that only the Solicitor General is authorized to
bring or defend actions on behalf of the People or the Republic of the Philippines once
the case is brought before this Court or the Court of Appeals.[35] While it is the
prosecuting attorney or fiscal who actively participates, on behalf of the State, in a
proceeding for annulment or declaration of nullity of marriage before the RTC, the Office
of the Solicitor General takes over when the case is elevated to the Court of Appeals or
this Court. Since it shall be eventually responsible for taking the case to the appellate
courts when circumstances demand, then it is only reasonable and practical that even
while the proceeding is still being held before the RTC, the Office of the Solicitor
General can already exercise supervision and control over the conduct of the prosecuting
attorney or fiscal therein to better guarantee the protection of the interests of the State.

In fact, this Court had already recognized and affirmed the role of the Solicitor
General in several cases for annulment and declaration of nullity of marriages that were
appealed before it, summarized as follows in the case of Ancheta v. Ancheta[36]

In the case of Republic v. Court of Appeals [268 SCRA 198

(1997)], this Court laid down the guidelines in the interpretation and
application of Art. 48 of the Family Code, one of which concerns the
role of the prosecuting attorney or fiscal and the Solicitor General to
appear as counsel for the State:

(8) The trial court must order the prosecuting attorney

or fiscal and the Solicitor General to appear as counsel
for the state. No decision shall be handed down unless
the Solicitor General issues a certification, which will
be quoted in the decision, briefly stating therein his
reasons for his agreement or opposition, as the case
may be, to the petition. The Solicitor General, along
with the prosecuting attorney, shall submit to the court
such certification within fifteen (15) days from the date
the case is deemed submitted for resolution of the
court. The Solicitor General shall discharge the
equivalent function of the defensor vinculi
contemplated under Canon 1095. [Id., at 213]
This Court in the case of Malcampo-Sin v. Sin [355 SCRA 285
(2001)] reiterated its pronouncement in Republic v. Court of Appeals
[Supra.] regarding the role of the prosecuting attorney or fiscal and
the Solicitor General to appear as counsel for the State[37]

Finally, the issuance of this Court of the Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable Marriages,[38] which became effective on
15 March 2003, should dispel any other doubts of respondent Crasus as to the authority
of the Solicitor General to file the instant Petition on behalf of the State. The Rule
recognizes the authority of the Solicitor General to intervene and take part in the
proceedings for annulment and declaration of nullity of marriages before the RTC and on
appeal to higher courts. The pertinent provisions of the said Rule are reproduced below

Sec. 5. Contents and form of petition.

(4) It shall be filed in six copies. The petitioner shall serve a copy of
the petition on the Office of the Solicitor General and the Office of
the City or Provincial Prosecutor, within five days from the date of
its filing and submit to the court proof of such service within the
same period.

Sec. 18. Memoranda. The court may require the parties and the
public prosecutor, in consultation with the Office of the Solicitor
General, to file their respective memoranda in support of their claims
within fifteen days from the date the trial is terminated. It may
require the Office of the Solicitor General to file its own
memorandum if the case is of significant interest to the State. No
other pleadings or papers may be submitted without leave of court.
After the lapse of the period herein provided, the case will be
considered submitted for decision, with or without the memoranda.
Sec. 19. Decision.

(2) The parties, including the Solicitor General and the public
prosecutor, shall be served with copies of the decision personally or
by registered mail. If the respondent summoned by publication
failed to appear in the action, the dispositive part of the decision
shall be published once in a newspaper of general circulation.
(3) The decision becomes final upon the expiration of fifteen days
from notice to the parties. Entry of judgment shall be made if no
motion for reconsideration or new trial, or appeal is filed by any of
the parties, the public prosecutor, or the Solicitor General.

Sec. 20. Appeal.

(2) Notice of Appeal. An aggrieved party or the Solicitor General

may appeal from the decision by filing a Notice of Appeal within
fifteen days from notice of denial of the motion for reconsideration

or new trial. The appellant shall serve a copy of the notice of appeal
on the adverse parties.

Given the foregoing, this Court arrives at a conclusion contrary to those of the RTC
and the Court of Appeals, and sustains the validity and existence of the marriage between
respondent Crasus and Fely. At most, Felys abandonment, sexual infidelity, and bigamy,
give respondent Crasus grounds to file for legal separation under Article 55 of the Family
Code of the Philippines, but not for declaration of nullity of marriage under Article 36 of
the same Code. While this Court commiserates with respondent Crasus for being
continuously shackled to what is now a hopeless and loveless marriage, this is one of
those situations where neither law nor society can provide the specific answer to every
individual problem.[39]

WHEREFORE, the Petition is GRANTED and the assailed Decision of the Court
of Appeals in CA-G.R. CV No. 62539, dated 30 July 2001, affirming the Judgment of the
RTC of Cebu City, Branch 22, in Civil Case No. CEB-20077, dated 30 October 1998, is
REVERSED and SET ASIDE.
The marriage of respondent Crasus L. Iyoy and Fely Ada Rosal-Iyoy remains valid and
subsisting.

SO ORDERED.

REPUBLIC OF THE PHILIPPINES,

Petitioner,

G.R. No. 154380

Present:

Davide, Jr., C.J.,

(Chairman),

- versus -

Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
CIPRIANO ORBECIDO III,
Respondent.
Promulgated:
October 5, 2005
x --------------------------------------------------x

DECISION
QUISUMBING, J.:
Given a valid marriage between two Filipino citizens, where one party is later
naturalized as a foreign citizen and obtains a valid divorce decree capacitating him or her
to remarry, can the Filipino spouse likewise remarry under Philippine law?
Before us is a case of first impression that behooves the Court to make a definite
ruling on this apparently novel question, presented as a pure question of law.

In this petition for review, the Solicitor General assails the Decision[1] dated
May 15, 2002, of the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and
its Resolution[2] dated July 4, 2002 denying the motion for reconsideration. The 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, Ciprianos wife left for the United States bringing along their son
Kristoffer. A few years later, Cipriano discovered that his wife had been naturalized as an
American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a
divorce decree and then married a certain Innocent Stanley. She, Stanley and her child by
him currently live at 5566 A. Walnut Grove Avenue, San Gabriel, California.

Cipriano thereafter filed with the trial court a petition for authority to remarry
invoking Paragraph 2 of Article 26 of the Family Code. No opposition was filed. Finding
merit in the petition, the court granted the same. The Republic, herein petitioner, through
the Office of the Solicitor General (OSG), sought reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER
ARTICLE 26 OF THE FAMILY CODE[4]
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not
applicable to the instant case because it only applies to a valid mixed marriage; that is, a
marriage celebrated between a Filipino citizen and an alien. The proper remedy,
according to the OSG, is to file a petition for annulment or for legal separation. [5]
Furthermore, the OSG argues there is no law that governs respondents situation. The
OSG posits that this is a matter of legislation and not of judicial determination.[6]

For his part, respondent admits that Article 26 is not directly applicable to his case
but insists that when his naturalized alien wife obtained a divorce decree which
capacitated her to remarry, he is likewise capacitated by operation of law pursuant to
Section 12, Article II of the Constitution.[7]

At the outset, we note that the petition for authority to remarry filed before the trial
court actually constituted a petition for declaratory relief. In this connection, Section 1,
Rule 63 of the Rules of Court provides:

RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
Section 1. Who may file petitionAny person interested under a
deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, ordinance, or other
governmental regulation may, before breach or violation thereof, bring an
action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or
duties, thereunder.
...
The requisites of a petition for declaratory relief are: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3)
that the party seeking the relief has a legal interest in the controversy; and (4) that the
issue is ripe for judicial determination.[8]

This case concerns the applicability of Paragraph 2 of Article 26 to a marriage

between two Filipino citizens where one later acquired alien citizenship, obtained a
divorce decree, and remarried while in the U.S.A. The interests of the parties are also
adverse, as petitioner representing the State asserts its duty to protect the institution of
marriage while respondent, a private citizen, insists on a declaration of his capacity to
remarry. Respondent, praying for relief, has legal interest in the controversy. The issue
raised is also ripe for judicial determination inasmuch as when respondent remarries,
litigation ensues and puts into question the validity of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family
Code apply to the case of respondent? Necessarily, we must dwell on how this provision

had come about in the first place, and what was the intent of the legislators in its
enactment?

Brief Historical Background

On July 6, 1987, then President Corazon Aquino signed into law Executive Order
No. 209, otherwise known as the Family Code, which took effect on August 3, 1988.
Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive
Order No. 227 was likewise signed into law, amending Articles 26, 36, and 39 of the
Family Code. A second paragraph was added to Article 26. As so amended, it now
provides:
ART. 26. All marriages solemnized outside the Philippines in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and
38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained abroad by
the alien spouse capacitating him or her to remarry, the Filipino spouse
shall have capacity to remarry under Philippine law. (Emphasis supplied)
On its face, the foregoing provision does not appear to govern the situation
presented by the case at hand. It seems to apply only to cases where at the time of the

celebration of the marriage, the parties are a Filipino citizen and a foreigner. The instant
case is one where at the time the marriage was solemnized, the parties were two Filipino
citizens, but later on, the wife was naturalized as an American citizen and subsequently
obtained a divorce granting her capacity to remarry, and indeed she remarried an
American citizen while residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings [9] on the Family Code, the
Catholic Bishops Conference of the Philippines (CBCP) registered the following
objections to Paragraph 2 of Article 26:
1.

The rule is discriminatory. It discriminates against those whose

spouses are Filipinos who divorce them abroad. These spouses
who are divorced will not be able to re-marry, while the spouses of
foreigners who validly divorce them abroad can.

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.

Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van
Dorn v. Romillo, Jr.[10] The Van Dorn case involved a marriage between a Filipino
citizen and a foreigner. The Court held therein that a divorce decree validly obtained by
the alien spouse is valid in the Philippines, and consequently, the Filipino spouse is
capacitated to remarry under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the
marriage, the parties were Filipino citizens, but later on, one of them obtains a foreign
citizenship by naturalization?
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of
Appeals.[11] In Quita, the parties were, as in this case, Filipino citizens when they got
married. The wife became a naturalized American citizen in 1954 and obtained a divorce
in the same year. The Court therein hinted, by way of obiter dictum, that a Filipino
divorced by his naturalized foreign spouse is no longer married under Philippine law and
can thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of
reason, we hold that Paragraph 2 of Article 26 should be interpreted to include cases
involving parties who, at the time of the celebration of the marriage were Filipino
citizens, but later on, one of them becomes naturalized as a foreign citizen and obtains a
divorce decree. The Filipino spouse should likewise be allowed to remarry as if the other
party were a foreigner at the time of the solemnization of the marriage. To rule otherwise
would be to sanction absurdity and injustice. Where the interpretation of a statute
according to its exact and literal import would lead to mischievous results or contravene

the clear purpose of the legislature, it should be construed according to its spirit and
reason, disregarding as far as necessary the letter of the law. A statute may therefore be
extended to cases not within the literal meaning of its terms, so long as they come within
its spirit or intent.[12]

If we are to give meaning to the legislative intent to avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after obtaining a
divorce is no longer married to the Filipino spouse, then the instant case must be deemed
as coming within the contemplation of Paragraph 2 of Article 26.
In view of the foregoing, we state the twin elements for the application of
Paragraph 2 of Article 26 as follows:
1.

There is a valid marriage that has been celebrated between a

Filipino citizen and a foreigner; and

2.

A valid divorce is obtained abroad by the alien spouse

capacitating him or her to remarry.

The reckoning point is not the citizenship of the parties at the time of the
celebration of the marriage, but their citizenship at the time a valid divorce is obtained
abroad by the alien spouse capacitating the latter to remarry.
In this case, when Ciprianos wife was naturalized as an American citizen, there
was still a valid marriage that has been celebrated between her and Cipriano. As fate
would have it, the naturalized alien wife subsequently obtained a valid divorce
capacitating her to remarry. Clearly, the twin requisites for the application of Paragraph 2

of Article 26 are both present in this case. Thus Cipriano, the divorced Filipino spouse,
should be allowed to remarry.
We are also unable to sustain the OSGs theory that the proper remedy of the
Filipino spouse is to file either a petition for annulment or a petition for legal separation.
Annulment would be a long and tedious process, and in this particular case, not even
feasible, considering that the marriage of the parties appears to have all the badges of
validity. On the other hand, legal separation would not be a sufficient remedy for it
would not sever the marriage tie; hence, the legally separated Filipino spouse would still
remain married to the naturalized alien spouse.
However, we note that the records are bereft of competent evidence duly submitted
by respondent concerning the divorce decree and the naturalization of respondents wife.
It is settled rule that one who alleges a fact has the burden of proving it and mere
allegation is not evidence.[13]

Accordingly, for his plea to prosper, respondent herein must prove his allegation
that his wife was naturalized as an American citizen. Likewise, before a foreign divorce
decree can be recognized by our own courts, the party pleading it must prove the divorce
as a fact and demonstrate its conformity to the foreign law allowing it. [14] Such foreign
law must also be proved as our courts cannot take judicial notice of foreign laws. Like
any other fact, such laws must be alleged and proved.[15] Furthermore, respondent must
also show that the divorce decree allows his former wife to remarry as specifically

required in Article 26. Otherwise, there would be no evidence sufficient to declare that
he is capacitated to enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of
the Family Code (E.O. No. 209, as amended by E.O. No. 227), should be interpreted to
allow a Filipino citizen, who has been divorced by a spouse who had acquired foreign
citizenship and remarried, also to remarry. However, considering that in the present
petition there is no sufficient evidence submitted and on record, we are unable to declare,
based on respondents bare allegations that his wife, who was naturalized as an American
citizen, had obtained a divorce decree and had remarried an American, that respondent is
now capacitated to remarry. Such declaration could only be made properly upon
respondents submission of the aforecited evidence in his favor.
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED.
The assailed Decision dated May 15, 2002, and Resolution dated July 4, 2002, of the
Regional Trial Court of Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 46631

November 16, 1939

IDONAH SLADE PERKINS, petitioner,

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

MORAN, J.:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the
Court of First Instance of Manila against the Benguet Consolidated Mining Company for
dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name,
payment of which was being withheld by the company; and, for the recognition of his
right to the control and disposal of said shares, to the exclusion of all others. To the
complaint, the company filed its answer alleging, by way of defense, that the withholding
of such dividends and the non-recognition of plaintiff's right to the disposal and control of
the shares were due to certain demands made with respect to said shares by the petitioner
herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the
adverse claimants be made parties to the action and served with notice thereof by
publication, and that thereafter all such parties be required to interplead and settle the
rights among themselves. On September 5, 1938, the trial court ordered respondent
Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah
Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in
addition to the relief prayed for in the original complaint, respondent Perkins prayed that
petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in the
shares of stock in question and excluded from any claim they assert thereon. Thereafter,
summons by publication were served upon the non-resident defendants, Idonah Slade
Perkins and George H. Engelhard, pursuant to the order of the trial court. On December
9, 1938, Engelhard filed his answer to the amended complaint, and on December 10,
1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled
"objection to venue, motion to quash, and demurrer to jurisdiction" wherein she
challenged the jurisdiction of the lower court over her person. Petitioner's objection,
motion and demurrer having been overruled as well as her motion for reconsideration of
the order of denial, she now brought the present petition for certiorari, praying that the
summons by publication issued against her be declared null and void, and that, with
respect to her, respondent Judge be permanently prohibited from taking any action on the
case.

The controlling issue here involved is whether or not the Court of First Instance of
Manila has acquired jurisdiction over the person of the present petitioner as a nonresident defendant, or, notwithstanding the want of such jurisdiction, whether or not said
court may validly try the case. The parties have filed lengthy memorandums relying on
numerous authorities, but the principles governing the question are well settled in this
jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident
defendant is sued in the Philippine courts and it appears, by the complaint or by
affidavits, that the action relates to real or personal property within the Philippines in
which said defendant has or claims a lien or interest, actual or contingent, or in which the
relief demanded consists, wholly or in part, in excluding such person from any interest
therein, service of summons maybe made by publication.
We have fully explained the meaning of this provision in El Banco Espaol
Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over the
subject-matter and over the persons of the parties. Jurisdiction over the subjectmatter is acquired by concession of the sovereign authority which organizes a
court and determines the nature and extent of its powers in general and thus fixes
its jurisdiction with reference to actions which it may entertain and the relief it
may grant. Jurisdiction over the persons of the parties is acquired by their
voluntary appearance in court and their submission to its authority, or by the
coercive power of legal process exerted over their persons.
(2) When the defendant is a non-resident and refuses to appear voluntary, the
court cannot acquire jurisdiction over his person even if the summons be served
by publication, for he is beyond the reach of judicial process. No tribunal
established by one State can extend its process beyond its territory so as to subject
to its decisions either persons or property located in another State. "There are
many expressions in the American reports from which it might be inferred that the
court acquires personal jurisdiction over the person of the defendant by
publication and notice; but such is not the case. In truth, the proposition that
jurisdiction over the person of a non-resident cannot be acquired by publication
and notice was never clearly understood even in the American courts until after
the decision had been rendered by the Supreme Court of the United States in the
leading case of Pennoyer v. Neff (95 U.S., 714; 24 Law. ed., 565). In the light of
that decisions which have subsequently been rendered in that and other courts, the
proposition that jurisdiction over the person cannot be thus acquired by
publication and notice is no longer open to question; and it is now fully
established that a personal judgment upon constructive or substituted service
against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment
is rendered; and the only exception seems to be found in the case where the non-

resident defendant has expressly or impliedly consented to the mode of service.

(Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585; 35 L.R.A.
[N.S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident cannot be
entertained by a Philippine court. Where, however, the action is in rem or quasi in
rem in connection with property located in the Philippines, the court acquires
jurisdiction over the res, and its jurisdiction over the person of the non-resident is
non-essential. In order that the court may exercise power over the res, it is not
necessary that the court should take actual custody of the property, potential
custody thereof being sufficient. There is potential custody when, from the nature
of the action brought, the power of the court over the property is impliedly
recognized by law. "An illustration of what we term potential jurisdiction over the
res, is found in the proceeding to register the title of land under our system for the
registration of land. Here the court, without taking actual physical control over the
property , assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor
of the petitioner against all the world."
(4) As before stated, in an action in rem or quasi in rem against a non-resident
defendant, jurisdiction over his person is non-essential, and if the law requires in
such case that the summons upon the defendant be served by publication, it is
merely to satisfy the constitutional requirement of due process. If any be said, in
this connection, that "may reported cases can be cited in which it is assumed that
the question of the sufficiency of publication or notice in the case of this kind is a
question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was
undoubtedly originally adopted by the court because of the analogy between
service by publication and personal service of process upon the defendant; and, as
has already been suggested, prior to the decision of Pennoyer v. Neff (supra), the
difference between the legal effects of the two forms of service was obscure. It is
accordingly not surprising that the modes of expression which had already been
moulded into legal tradition before that case was decided have been brought down
to the present day. But it is clear that the legal principle here involved is not
affected by the peculiar languages in which the courts have expounded their
ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire jurisdiction over the
person of a non-resident, as laid down by the Supreme Court of the United States in
Pennoyer v. Neff, supra, may be found in a recognized principle of public law to the
effect that "no State can exercise direct jurisdiction and authority over persons or
property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The
several States are of equal dignity and authority, and the independence of one implies the
exclusion of power from all others. And so it is laid down by jurists, as an elementary
principle, that the laws of one State have no operation outside of its territory, except so
far as is allowed by comity; and that no tribunal established by it can extend its process

beyond that territory so as to subject either persons or property to its decisions. "Any
exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and
incapable of binding such persons or property in any other tribunals." Story, Confl. L.,
sec. 539." (Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).
When, however, the action relates to property located in the Philippines, the
Philippine courts may validly try the case, upon the principle that a "State, through its
tribunals, may subject property situated within its limits owned by non-residents to the
payment of the demand of its own citizens against them; and the exercise of this
jurisdiction in no respect infringes upon the sovereignty of the State where the owners are
domiciled. Every State owes protection to its citizens; and, when non-residents deal with
them, it is a legitimate and just exercise of authority to hold and appropriate any property
owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the
State's jurisdiction over the property of the non-resident situated within its limits that its
tribunals can inquire into the non-resident's obligations to its own citizens, and the
inquiry can then be carried only to the extent necessary to control the disposition of the
property. If the non-resident has no property in the State, there is nothing upon which the
tribunals can adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene
Arthur Perkins in his amended complaint against the petitioner, Idonah Slade Perkins,
seeks to exclude her from any interest in a property located in the Philippines. That
property consists in certain shares of stocks of the Benguet Consolidated Mining
Company, a sociedad anonima, organized in the Philippines under the provisions of the
Spanish Code of Commerce, with its principal office in the City of Manila and which
conducts its mining activities therein. The situs of the shares is in the jurisdiction where
the corporation is created, whether the certificated evidencing the ownership of those
shares are within or without that jurisdiction. (Fletcher Cyclopedia Corporations,
Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that the action thus
brought is quasi in rem, for while the judgement that may be rendered therein is not
strictly a judgment in rem, "it fixes and settles the title to the property in controversy and
to that extent partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by
the Supreme Court of the United States in Pennoyer v. Neff (supra);
It is true that, in a strict sense, a proceeding in rem is one taken directly
against property, and has for its object the disposition of the property, without
reference to the title of individual claimants; but , in a large and more general
sense, the terms are applied to actions between parties, where the direct object is
to reach and dispose of property owned by them, or of some interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has
jurisdiction over the person of the non-resident. In order to satisfy the constitutional
requirement of due process, summons has been served upon her by publication. There is
no question as to the adequacy of publication made nor as to the mailing of the order of
publication to the petitioner's last known place of residence in the United States. But, of
course, the action being quasi in rem and notice having be made by publication, the relief

that may be granted by the Philippine court must be confined to the res, it having no
jurisdiction to render a personal judgment against the non-resident. In the amended
complaint filed by Eugene Arthur Perkins, no money judgment or other relief in
personam is prayed for against the petitioner. The only relief sought therein is that she be
declared to be without any interest in the shares in controversy and that she be excluded
from any claim thereto.
Petitioner contends that the proceeding instituted against her is one of interpleading
and is therefore an action in personam. Section 120 of our Code of Civil Procedure
provides that whenever conflicting claims are or may be made upon a person for or
relating to personal property, or the performance of an obligation or any portion thereof,
so that he may be made subject to several actions by different persons, such person may
bring an action against the conflicting claimants, disclaiming personal interest in the
controversy, and the court may order them to interplead with one another and litigate
their several claims among themselves, there upon proceed to determine their several
claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint
filed by Eugene Arthur Perkins, averred that in connection with the shares of stock in
question, conflicting claims were being made upon it by said plaintiff, Eugene Arthur
Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard, and prayed
that these last two be made parties to the action and served with summons by publication,
so that the three claimants may litigate their conflicting claims and settle their rights
among themselves. The court has not issued an order compelling the conflicting
claimants to interplead with one another and litigate their several claims among
themselves, but instead ordered the plaintiff to amend his complaint including the other
two claimants as parties defendant. The plaintiff did so, praying that the new defendants
thus joined be excluded fro any interest in the shares in question, and it is upon this
amended complaint that the court ordered the service of the summons by publication. It is
therefore, clear that the publication of the summons was ordered not in virtue of an
interpleading, but upon the filing of the amended complaint wherein an action quasi in
rem is alleged.
Had not the complaint been amended, including the herein petitioner as an
additional defendant, and had the court, upon the filing of the answer of the Benguet
Consolidated Mining Company, issued an order under section 120 of the Code of Civil
Procedure, calling the conflicting claimants into court and compelling them to interplead
with one another, such order could not perhaps have validly been served by publication or
otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would be
purely one of interpleading. Such proceeding is a personal action, for it merely seeks to
call conflicting claimants into court so that they may interplead and litigate their several
claims among themselves, and no specific relief is prayed for against them, as the
interpleader have appeared in court, one of them pleads ownership of the personal
property located in the Philippines and seeks to exclude a non-resident claimant from any
interest therein, is a question which we do not decide not. Suffice it to say that here the
service of the summons by publication was ordered by the lower court by virtue of an
action quasi in rem against the non-resident defendant.

Respondents contend that, as the petitioner in the lower court has pleaded over the
subject-matter, she has submitted herself to its jurisdiction. We have noticed, however,
that these pleas have been made not as independent grounds for relief, but merely as
additional arguments in support of her contention that the lower court had no jurisdiction
over the person. In other words, she claimed that the lower court had no jurisdiction over
her person not only because she is a non-resident, but also because the court had no
jurisdiction over the subject-matter of the action and that the issues therein involved have
already been decided by the New York court and are being relitigated in the California
court. Although this argument is obviously erroneous, as neither jurisdiction over the
subject-matter nor res adjudicata nor lis pendens has anything to do with the question of
jurisdiction over her person, we believe and so hold that the petitioner has not, by such
erroneous argument, submitted herself to the jurisdiction of the court. Voluntary
appearance cannot be implied from either a mistaken or superflous reasoning but from
the nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against petitioner.

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.

MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment
upon the rights of the parties under the same cause of action asserted in a case
in our local court. Petitioners brought this case in the Regional Trial Court of
Makati, Branch 56, which, in view of the pendency at the time of the foreign
action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in
addition to forum non conveniens. On appeal, the Court of Appeals affirmed.
Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate
loans from petitioners Ayala International Finance Limited (hereafter called
AYALA) 1 and Philsec Investment Corporation (hereafter called PHILSEC) in the
sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a
market value of P14,088,995.00. In order to facilitate the payment of the loans,
private respondent 1488, Inc., through its president, private respondent Drago
Daic, assumed 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 overvalued. On March 13, 1990, the United
States District Court for the Southern District of Texas dismissed the counterclaim
against Edgardo V. Guevarra on the ground that it was "frivolous and [was]
brought against him simply to humiliate and embarrass him." For this reason, the
U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and
ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United
States, petitioners filed a complaint "For Sum of Money with Damages and Writ
of Preliminary Attachment" against private respondents in the Regional Trial
Court of Makati, where it was docketed as Civil Case No. 16563. The complaint
reiterated the allegation of petitioners in their respective counterclaims in Civil
Action No. H-86-440 of the United States District Court of Southern Texas that
private respondents committed fraud by selling the property at a price 400
percent more than its true value of US$800,000.00. Petitioners claimed that, as a
result of private respondents' fraudulent misrepresentations, ATHONA, PHILSEC,
and AYALA were induced to enter into the Agreement and to purchase the
Houston property. Petitioners prayed that private respondents be ordered to
return to ATHONA the excess payment of US$1,700,000.00 and to pay damages.
On April 20, 1987, the trial court issued a writ of preliminary attachment against
the real and personal properties of private respondents. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds
of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and
Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners
PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the
alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer,
but not PHILSEC and BPI-IFL which were not parties to the sale and whose only
participation was to extend financial accommodation to ATHONA under a

separate loan agreement. On the other hand, private respondents 1488, Inc. and
its president Daic filed a joint "Special Appearance and Qualified Motion to
Dismiss," contending that the action being in personam, extraterritorial service of
summons by publication was ineffectual and did not vest the court with
jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic,
who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating
that "the evidentiary requirements of the controversy may be more suitably tried
before the forum of the litis pendentia in the U.S., under the principle in private
international law of forum non conveniens," even as it noted that Ducat was not a
party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to
dismiss. On March 9, 1988, the trial court 3 granted the motion to dismiss filed by
1488, Inc. and Daic on the ground of litis pendentia considering that
the "main factual element" of the cause of action in this case which is the validity
of the sale of real property in the United States between defendant 1488 and
plaintiff ATHONA is the subject matter of the pending case in the United States
District Court which, under the doctrine 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 note 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 of forum non conveniens was likewise affirmed
by the Court of Appeals on the ground that the case can be better tried
and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and
involve foreign elements, to wit: 1) the property subject matter of the sale is
situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign
corporation; 3) although the buyer, Athona Holdings, a foreign corporation which
does not claim to be doing business in the Philippines, is wholly owned by
Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also
a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.

In their present appeal, petitioners contend that:

1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE
SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON
BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURT'S
DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY
THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL
COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF
APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY
REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL
COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE
IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS' RIGHTS
FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE
RESPONDENTS (WHO ARE MOSTLY 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 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 Philippines
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
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. 921070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings,
petitioners should have the burden of impeaching the foreign judgment and only

in the event they succeed in doing so may they proceed with their action against
private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable
under the principle of forum non conveniens. First, a motion to dismiss is limited
to the grounds under Rule 16, 1, which does not include forum non conveniens.
16
The propriety of dismissing a case based on this principle requires a factual
determination, hence, it is more properly considered a matter of defense.
Second, while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after "vital facts are established, to
determine whether special circumstances" require the court's desistance. 17
In this case, the trial court abstained from taking jurisdiction solely on the basis of
the pleadings filed by private respondents in connection with the motion to
dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic
corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it
was the extinguishment of the latter's debt which was the object of the
transaction under litigation. The trial court arbitrarily dismissed the case even
after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an
action in personam and summons were served by extraterritorial service. Rule
14, 17 on extraterritorial service provides that service of summons on a nonresident defendant may be effected out of the Philippines by leave of Court
where, among others, "the property of the defendant has been attached within
the Philippines." 18 It is not disputed that the properties, real and personal, of the
private respondents had been attached prior to service of summons under the
Order of the trial court dated April 20, 1987. 19
Fourth. As for the temporary restraining order issued by the Court on June 29,
1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V.
Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by
the U.S. court, the Court finds that the judgment sought to be enforced is
severable from the main judgment under consideration in Civil Case No. 16563.
The separability of Guevara'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.
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.

G.R. No. 162894

February 26, 2008

RAYTHEON INTERNATIONAL, INC., petitioner,

vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure which seeks the reversal of the Decision1 and Resolution2 of the Court of
Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent
against petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized
and existing under the laws of the State of Connecticut, United States of America, and
respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby
BMSI hired respondent as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service contract with the Republic of
the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo
eruption and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor
Relations Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST),
Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment contract.4 On 28 September 1995, Labor
Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay
respondents money claims.5 Upon appeal by BMSI, the NLRC reversed the decision of
the Labor Arbiter and dismissed respondents complaint on the ground of lack of
jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a
Resolution dated 26 November 1997. The Resolution became final and executory on 09
November 1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7
docketed as Civil Case No. 1192-BG, named as defendants herein petitioner Raytheon
International, Inc. as well as BMSI and RUST, the two corporations impleaded in the
earlier labor case. The complaint essentially reiterated the allegations in the labor case
that BMSI verbally employed respondent to negotiate the sale of services in government
projects and that respondent was not paid the commissions due him from the Pinatubo

dredging project which he secured on behalf of BMSI. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and functioned as one
company.
In its Answer,8 petitioner alleged that contrary to respondents claim, it was a foreign
corporation duly licensed to do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of money. Petitioner also
denied combining with BMSI and RUST for the purpose of assuming the alleged
obligation of the said companies.9 Petitioner also referred to the NLRC decision which
disclosed that per the written agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative Agreement," the rights and obligations of
the parties shall be governed by the laws of the State of Connecticut.10 Petitioner sought
the dismissal of the complaint on grounds of failure to state a cause of action and forum
non conveniens and prayed for damages by way of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the
complaint on grounds of forum non conveniens and failure to state a cause of action.
Respondent opposed the same. Pending the resolution of the omnibus motion, the
deposition of Walter Browning was taken before the Philippine Consulate General in
Chicago.13
In an Order14 dated 13 September 2000, the RTC denied petitioners omnibus motion. The
trial court held that the factual allegations in the complaint, assuming the same to be
admitted, were sufficient for the trial court to render a valid judgment thereon. It also
ruled that the principle of forum non conveniens was inapplicable because the trial court
could enforce judgment on petitioner, it being a foreign corporation licensed to do
business in the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed
by respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioners
motion. Thus, it filed a Rule 65 Petition19 with the Court of Appeals praying for the
issuance of a writ of certiorari and a writ of injunction to set aside the twin orders of the
trial court dated 13 September 2000 and 31 July 2001 and to enjoin the trial court from
conducting further proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision21 denying the
petition for certiorari for lack of merit. It also denied petitioners motion for
reconsideration in the assailed Resolution issued on 10 March 2004.22
The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in
resolving petitioners omnibus motion, it found the evidence presented by petitioner, that
is, the deposition of Walter Browning, insufficient for purposes of determining whether
the complaint failed to state a cause of action. The appellate court also stated that it could
not rule one way or the other on the issue of whether the corporations, including

petitioner, named as defendants in the case had indeed merged together based solely on
the evidence presented by respondent. Thus, it held that the issue should be threshed out
during trial.23 Moreover, the appellate court deferred to the discretion of the trial court
when the latter decided not to desist from assuming jurisdiction on the ground of the
inapplicability of the principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF
ACTION AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino
Padua Law Office, counsel on record for respondent, manifested that the lawyer handling
the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before the
filing of the instant petition and that it could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a Resolution25 dated 20 November
2006, the Court resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI included
a valid choice of law clause, that is, that the contract shall be governed by the laws of the
State of Connecticut. It also mentions the presence of foreign elements in the dispute
namely, the parties and witnesses involved are American corporations and citizens and
the evidence to be presented is located outside the Philippines that renders our local
courts inconvenient forums. Petitioner theorizes that the foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases
involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice
of law, and recognition and enforcement of judgments. Thus, in the instances27 where the
Court held that the local judicial machinery was adequate to resolve controversies with a
foreign element, the following requisites had to be proved: (1) that the Philippine Court is
one to which the parties may conveniently resort; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have the power to enforce its decision.28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a
Philippine court and where the court has jurisdiction over the subject matter, the parties
and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or

the convenience of the parties point to a foreign forum. This is an exercise of sovereign
prerogative of the country where the case is filed.29
Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law30 and by the material allegations in the complaint, irrespective of
whether or not the plaintiff is entitled to recover all or some of the claims or reliefs
sought therein.31 Civil Case No. 1192-BG is an action for damages arising from an
alleged breach of contract. Undoubtedly, the nature of the action and the amount of
damages prayed are within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein
respondent (as party plaintiff) upon the filing of the complaint. On the other hand,
jurisdiction over the person of petitioner (as party defendant) was acquired by its
voluntary appearance in court.32
That the subject contract included a stipulation that the same shall be governed by the
laws of the State of Connecticut does not suggest that the Philippine courts, or any other
foreign tribunal for that matter, are precluded from hearing the civil action. Jurisdiction
and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to
cause a defendant to travel to this state; choice of law asks the further question whether
the application of a substantive law which will determine the merits of the case is fair to
both parties.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 Petitioners
averments of the foreign elements in the instant case are not sufficient to oust the trial
court of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a
matter of defense. While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after vital facts are established,
to determine whether special circumstances require the courts desistance.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound discretion of the lower courts
because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a
cause of action against petitioner. Failure to state a cause of action refers to the
insufficiency of allegation in the pleading.36 As a general rule, the elementary test for

failure to state a cause of action is whether the complaint alleges facts which if true
would justify the relief demanded.37
The complaint alleged that petitioner had combined with BMSI and RUST to function as
one company. Petitioner contends that the deposition of Walter Browning rebutted this
allegation. On this score, the resolution of the Court of Appeals is instructive, thus:
x x x Our examination of the deposition of Mr. Walter Browning as well as other
documents produced in the hearing shows that these evidence aliunde are not
quite sufficient for us to mete a ruling that the complaint fails to state a cause of
action.
Annexes "A" to "E" by themselves are not substantial, convincing and conclusive
proofs that Raytheon Engineers and Constructors, Inc. (REC) assumed the
warranty obligations of defendant Rust International in the Makar Port Project in
General Santos City, after Rust International ceased to exist after being absorbed
by REC. Other documents already submitted in evidence are likewise meager to
preponderantly conclude that Raytheon International, Inc., Rust International[,]
Inc. and Brand Marine Service, Inc. have combined into one company, so much
so that Raytheon International, Inc., the surviving company (if at all) may be held
liable for the obligation of BMSI to respondent Rouzie for unpaid commissions.
Neither these documents clearly speak otherwise.38
As correctly pointed out by the Court of Appeals, the question of whether petitioner,
BMSI and RUST merged together requires the presentation of further evidence, which
only a full-blown trial on the merits can afford.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby
AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 120077

October 13, 2000

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

By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company

Limited), MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt,
General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos
that he was recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. The position was slated to open on October 1,
1988.11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of
the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if
the contract was acceptable, to return the same to Mr. Henk in Manila, together with his
passport and two additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective
June 30, 1988, under the pretext that he was needed at home to help with the family's
piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr.
Henk's letter. Respondent Santos enclosed four (4) signed copies of the employment
contract (dated June 4, 1988) and notified them that he was going to arrive in Manila
during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years.12 It provided for a monthly salary of nine
hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing
Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at
the Palace Hotel.14
Subsequently, respondent Santos signed an amended "employment agreement" with the
Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the

Palace Hotel. The Vice President (Operations and Development) of petitioner MHICL
Miguel D. Cergueda signed the employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He
returned to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a
handwritten note that respondent Santos be given one (1) month notice of his release
from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr.
Shmidt that his employment at the Palace Hotel print shop would be terminated due to
business reverses brought about by the political upheaval in China.15 We quote the letter:16
"After the unfortunate happenings in China and especially Beijing (referring to
Tiannamen Square incidents), our business has been severely affected. To reduce
expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this
does in no way reflect your past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will contact you directly and
give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos
and paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr.
Shmidt, demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:17
His service with the Palace Hotel, Beijing was not abruptly terminated but we
followed the one-month notice clause and Mr. Santos received all benefits due
him.
"For your information the Print Shop at the Palace Hotel is still not operational
and with a low business outlook, retrenchment in various departments of the hotel
is going on which is a normal management practice to control costs.
"When going through the latest performance ratings, please also be advised that
his performance was below average and a Chinese National who is doing his job
now shows a better approach.

"In closing, when Mr. Santos received the letter of notice, he hardly showed up
for work but still enjoyed free accommodation/laundry/meals up to the day of his
departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
Arbitration Branch, National Capital Region, National Labor Relations Commission
(NLRC). He prayed for an award of nineteen thousand nine hundred and twenty three
dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as
exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The
complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated
in the proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners,
thus:19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the
NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:20
"WHEREFORE, let the appealed Decision be, as it is hereby, declared null and
void for want of jurisdiction. Complainant is hereby enjoined to file his complaint
with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the aforequoted resolution. He argued that the case was not cognizable by the POEA as he was not
an "overseas contract worker."21

On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed
Labor Arbiter Emerson Tumanon to hear the case on the question of whether private
respondent was retrenched or dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National
Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G.
de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that
respondent Santos was illegally dismissed from employment and recommended that he
be paid actual damages equivalent to his salaries for the unexpired portion of his
contract.26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:27
"WHEREFORE, finding that the report and recommendations of Arbiter de Vera
are supported by substantial evidence, judgment is hereby rendered, directing the
respondents to jointly and severally pay complainant the following computed
contractual benefits: (1) US$12,600.00 as salaries for the unexpired portion of the
parties' contract; (2) US$3,600.00 as extra four (4) months salary for the two (2)
years period (sic) of the parties' contract; (3) US$3,600.00 as "14th month pay"
for the aforesaid two (2) years contract stipulated by the parties or a total of
US$19,800.00 or its peso equivalent, plus (4) attorney's fees of 10% of
complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Vera's recommendation had no basis in law and in fact.28
On March 30, 1995, the NLRC denied the motion for reconsideration.29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of
a temporary restraining order and/or writ of preliminary injunction and a motion for the
annulment of the entry of judgment of the NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over
the petition and its annexes, they can not defend and sustain the position taken by the

NLRC in its assailed decision and orders. The Solicitor General prayed that he be
excused from filing a comment on behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment.34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and
required the NLRC to file its own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the
case involves purely foreign elements. The only link that the Philippines has with the case
is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace Hotel, a
foreign employer, through correspondence sent to the Sultanate of Oman, where
respondent Santos was then employed. He was hired without the intervention of the
POEA or any authorized recruitment agency of the government.36
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is
one to which the parties may conveniently resort to; (2) that the Philippine court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine court has or is likely to have power to enforce its decision.37 The conditions are
unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the
incidents of the case from the time of recruitment, to employment to dismissal
occurred outside the Philippines. The inconvenience is compounded by the fact that the
proper defendants, the Palace Hotel and MHICL are not nationals of the Philippines.
Neither .are they "doing business in the Philippines." Likewise, the main witnesses, Mr.
Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as
to the law governing the employment contract as such was perfected in foreign soil. This
calls to fore the application of the principle of lex loci contractus (the law of the place
where the contract was made).38

The employment contract was not perfected in the Philippines. Respondent Santos
signified his acceptance by writing a letter while he was in the Republic of Oman. This
letter was sent to the Palace Hotel in the People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to
justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper
decision could be reached by the NLRC, such would not have any binding effect against
the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the
laws of China and was not even served with summons. Jurisdiction over its person was
not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither are we saying that we do not have
power over an employment contract executed in a foreign country. If Santos were an
"overseas contract worker", a Philippine forum, specifically the POEA, not the NLRC,
would protect him.39 He is not an "overseas contract worker" a fact which he admits with
conviction.40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's
decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2)
that MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct
juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital
stock. However, this is not enough to pierce the veil of corporate fiction between MHICL
and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
corporate fiction is used to defeat public convenience, justify wrong, protect fraud or
defend a crime. 41 It is done only when a corporation is a mere alter ego or business
conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself a sufficient reason for disregarding the fiction of separate
corporate personalities."

The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporation's finances,
policy and business practices with regard to the transaction attacked. There must be proof
that the other corporation had no separate mind, will or existence with respect the act
complained of. Second, control must be used by the defendant to commit fraud or wrong.
Third, the aforesaid control or breach of duty must be the proximate cause of the injury or
loss complained of. The absence of any of the elements prevents the piercing of the
corporate veil.43
It is basic that a corporation has a personality separate and distinct from those composing
it as well as from that of any other legal entity to which it may be related.44 Clear and
convincing evidence is needed to pierce the veil of corporate fiction.45 In this case, we
find no evidence to show that MHICL and MHC are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his
employment contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel
D. Cergueda signed the employment contract as a mere witness. He merely signed under
the word "noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would.46 In Sichangco v. Board of Commissioners of Immigration,47 the Court recognized
that the term "noted" means that the person so noting has merely taken cognizance of the
existence of an act or declaration, without exercising a judicious deliberation or rendering
a decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part"
of the document is that which, "in a deed or other formal instrument is that part which
comes after the recitals, or where there are no recitals, after the parties (emphasis
ours)."48 As opposed to a party to a contract, a witness is simply one who, "being present,
personally sees or perceives a thing; a beholder, a spectator, or eyewitness."49 One who
"notes" something just makes a "brief written statement"50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship
between Santos and MHICL. In determining the existence of an employer-employee
relationship, the following elements are considered:51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and

"(4) the power to control employee's conduct."

MHICL did not have and did not exercise any of the aforementioned powers. It did not
select respondent Santos as an employee for the Palace Hotel. He was referred to the
Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos to
work. The terms of employment were negotiated and finalized through correspondence
between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL. Neither did respondent Santos
adduce any proof that MHICL had the power to control his conduct. Finally, it was the
Palace Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos'
services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is
no proof that MHICL "supplied" respondent Santos or even referred him for employment
to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the
same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is
not enough to pierce the corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no
employer-employee relationship existed between MHICL, MHC and respondent Santos,
Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in
NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following:53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an amount

exceeding five thousand pesos (P5,000.00) regardless of whether accompanied

with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can be
resolved by reference to the Labor Code, or other labor statutes, or their collective
bargaining agreements.54
"To determine which body has jurisdiction over the present controversy, we rely on the
sound judicial principle that jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
complaint. His failure to dismiss the case amounts to grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the
orders and resolutions of the National Labor Relations Commission dated May 31, 1993,
December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR
Case No. 00-02-01058-90).
No costs.
SO ORDERED.

G.R. No. 133876 December 29, 1999

BANK OF AMERICA, NT and SA, petitioner,
vs.
AMERICAN REALTY CORPORATION and COURT OF APPEALS,
respondents.

BUENA, J.:
Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage
constituted over a third party mortgagor's property situated in the Philippines by
filing an action for the collection of the principal loan before foreign courts?
Sought to be reversed in the instant petition for review on certiorari under Rule
45 of the Rules of Court are the decision 1 of public respondent Court of Appeals
in CA G.R. CV No. 51094, promulgated on 30 September 1997 and its resolution,
2
dated 22 May 1998, denying petitioner's motion for reconsideration.
Petitioner Bank of America NT & SA (BANTSA) is an international banking and
financing institution duly licensed to do business in the Philippines, organized
and existing under and by virtue of the laws of the State of California, United
States of America while private respondent American Realty Corporation (ARC)
is a domestic corporation.
Bank of America International Limited (BAIL), on the other hand, is a limited
liability company organized and existing under the laws of England.
As borne by the records, BANTSA and BAIL on several occasions granted three
major multi-million United States (US) Dollar loans to the following corporate
borrowers: (1) Liberian Transport Navigation, S.A.; (2) El Challenger S.A. and (3)
Eshley Compania Naviera S.A. (hereinafter collectively referred to as
"borrowers"), all of which are existing under and by virtue of the laws of the
Republic of Panama and are foreign affiliates of private
respondent. 3
Due to the default in the payment of the loan amortizations, BANTSA and the
corporate borrowers signed and entered into restructuring agreements. As
additional security for the restructured loans, private respondent ARC as third
party mortgagor executed two real estate mortgages, 4 dated 17 February 1983
and 20 July 1984, over its parcels of land including improvements thereon,
located at Barrio Sto. Cristo, San Jose Del Monte, Bulacan, and which are

covered by Transfer Certificate of Title Nos. T-78759, T-78760, T-78761, T-78762

and T-78763.
Eventually, the corporate borrowers defaulted in the payment of the restructured
loans prompting petitioner BANTSA to file civil actions 5 before foreign courts for
the collection of the principal loan, to wit:
a) In England, in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No 2098) against
Liberian Transport Navigation S.A., Eshley Compania Naviera
S.A., El Challenger S.A., Espriona Shipping Company S.A.,
Eddie Navigation Corp., S.A., Eduardo Katipunan Litonjua and
Aurelio Katipunan Litonjua on June 17, 1992.
b) In England, in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against El
Challenger S.A., Espriona Shipping Company S.A., Eduardo
Katipuan Litonjua & Aurelio Katipunan Litonjua on July 2, 1992;
c) In Hongkong, in the Supreme Court of Hongkong High Court
(Action No. 4039 of 1992) against Eshley Compania Naviera
S.A., El Challenger S.A., Espriona Shipping Company S.A.
Pacific Navigators Corporation, Eddie Navigation Corporation
S.A., Litonjua Chartering (Edyship) Co., Inc., Aurelio Katipunan
Litonjua, Jr. and Eduardo Katipunan Litonjua on November 19,
1992; and
d) In Hongkong, in the Supreme Court of Hongkong High Court
(Action No. 4040 of 1992) against Eshley Compania Naviera
S.A., El Challenger S.A., Espriona Shipping Company, S.A.,
Pacific Navigators Corporation, Eddie Navigation Corporation
S.A., Litonjua Chartering (Edyship) Co., Jr. and Eduardo
Katipunan Litonjua on November 21, 1992.

In the civil suits instituted before the foreign courts, private respondent ARC,
being a third party mortgagor, was private not impleaded as party-defendant.
On 16 December 1992, petitioner BANTSA filed before the Office of the
Provincial Sheriff of Bulacan, Philippines an application for extrajudicial
foreclosure 6 of real estate mortgage.
On 22 January 1993, after due publication and notice, the mortgaged real
properties were sold at public auction in an extrajudicial foreclosure sale, with
Integrated Credit and Corporation Services Co (ICCS) as the highest bidder for
the sum of Twenty four Million Pesos (P24,000.000.00). 7
On 12 February 1993, private respondent filed before the Pasig Regional Trial
Court, Branch 159, an action for damages 8 against the petitioner, for the latter's
act of foreclosing extrajudicially the real estate mortgages despite the pendency
of civil suits before foreign courts for the collection of the principal loan.

In its answer 9 petitioner alleged that the rule prohibiting the mortgagee from
foreclosing the mortgage after an ordinary suit for collection has been filed, is not
applicable in the present case, claiming that:
a) The plaintiff, being a mere third party mortgagor and not a party to the principal
restructuring agreements, was never made a party defendant in the civil cases
filed in Hongkong and England;
b) There is actually no civil suit for sum of money filed in the Philippines since the
civil actions were filed in Hongkong and England. As such, any decisions (sic)
which may be rendered in the abovementioned courts are not (sic) enforceable in
the Philippines unless a separate action to enforce the foreign judgments is first
filed in the Philippines, pursuant to Rule 39, Section 50 of the Revised Rules of
Court.
c) Under English Law, which is the governing law under the principal
agreements, the mortgagee does not lose its security interest by filing civil
actions for sums of money.

On 14 December 1993, private respondent filed a motion for

suspension 10 of the redemption period on the ground that "it cannot exercise said
right of redemption without at the same time waiving or contradicting its
contentions in the case that the foreclosure of the mortgage on its properties is
legally improper and therefore invalid."
In an order 11 dated 28 January 1994, the trial court granted the private
respondent's motion for suspension after which a copy of said order was duly
received by the Register of Deeds of Meycauayan, Bulacan.
On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the
foreclosure sale, consolidated its ownership over the real properties, resulting to
the issuance of Transfer Certificate of Title Nos. T-18627, T-186272, T-186273, T16471 and T-16472 in its name.
On 18 March 1994, after the consolidation of ownership in its favor, ICCS sold
the real properties to Stateland Investment Corporation for the amount of Thirty
Nine Million Pesos (P39,000,000.00). 12 Accordingly, Transfer Certificate of Title
Nos. T-187781(m), T-187782(m), T-187783(m), T-16653P(m) and T-16652P(m)
were issued in the latter's name.
After trial, the lower court rendered a decision 13 in favor of private respondent
ARC dated 12 May 1993, the decretal portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the filing in foreign
courts by the defendant of collection suits against the principal debtors operated
as a waiver of the security of the mortgages. Consequently, the plaintiff's rights
as owner and possessor of the properties then covered by Transfer Certificates
of Title Nos. T-78759, T-78762, T-78763, T-78760 and T-78761, all of the
Register of Deeds of Meycauayan, Bulacan, Philippines, were violated when the

defendant caused the extrajudicial foreclosure of the mortgages constituted

thereon.
Accordingly, the defendant is hereby ordered to pay the plaintiff the following
sums, all with legal interest thereon from the date of the filing of the complaint up
to the date of actual payment:
1) Actual or compensatory damages in the amount of Ninety Nine Million Pesos
(P99,000,000.00);
2) Exemplary damages in the amount of Five Million Pesos (P5,000,000.00); and
3) Costs of suit.
SO ORDERED.

On appeal, the Court of Appeals affirmed the assailed decision of the lower court
prompting petitioner to file a motion for reconsideration which the appellate court
denied.
Hence, the instant petition for review 14 on certiorari where herein petitioner
BANTSA ascribes to the Court of Appeals the following assignment of errors:
1. The Honorable Court of Appeals disregarded the doctrines laid
down by this Hon. Supreme Court in the cases of Caltex
Philippines, Inc. vs. Intermediate Appellate Court docketed as
G.R. No. 74730 promulgated on August 25, 1989 and Philippine
Commercial International Bank vs. IAC, 196 SCRA 29 (1991
case), although said cases were duly cited, extensively
discussed and specifically mentioned, as one of the issues in the
assignment of errors found on page 5 of the decision dated
September 30, 1997.
2. The Hon. Court of Appeals acted with grave abuse of
discretion when it awarded the private respondent actual and
exemplary damages totalling P171,600,000.00, as of July 12,
1998 although such huge amount was not asked nor prayed for
in private respondent's complaint, is contrary to law and is totally
unsupported by evidence (sic).

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

1. Whether or not the petitioner's act of filing a collection suit
against the principal debtors for the recovery of the loan before
foreign courts constituted a waiver of the remedy of foreclosure.
2. Whether or not the award by the lower court of actual and
exemplary damages in favor of private respondent ARC, as thirdparty mortgagor, is proper.

The petition is bereft of merit.

First, as to the issue of availability of remedies, petitioner submits that a waiver of

the remedy of foreclosure requires the concurrence of two requisites: an ordinary
civil action for collection should be filed and subsequently a final judgment be
correspondingly rendered therein.
According to petitioner, the mere filing of a personal action to collect the principal
loan does not suffice; a final judgment must be secured and obtained in the
personal action so that waiver of the remedy of foreclosure may be appreciated.
To put it differently, absent any of the two requisites, the mortgagee-creditor is
deemed not to have waived the remedy of foreclosure.
We do not agree.
Certainly, this Court finds petitioner's arguments untenable and upholds the
jurisprudence laid down in Bachrach 15 and similar cases adjudicated thereafter,
thus:
In the absence of express statutory provisions, a mortgage creditor may institute
against the mortgage debtor either a personal action or debt or a real action to
foreclose the mortgage. In other words, he may he may pursue either of the two
remedies, but not both. By such election, his cause of action can by no means be
impaired, for each of the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the properties of the debtor for
attachment and execution, even including the mortgaged property itself. And, if
he waives such personal action and pursues his remedy against the mortgaged
property, an unsatisfied judgment thereon would still give him the right to sue for
a deficiency judgment, in which case, all the properties of the defendant, other
than the mortgaged property, are again open to him for the satisfaction of the
deficiency. In either case, his remedy is complete, his cause of action
undiminished, and any advantages attendant to the pursuit of one or the other
remedy are purely accidental and are all under his right of election. On the other
hand, a rule that would authorize the plaintiff to bring a personal action against
the debtor and simultaneously or successively another action against the
mortgaged property, would result not only in multiplicity of suits so offensive to
justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity
(Osorio vs. San Agustin, 25 Phil., 404), but also in subjecting the defendant to the
vexation of being sued in the place of his residence or of the residence of the
plaintiff, and then again in the place where the property lies.

In Danao vs. Court of Appeals, 16 this Court, reiterating jurisprudence enunciated

in Manila Trading and Supply Co vs. Co Kim 17 and Movido vs.
RFC, 18 invariably held:
. . . The rule is now settled that a mortgage creditor may elect to waive his
security and bring, instead, an ordinary action to recover the indebtedness with
the right to execute a judgment thereon on all the properties of the debtor,
including the subject matter of the mortgage . . . , subject to the qualification that
if he fails in the remedy by him elected, he cannot pursue further the remedy he
has waived. (Emphasis Ours)

Anent real properties in particular, the Court has laid down the rule that a
mortgage creditor may institute against the mortgage debtor either a personal
action for debt or a real action to foreclose the mortgage. 19
In our jurisdiction, the remedies available to the mortgage creditor are deemed
alternative and not cumulative. Notably, an election of one remedy operates as a
waiver of the other. For this purpose, a remedy is deemed chosen upon the filing
of the suit for collection or upon the filing of the complaint in an action for
foreclosure of mortgage, pursuant to the provision of Rule 68 of the of the 1997
Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed
elected by the mortgage creditor upon filing of the petition not with any court of
justice but with the Office of the Sheriff of the province where the sale is to be
made, in accordance with the provisions of Act No. 3135, as amended by Act No.
4118.
In the case at bench, private respondent ARC constituted real estate mortgages
over its properties as security for the debt of the principal debtors. By doing so,
private respondent subjected itself to the liabilities of a third party mortgagor.
Under the law, third persons who are not parties to a loan may secure the latter
by pledging or mortgaging their own property. 20
Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction
which makes a third person who secures the fulfillment of another's obligation by
mortgaging his own property, to be solidarily bound with the principal obligor. The
signatory to the principal contractloanremains to be primarily bound. It is only
upon default of the latter that the creditor may have recourse on the mortgagors
by foreclosing the mortgaged properties in lieu of an action for the recovery of the
amount of the loan. 21
In the instant case, petitioner's contention that the requisites of filing the action
for collection and rendition of final judgment therein should concur, is untenable.
Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in said case,
that the filing of a collection suit barred the foreclosure of the mortgage:
A mortgagee who files a suit for collection abandons the remedy of foreclosure of
the chattel mortgage constituted over the personal property as security for the
debt or value of the promissory note when he seeks to recover in the said
collection suit.
. . . When the mortgagee elects to file a suit for collection, not foreclosure,
thereby abandoning the chattel mortgage as basis for relief, he clearly manifests
his lack of desire and interest to go after the mortgaged property as security for
the promissory note . . . .

Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity and
emphasis, that the mere act of filing of an ordinary action for collection operates
as a waiver of the mortgage-creditor's remedy to foreclose the mortgage. By the

mere filing of the ordinary action for collection against the principal debtors, the
petitioner in the present case is deemed to have elected a remedy, as a result of
which a waiver of the other necessarily must arise. Corollarily, no final judgment
in the collection suit is required for the rule on waiver to apply.
Hence, in Caltex Philippines, Inc. vs. Intermediate-Appellate Court, 23 a case
relied upon by petitioner, supposedly to buttress its contention, this Court had
occasion to rule that the mere act of filing a collection suit for the recovery of a
debt secured by a mortgage constitutes waiver of the other remedy of
foreclosure.
In the case at bar, petitioner BANTSA only has one cause of action which is nonpayment of the debt. Nevertheless, alternative remedies are available for its
enjoyment and exercise. Petitioner then may opt to exercise only one of two
remedies so as not to violate the rule against splitting a cause of action.
As elucidated by this Court in the landmark case of Bachrach Motor Co., Inc, vs.
Icarangal. 24
For non-payment of a note secured by mortgage, the creditor has a single cause
of action against the debtor. This single cause of action consists in the recovery
of the credit with execution of the security. In other words, the creditor in his
action may make two demands, the payment of the debt and the foreclosure of
his mortgage. But both demands arise from the same cause, the non-payment of
the debt, and for that reason, they constitute a single cause of action. Though the
debt and the mortgage constitute separate agreements, the latter is subsidiary to
the former, and both refer to one and the same obligation. Consequently, there
exists only one cause of action for a single breach of that obligation. Plaintiff,
then, by applying the rules above stated, cannot split up his single cause of
action by filing a complaint for payment of the debt, and thereafter another
complaint for foreclosure of the mortgage. If he does so, the filing of the first
complaint will bar the subsequent complaint. By allowing the creditor to file two
separate complaints simultaneously or successively, one to recover his credit and
another to foreclose his mortgage, we will, in effect, be authorizing him plural
redress for a single breach of contract at so much cost to the courts and with so
much vexation and oppression to the debtor.

Petitioner further faults the Court of Appeals for allegedly disregarding the
doctrine enunciated in Caltex wherein this High Court relaxed the application of
the general rules to wit:
In the present case, however, we shall not follow this rule to the letter but declare
that it is the collection suit which was waived and/or abandoned. This ruling is
more in harmony with the principles underlying our judicial system. It is of no
moment that the collection suit was filed ahead, what is determinative is the fact
that the foreclosure proceedings ended even before the decision in the collection
suit was rendered. . . .

Notably, though, petitioner took the Caltex ruling out of context. We must stress
that the Caltex case was never intended to overrule the well-entrenched doctrine

enunciated Bachrach, which to our mind still finds applicability in cases of this
sort. To reiterate, Bachrach is still good law.
We then quote the decision 25 of the trial court, in the present case, thus:
The aforequoted ruling in Caltex is the exception rather than the rule, dictated by
the peculiar circumstances obtaining therein. In the said case, the Supreme
Court chastised Caltex for making ". . . a mockery of our judicial system when it
initially filed a collection suit then, during the pendency thereof, foreclosed
extrajudicially the mortgaged property which secured the indebtedness, and still
pursued the collection suit to the end." Thus, to prevent a mockery of our judicial
system", the collection suit had to be nullified because the foreclosure
proceedings have already been pursued to their end and can no longer be
undone.
xxx xxx xxx
In the case at bar, it has not been shown whether the defendant pursued to the
end or are still pursuing the collection suits filed in foreign courts. There is no
occasion, therefore, for this court to apply the exception laid down by the
Supreme Court in Caltex by nullifying the collection suits. Quite obviously, too,
the aforesaid collection suits are beyond the reach of this Court. Thus the only
way the court may prevent the spector of a creditor having "plural redress for a
single breach of contract" is by holding, as the Court hereby holds, that the
defendant has waived the right to foreclose the mortgages constituted by the
plaintiff on its properties originally covered by Transfer Certificates of Title Nos. T78759, T-78762, T-78760 and T-78761. (RTC Decision pp., 10-11)

In this light, the actuations of Caltex are deserving of severe criticism, to say the
least. 26
Moreover, petitioner attempts to mislead this Court by citing the case of PCIB vs.
IAC. 27 Again, petitioner tried to fit a square peg in a round hole. It must be
stressed that far from overturning the doctrine laid down in Bachrach, this Court
in PCIB buttressed its firm stand on this issue by declaring:
While the law allows a mortgage creditor to either institute a personal action for
the debt or a real action to foreclosure the mortgage, he cannot pursue both
remedies simultaneously or successively as was done by PCIB in this case.
xxx xxx xxx
Thus, when the PCIB filed Civil Case No. 29392 to enforce payment of the 1.3
million promissory note secured by real estate mortgages and subsequently filed
a petition for extrajudicial foreclosure, it violates the rule against splitting a cause
of action.

Accordingly, applying the foregoing rules, we hold that petitioner, by the

expediency of filing four civil suits before foreign courts, necessarily abandoned
the remedy to foreclose the real estate mortgages constituted over the properties
of third-party mortgagor and herein private respondent ARC. Moreover, by filing

the four civil actions and by eventually foreclosing extrajudicially the mortgages,
petitioner in effect transgressed the rules against splitting a cause of action wellenshrined in jurisprudence and our statute books.
In Bachrach, this Court resolved to deny the creditor the remedy of foreclosure
after the collection suit was filed, considering that the creditor should not be
afforded "plural redress for a single breach of contract." For cause of action
should not be confused with the remedy created for its enforcement. 28
Notably, it is not the nature of the redress which is crucial but the efficacy of the
remedy chosen in addressing the creditor's cause. Hence, a suit brought before a
foreign court having competence and jurisdiction to entertain the action is
deemed, for this purpose, to be within the contemplation of the remedy available
to the mortgagee-creditor. This pronouncement would best serve the interest of
justice and fair play and further discourage the noxious practice of splitting up a
lone cause of action.
Incidentally, BANTSA alleges that under English Law, which according to
petitioner is the governing law with regard to the principal agreements, the
mortgagee does not lose its security interest by simply filing civil actions for sums
of money. 29
We rule in the negative.
This argument shows desperation on the part of petitioner to rivet its crumbling
cause. In the case at bench, Philippine law shall apply notwithstanding the
evidence presented by petitioner to prove the English law on the matter.
In a long line of decisions, this Court adopted the well-imbedded principle in our
jurisdiction that there is no judicial notice of any foreign law. A foreign law must
be properly pleaded and proved as a fact. 30 Thus, if the foreign law involved is
not properly pleaded and proved, our courts will presume that the foreign law is
the same as our local or domestic or internal
law. 31 This is what we refer to as the doctrine of processual presumption.
In the instant case, assuming arguendo that the English Law on the matter were
properly pleaded and proved in accordance with Section 24, Rule 132 of the
Rules of Court and the jurisprudence laid down in Yao Kee, et al. vs.
Sy-Gonzales, 32 said foreign law would still not find applicability.
Thus, when the foreign law, judgment or contract is contrary to a sound and
established public policy of the forum, the said foreign law, judgment or order
shall not be applied. 33
Additionally, prohibitive laws concerning persons, their acts or property, and
those which have for their object public order, public policy and good customs

shall not be rendered ineffective by laws or judgments promulgated, or by

determinations or conventions agreed upon in a foreign country. 34
The public policy sought to be protected in the instant case is the principle
imbedded in our jurisdiction proscribing the splitting up of a single cause of
action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
If two or more suits are instituted on the basis of the same cause of action, the
filing of one or a judgment upon the merits in any one is available as a ground for
the dismissal of the others.

Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the
most important function of law; hence, a law, or judgment or contract that is
obviously unjust negates the fundamental principles of Conflict of Laws. 35
Clearly then, English Law is not applicable.
As to the second pivotal issue, we hold that the private respondent is entitled to
the award of actual or compensatory damages inasmuch as the act of petitioner
BANTSA in extrajudicially foreclosing the real estate mortgages constituted a
clear violation of the rights of herein private respondent ARC, as third-party
mortgagor.
Actual or compensatory damages are those recoverable because of pecuniary
loss in business, trade, property, profession, job or occupation and the same
must be proved, otherwise if the proof is flimsy and non-substantial, no damages
will be given. 36 Indeed, the question of the value of property is always a difficult
one to settle as valuation of real property is an imprecise process since real
estate has no inherent value readily ascertainable by an appraiser or by the
court. 37 The opinions of men vary so much concerning the real value of property
that the best the courts can do is hear all of the witnesses which the respective
parties desire to present, and then, by carefully weighing that testimony, arrive at
a conclusion which is just and equitable. 38
In the instant case, petitioner assails the Court of Appeals for relying heavily on
the valuation made by Philippine Appraisal Company. In effect, BANTSA
questions the act of the appellate court in giving due weight to the appraisal
report composed of twenty three pages, signed by Mr. Lauro Marquez and
submitted as evidence by private respondent. The appraisal report, as the
records would readily show, was corroborated by the testimony of Mr. Reynaldo
Flores, witness for private respondent.
On this matter, the trial court observed:

The record herein reveals that plaintiff-appellee formally offered as evidence the
appraisal report dated March 29, 1993 (Exhibit J, Records, p. 409), consisting of
twenty three (23) pages which set out in detail the valuation of the property to
determine its fair market value (TSN, April 22, 1994, p. 4), in the amount of
P99,986,592.00 (TSN, ibid., p. 5), together with the corroborative testimony of
one Mr. Reynaldo F. Flores, an appraiser and director of Philippine Appraisal
Company, Inc. (TSN, ibid., p. 3). The latter's testimony was subjected to
extensive cross-examination by counsel for defendant-appellant (TSN, April 22,
1994, pp. 6-22). 39

In the matter of credibility of witnesses, the Court reiterates the familiar and wellentrenched rule that the factual findings of the trial court should be respected. 40
The time-tested jurisprudence is that the findings and conclusions of the trial
court on the credibility of witnesses enjoy a badge of respect for the reason that
trial courts have the advantage of observing the demeanor of witnesses as they
testify. 41
This Court will not alter the findings of the trial court on the credibility of
witnesses, principally because they are in a better position to assess the same
than the appellate court. 42 Besides, trial courts are in a better position to examine
real evidence as well as observe the demeanor of witnesses. 43
Similarly, the appreciation of evidence and the assessment of the credibility of
witnesses rest primarily with the trial court. 44 In the case at bar, we see no reason
that would justify this Court to disturb the factual findings of the trial court, as
affirmed by the Court of Appeals, with regard to the award of actual damages.
In arriving at the amount of actual damages, the trial court justified the award by
presenting the following ratiocination in its assailed decision 45, to wit:
Indeed, the Court has its own mind in the matter of valuation. The size of the
subject real properties are (sic) set forth in their individuals titles, and the Court
itself has seen the character and nature of said properties during the ocular
inspection it conducted. Based principally on the foregoing, the Court makes the
following observations:
1. The properties consist of about 39 hectares in Bo. Sto. Cristo, San Jose del
Monte, Bulacan, which is (sic) not distant from Metro Manila the biggest urban
center in the Philippines and are easily accessible through well-paved roads;
2. The properties are suitable for development into a subdivision for low cost
housing, as admitted by defendant's own appraiser (TSN, May 30, 1994, p. 31);
3. The pigpens which used to exist in the property have already been
demolished. Houses of strong materials are found in the vicinity of the property
(Exhs. 2, 2-1 to 2-7), and the vicinity is a growing community. It has even been
shown that the house of the Barangay Chairman is located adjacent to the
property in question (Exh. 27), and the only remaining piggery (named Cherry
Farm) in the vicinity is about 2 kilometers away from the western boundary of the
property in question (TSN, November 19, p. 3);

4. It will not be hard to find interested buyers of the property, as indubitably

shown by the fact that on March 18, 1994, ICCS (the buyer during the
foreclosure sale) sold the consolidated real estate properties to Stateland
Investment Corporation, in whose favor new titles were issued, i.e., TCT Nos. T187781(m); T-187782(m), T-187783(m); T-16653P(m) and T-166521(m) by the
Register of Deeds of Meycauayan (sic), Bulacan;
5. The fact that ICCS was able to sell the subject properties to Stateland
Investment Corporation for Thirty Nine Million (P39,000,000.00) Pesos, which is
more than triple defendant's appraisal (Exh. 2) clearly shows that the Court
cannot rely on defendant's aforesaid estimate (Decision, Records, p. 603).

It is a fundamental legal aphorism that the conclusions of the trial judge on the
credibility of witnesses command great respect and consideration especially
when the conclusions are supported by the evidence on record. 46 Applying the
foregoing principle, we therefore hold that the trial court committed no palpable
error in giving credence to the testimony of Reynaldo Flores, who according to
the records, is a licensed real estate broker, appraiser and director of Philippine
Appraisal Company, Inc. since 1990. 47 As the records show, Flores had been
with the company for 26 years at the time of his testimony.
Of equal importance is the fact that the trial court did not confine itself to the
appraisal report dated 29 March 1993, and the testimony given by Mr. Reynaldo
Flores, in determining the fair market value of the real property. Above all these,
the record would likewise show that the trial judge in order to appraise himself of
the characteristics and condition of the property, conducted an ocular inspection
where the opposing parties appeared and were duly represented.
Based on these considerations and the evidence submitted, we affirm the ruling
of the trial court as regards the valuation of the property
. . . a valuation of Ninety Nine Million Pesos (P99,000,000.00) for the 39-hectare
properties (sic) translates to just about Two Hundred Fifty Four Pesos (P254.00)
per square meter. This appears to be, as the court so holds, a better
approximation of the fair market value of the subject properties. This is the
amount which should be restituted by the defendant to the plaintiff by way of
actual or compensatory damages . . . . 48

Further, petitioner ascribes error to the lower court awarding an amount allegedly
not asked nor prayed for in private respondent's complaint.
Notwithstanding the fact that the award of actual and compensatory damages by
the lower court exceeded that prayed for in the complaint, the same is
nonetheless valid, subject to certain qualifications.
On this issue, Rule 10, Section 5 of the Rules of Court is pertinent:
Sec. 5. Amendment to conform to or authorize presentation of evidence.
When issues not raised by the pleadings are tried with the express or implied

consent of the parties, they shall be treated in all respects as if they had been
raised in the pleadings. Such amendment of the pleadings as may be necessary
to cause them to conform to the evidence and to raise these issues may be
made upon motion of any party at any time, even after judgement; but failure to
amend does not affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended and shall do so with
liberality if the presentation of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a continuance to enable
the amendment to be made.

The jurisprudence enunciated in Talisay-Silay Milling Co., Inc. vs. Asociacion de

Agricultures de Talisay-Silay, Inc. 49 citing Northern Cement Corporation vs.
Intermediate Appellate Court 50 is enlightening:
There have been instances where the Court has held that even without the
necessary amendment, the amount proved at the trial may be validly awarded,
as in Tuazon v. Bolanos (95 Phil. 106), where we said that if the facts shown
entitled plaintiff to relief other than that asked for, no amendment to the complaint
was necessary, especially where defendant had himself raised the point on which
recovery was based. The appellate court could treat the pleading as amended to
conform to the evidence although the pleadings were actually not amended.
Amendment is also unnecessary when only clerical error or non substantial
matters are involved, as we held in Bank of the Philippine Islands vs. Laguna (48
Phil. 5). In Co Tiamco vs. Diaz (75 Phil. 672), we stressed that the rule on
amendment need not be applied rigidly, particularly where no surprise or
prejudice is caused the objecting party. And in the recent case of National Power
Corporation vs. Court of Appeals (113 SCRA 556), we held that where there is a
variance in the defendant's pleadings and the evidence adduced by it at the trial,
the Court may treat the pleading as amended to conform with the evidence.
It is the view of the Court that pursuant to the above-mentioned rule and in light
of the decisions cited, the trial court should not be precluded from awarding an
amount higher than that claimed in the pleading notwithstanding the absence of
the required amendment. But it is upon the condition that the evidence of such
higher amount has been presented properly, with full opportunity on the part of
the opposing parties to support their respective contentions and to refute each
other's evidence.
The failure of a party to amend a pleading to conform to the evidence adduced
during trial does not preclude an adjudication by the court on the basis of such
evidence which may embody new issues not raised in the pleadings, or serve as
a basis for a higher award of damages. Although the pleading may not have been
amended to conform to the evidence submitted during trial, judgment may
nonetheless be rendered, not simply on the basis of the issues alleged but also
the basis of issues discussed and the assertions of fact proved in the course of
trial. The court may treat the pleading as if it had been amended to conform to
the evidence, although it had not been actually so amended. Former Chief
Justice Moran put the matter in this way:
When evidence is presented by one party, with the expressed or
implied consent of the adverse party, as to issues not alleged in
the pleadings, judgment may be rendered validly as regards
those issues, which shall be considered as if they have been

raised in the pleadings. There is implied consent to the evidence

thus presented when the adverse party fails to object thereto.
Clearly, a court may rule and render judgment on the basis of the evidence
before it even though the relevant pleading had not been previously amended, so
long as no surprise or prejudice is thereby caused to the adverse party. Put a
little differently, so long as the basis requirements of fair play had been met, as
where litigants were given full opportunity to support their respective contentions
and to object to or refute each other's evidence, the court may validly treat the
pleadings as if they had been amended to conform to the evidence and proceed
to adjudicate on the basis of all the evidence before it.

In the instant case, inasmuch as the petitioner was afforded the opportunity to
refute and object to the evidence, both documentary and testimonial, formally
offered by private respondent, the rudiments of fair play are deemed satisfied. In
fact, the testimony of Reynaldo Flores was put under scrutiny during the course
of the cross-examination. Under these circumstances, the court acted within the
bounds of its jurisdiction and committed no reversible error in awarding actual
damages the amount of which is higher than that prayed for. Verily, the lower
court's actuations are sanctioned by the Rules and supported by jurisprudence.
Similarly, we affirm the grant of exemplary damages although the amount of Five
Million Pesos (P5,000,000.00) awarded, being excessive, is subject to reduction.
Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or
compensatory damages. 51 Considering its purpose, it must be fair and
reasonable in every case and should not be awarded to unjustly enrich a
prevailing party. 52 In our view, an award of P50,000.00 as exemplary damages in
the present case qualifies the test of reasonableness.
WHEREFORE, premises considered, the instant petition is DENIED for lack of
merit. The decision of the Court of Appeals is hereby AFFIRMED with
MODIFICATION of the amount awarded as exemplary damages. According,
petitioner is hereby ordered to pay private respondent the sum of
P99,000,000.00 as actual or compensatory damages; P50,000.00 as exemplary
damage and the costs of suit.
SO ORDERED.

G.R. No. L-55960 November 24, 1988

YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN YEN, petitioners,
vs.
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE, RODOLFO SY,
and HONORABLE COURT OF APPEALS, respondents.
Montesa, Albon, & Associates for petitioners.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.

CORTES, J.:
Sy Kiat, a Chinese national. died on January 17, 1977 in Caloocan City where he
was then residing, leaving behind real and personal properties here in the
Philippines worth P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy
filed a petition for the grant of letters of administration docketed as Special
Proceedings Case No. C-699 of the then Court of First Instance of Rizal Branch
XXXIII, Caloocan City. In said petition they alleged among others that (a) they are
the children of the deceased with Asuncion Gillego; (b) to their knowledge Sy Mat
died intestate; (c) they do not recognize Sy Kiat's marriage to Yao Kee nor the
filiation of her children to him; and, (d) they nominate Aida Sy-Gonzales for
appointment as administratrix of the intestate estate of the deceased [Record on
Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai Cho and Sy Yun
Chen who alleged that: (a) Yao Kee is the lawful wife of Sy Kiat whom he married
on January 19, 1931 in China; (b) the other oppositors are the legitimate children
of the deceased with Yao Kee; and, (c) Sze Sook Wah is the eldest among them
and is competent, willing and desirous to become the administratrix of the estate
of Sy Kiat [Record on Appeal, pp. 12-13; Rollo, p. 107.] After hearing, the probate
court, finding among others that:
(1) Sy Kiat was legally married to Yao Kee [CFI decision, pp. 12-27; Rollo, pp.
49-64;]
(2) Sze Sook Wah, Sze Lai Cho and Sze Chun Yen are the legitimate children of
Yao Kee with Sy Mat [CFI decision, pp. 28-31; Rollo. pp. 65-68;] and,

(3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe and Rodolfo Sy are the
acknowledged illegitimate offsprings of Sy Kiat with Asuncion Gillego [CFI
decision, pp. 27-28; Rollo, pp. 64- 65.]

held if favor of the oppositors (petitioners herein) and appointed Sze Sook Wah
as the administratrix of the intestate estate of the deceased [CFI decision, pp. 6869; Rollo, pp. 105-106.]
On appeal the Court of Appeals rendered a decision modifying that of the probate
court, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the lower Court is hereby
MODIFIED and SET ASIDE and a new judgment rendered as follows:
(1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy, Teresita Sy- Bernabe and
Rodolfo Sy acknowledged natural children of the deceased Sy Kiat with Asuncion
Gillego, an unmarried woman with whom he lived as husband and wife without
benefit of marriage for many years:
(2) Declaring oppositors Sze Sook Wah, Sze Lai Chu and Sze Chun Yen, the
acknowledged natural children of the deceased Sy Kiat with his Chinese wife Yao
Kee, also known as Yui Yip, since the legality of the alleged marriage of Sy Mat
to Yao Kee in China had not been proven to be valid to the laws of the Chinese
People's Republic of China (sic);
(3) Declaring the deed of sale executed by Sy Kiat on December 7, 1976 in favor
of Tomas Sy (Exhibit "G-1", English translation of Exhibit "G") of the Avenue
Tractor and Diesel Parts Supply to be valid and accordingly, said property should
be excluded from the estate of the deceased Sy Kiat; and
(4) Affirming the appointment by the lower court of Sze Sook Wah as judicial
administratrix of the estate of the deceased. [CA decision, pp. 11-12; Rollo, pp.
36- 37.]

From said decision both parties moved for partial reconsideration, which was
however denied by respondent court. They thus interposed their respective
appeals to this Court.
Private respondents filed a petition with this Court docketed as G.R. No. 56045
entitled "Aida Sy-Gonzales, Manuel Sy, Teresita 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 Mat would be married, the wedding date was set, and
invitations were sent out; that the said agreement was complied with; that she
has five children with Sy Kiat, but two of them died; that those who are alive are
Sze Sook Wah, Sze Lai Cho, and Sze Chun Yen, the eldest being Sze Sook Wah
who is already 38 years old; that Sze Sook Wah was born on November 7, 1939;
that she and her husband, Sy Mat, have been living in FooKien, China before he
went to the Philippines on several occasions; that the practice during the time of
her marriage was a written document [is exchanged] just between the parents of
the bride and the parents of the groom, or any elder for that matter; that in China,
the custom is that there is a go- between, a sort of marriage broker who is known
to both parties who would talk to the parents of the bride-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 Mat; that during her wedding, Sy Chick, the
eldest brother of Sy Kiat, signed the document with her mother; that as to the

whereabouts of that document, she and Sy Mat were married for 46 years
already and the document was left in China and she doubt if that document can
still be found now; that it was left in the possession of Sy Kiat's family; that right
now, she does not know the whereabouts of that document because of the lapse
of many years and because they left it in a certain place and it was already eaten
by the termites; that after her wedding with Sy Kiat, they lived immediately
together as husband and wife, and from then on, they lived together; that Sy Kiat
went to the Philippines sometime in March or April in the same year they were
married; that she went to the Philippines in 1970, and then came back to China;
that again she went back to the Philippines and lived with Sy Mat as husband
and wife; that she begot her children with Sy Kiat during the several trips by Sy
Kiat made back to China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]

Second, the testimony of Gan Ching, a younger brother of Yao Kee who stated
that he was among the many people who attended the wedding of his sister with
Sy Kiat and that no marriage certificate is issued by the Chinese government, a
document signed by the parents or elders of the parties being sufficient [CFI
decision, pp. 15-16; Rollo, pp.
52-53.]
Third, the statements made by Asuncion Gillego when she testified before the
trial court to the effect that (a) Sy Mat was married to Yao Kee according to
Chinese custom; and, (b) Sy Kiat's admission to her that he has a Chinese wife
whom he married according to Chinese custom [CFI decision, p. 17; Rollo, p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in Caloocan City on
October 3, 1972 where the following entries are found: "Marital statusMarried";
"If married give name of spousesYao Kee"; "Address-China; "Date of marriage
1931"; and "Place of marriageChina" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on January 12,
1968 where the following entries are likewise found: "Civil statusMarried"; and,
'If married, state name and address of spouseYao Kee Chingkang, China"
[Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977 by the Embassy
of the People's Republic of China to the effect that "according to the information
available at the Embassy Mr. Sy Kiat a Chinese national and Mrs. Yao Kee alias
Yui Yip also Chinese were married on January 19, 1931 in Fukien, the People's
Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between Yao Kee and
Sy Kiat. However, the same do not suffice to establish the validity of said
marriage in accordance with Chinese law or custom.
Custom is defined as "a rule of conduct formed by repetition of acts, uniformly
observed (practiced) as a social rule, legally binding and obligatory" [In the
Matter of the Petition for Authority to Continue Use of the Firm Name "Ozaeta,

Romulo, de Leon, Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL
Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed., Vol. 1, p. 7.] The law
requires that "a custom must be proved as a fact, according to the rules of
evidence" [Article 12, Civil Code.] On this score the Court had occasion to state
that "a local custom as a source of right can not be considered by a court of
justice unless such custom is properly established by competent evidence like
any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The same evidence,
if not one of a higher degree, should be required of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil Code which
states that:
Art. 71. All marriages performed outside the Philippines in accordance with the
laws in force in the country where they were performed and valid there as such,
shall also be valid in this country, except bigamous, Polygamous, or incestuous
marriages, as determined by Philippine law. (Emphasis supplied.) ***

Construing this provision of law the Court has held that to establish a valid
foreign marriage two things must be proven, namely: (1) the existence of the
foreign law as a question of fact; and (2) the alleged foreign marriage by
convincing evidence [Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of Court. With
respect to an unwritten foreign law, Rule 130 section 45 states that:
SEC. 45. Unwritten law.The oral testimony of witnesses, skilled therein, is
admissible as evidence of the unwritten law of a foreign country, as are also
printed and published books of reports of decisions of the courts of the foreign
country, if proved to be commonly admitted in such courts.

Proof of a written foreign law, on the other hand, is provided for under Rule 132
section 25, thus:
SEC. 25. Proof of public or official record.An official record or an entry therein,
when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record,
or by his deputy, and accompanied, if the record is not kept in the Philippines,
with a certificate that such officer has the custody. If the office in which the record
is kept is in a foreign country, the certificate may be made by a secretary of
embassy or legation, consul general, consul, vice consul, or consular agent or by
any officer in the foreign service of the Philippines stationed in the foreign country
in which the record is kept and authenticated by the seal of his office.

The Court has interpreted section 25 to include competent evidence like the
testimony of a witness to prove the existence of a written foreign law [Collector of
Internal Revenue v. Fisher 110 Phil. 686, 700-701 (1961) citing Willamette Iron
and Steel Works v. Muzzal, 61 Phil. 471 (1935).]

In the case at bar petitioners did not present any competent evidence relative to
the law and custom of China on marriage. The testimonies of Yao and Gan Ching
cannot be considered as proof of China's law or custom on marriage not only
because they are
self-serving evidence, but more importantly, there is no showing that they are
competent to testify on the subject matter. For failure to prove the foreign law or
custom, and consequently, the validity of the marriage in accordance with said
law or custom, the marriage between Yao Kee and Sy Kiat cannot be recognized
in this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling they are not duty
bound to prove the Chinese law on marriage as judicial notice thereof had been
taken by this Court in the case of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction is the principle
that Philippine courts cannot take judicial notice of foreign laws. They must be
alleged and proved as any other fact [Yam Ka Lim v. Collector of Customs, 30
Phil. 46, 48 (1915); Fluemer v. Hix, 54 Phil. 610 (1930).]
Moreover a reading of said case would show that the party alleging the foreign
marriage presented a witness, one Li Ung Bieng, to prove that matrimonial letters
mutually exchanged by the contracting parties constitute the essential requisite
for a marriage to be considered duly solemnized in China. Based on his
testimony, which as found by the Court is uniformly corroborated by authors on
the subject of Chinese marriage, what was left to be decided was the issue of
whether or not the fact of marriage in accordance with Chinese law was duly
proven [Sy Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court has indeed taken
judicial notice of the law of China on marriage in the aforecited case, petitioners
however have not shown any proof that the Chinese law or custom obtaining at
the time the Sy Joc Lieng marriage was celebrated in 1847 was still the law when
the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or eighty-four (84)
years later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil. 633 (1916)] as
being applicable to the instant case. They aver that the judicial pronouncement in
the Memoracion case, that the testimony of one of the contracting parties is
competent evidence to show the fact of marriage, holds true in this case.
The Memoracion case however is not applicable to the case at bar as said case
did not concern a foreign marriage and the issue posed was whether or not the
oral testimony of a spouse is competent evidence to prove the fact of marriage in
a complaint for adultery.

Accordingly, in the absence of proof of the Chinese law on marriage, it should be

presumed that it is the same as ours *** [Wong Woo Yiu v. Vivo, G.R. No. L21076, March 31, 1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her
testimony that there was no solemnizing officer as is known here in the
Philippines [See Article 56, Civil Code] when her alleged marriage to Sy Mat was
celebrated [CFI decision, p. 14; Rollo, p. 51], it therefore follows that her
marriage to Sy Kiat, even if true, cannot be recognized in this jurisdiction [Wong
Woo Yiu v. Vivo, supra., pp. 555-556.]
II. The second issue raised by petitioners concerns the status of private
respondents.
Respondent court found the following evidence of petitioners' filiation:
(1) Sy Kiat's Master Card of Registered Alien where the following are entered:
"Children if any: give number of childrenFour"; and, "NameAll living in China"
[Exhibit "SS-1";]
(2) the testimony of their mother Yao Kee who stated that she had five children
with Sy Kiat, only three of whom are alive namely, Sze Sook Wah, Sze Lai Chu
and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;] and,
(3) an affidavit executed on March 22,1961 by Sy Kiat for presentation to the
Local Civil Registrar of Manila to support Sze Sook Wah's application for a
marriage license, wherein Sy Kiat expressly stated that she is his daughter
[Exhibit "3".]

Likewise on the record is the testimony of Asuncion Gillego that Sy Kiat told her
he has three daughters with his Chinese wife, two of whomSook Wah and Sze
Kai Choshe knows, and one adopted son [TSN, December 6,1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao Kee with Sy Mat
according to the laws of China, they cannot be accorded the status of legitimate
children but only that of acknowledged natural children. Petitioners are natural
children, it appearing that at the time of their conception Yao Kee and Sy Kiat
were not disqualified by any impediment to marry one another [See Art. 269, Civil
Code.] And they are acknowledged children of the deceased because of Sy Kiat's
recognition of Sze Sook Wah [Exhibit "3"] and its extension to Sze Lai Cho and
Sy Chun Yen who are her sisters of the full blood [See Art. 271, Civil Code.]
Private respondents on the other hand are also the deceased's acknowledged
natural children with Asuncion Gillego, a Filipina with whom he lived for twentyfive (25) years without the benefit of marriage. They have in their favor their
father's acknowledgment, evidenced by a compromise agreement entered into by
and between their parents and approved by the Court of First Instance on
February 12, 1974 wherein Sy Kiat not only acknowleged them as his children by
Asuncion Gillego but likewise made provisions for their support and future
inheritance, thus:

xxx xxx xxx

2. The parties also acknowledge that they are common-law husband and wife
and that out of such relationship, which they have likewise decided to definitely
and finally terminate effective immediately, they begot five children, namely: Aida
Sy, born on May 30, 1950; Manuel Sy, born on July 1, 1953; Teresita Sy, born on
January 28, 1955; Ricardo Sy now deceased, born on December 14, 1956; and
Rodolfo Sy, born on May 7, 1958.
3. With respect to the AVENUE TRACTOR AND DIESEL PARTS SUPPLY ... , the
parties mutually agree and covenant that
(a) The stocks and merchandize and the furniture and
equipments ..., shall be divided into two equal shares between,
and distributed to, Sy Kiat who shall own
one-half of the total and the other half to Asuncion Gillego who
shall transfer the same to their children, namely, Aida Sy, Manuel
Sy, Teresita Sy, and Rodolfo Sy.
(b) the business name and premises ... shall be retained by Sy
Kiat. However, it shall be his obligation to give to the aforenamed
children an amount of One Thousand Pesos ( Pl,000.00 )
monthly out of the rental of the two doors of the same building
now occupied by Everett Construction.
xxx xxx xxx
(5) With respect to the acquisition, during the existence of the
common-law husband-and-wife relationship between the parties, of the real
estates and properties registered and/or appearing in the name of Asuncion
Gillego ... , the parties mutually agree and covenant that the said real estates
and properties shall be transferred in equal shares to their children, namely, Aida
Sy, Manuel Sy, Teresita Sy, and Rodolfo Sy, but to be administered by Asuncion
Gillego during her lifetime ... [Exhibit "D".] (Emphasis supplied.)
xxx xxx xxx

This compromise agreement constitutes a statement before a court of record by

which a child may be voluntarily acknowledged [See Art. 278, Civil Code.]
Petitioners further argue that the questions on the validity of Sy Mat's marriage to
Yao Kee and the paternity and filiation of the parties should have been ventilated
in the Juvenile and Domestic Relations Court.
Specifically, petitioners rely on the following provision of Republic Act No. 5502,
entitled "An Act Revising Rep. Act No. 3278, otherwise known as the Charter of
the City of Caloocan', with regard to the Juvenile and Domestic Relations Court:
SEC. 91-A. Creation and Jurisdiction of the Court.
xxx xxx xxx

The provisions of the Judiciary Act to the contrary notwithstanding, the court shall
have exclusive original jurisdiction to hear and decide the following cases:
xxx xxx xxx
(2) Cases involving custody, guardianship, adoption, revocation of adoption,
paternity and acknowledgment;
(3) Annulment of marriages, relief from marital obligations, legal separation of
spouses, and actions for support;
(4) Proceedings brought under the provisions of title six and title seven, chapters
one to three of the civil code;
xxx xxx xxx

and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-23661, 21
SCRA 1324] reiterated in Divinagracia v. Rovira [G.R. No. L-42615, 72 SCRA
307.]
With the enactment of Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, the Juvenile and Domestic Relations
Courts were abolished. Their functions and jurisdiction are now vested with the
Regional Trial Courts [See Section 19 (7), B.P. Blg. 129 and Divinagracia v.
Belosillo, G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it is no
longer necessary to pass upon the issue of jurisdiction raised by petitioners.
Moreover, even without the exactment of Batas Pambansa Blg. 129 we find in
Rep. Act No. 5502 sec. 91-A last paragraph that:
xxx xxx xxx
If any question involving any of the above matters should arise as an incident in
any case pending in the ordinary court, said incident shall be determined in the
main case.
xxx xxx xxx

As held in the case of Divinagracia v. Rovira [G.R. No. L42615. August 10, 1976,
72 SCRA 307]:
xxx xxx xxx
It is true that under the aforequoted section 1 of Republic Act No. 4834 **** a case
involving paternity and acknowledgment may be ventilated as an incident in the
intestate or testate proceeding (See Baluyot vs. Ines Luciano, L-42215, July 13,
1976). But that legal provision presupposes that such an administration
proceeding is pending or existing and has not been terminated. [at pp. 313-314.]
(Emphasis supplied.)

xxx xxx xxx

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

[G.R. No. L-10060. November 27, 1956.]

MARIA S. PASCUAL, Plaintiff-Appellee, vs. JOSE LACSAMANA, DefendantAppellant.
DECISION
LABRADOR, J.:
On July 23, 1951, the Defendant executed a document in Tagalog, presented at the trial as
Exhibit A, which reads:
chanroblesvirtuallawlibrary

ALAMIN NG LAHAT NG MAKABABASA NITO:

chanroblesvirtuallawlibrary

Na ako, si Jose Lacsamana, may sapat na gulang, may asawa, at kasalukuyan

naninirahan sa 1039 Trabajo, Sampaloc, Manila ay nagpapatunay ng sumusunod:
chanroblesvirtuallawlibrary

Una. Na ako ay umutang ng halagang anim na libo apat na daan at limang piso at
limang pu at tatlong sentimos lamang (P6,405.53) kualtang pilipino, kay Gng. Maria S.
Pascual ng Malabon, Rizal ngayong araw na ito.
Ikalawa. Na ang nasabing utang ay ipinangangako kong bahayaran sa nasabing
Ginang sa Deciembre 31, 1951.
Ikatlo. Na ang lahat ng isdang huhulihin sa aming palaisdaang MAGPITO at
PULO na nasa Pampanga, sa punduhan ng isda sa Hulong Duat, Malabon, Rizal, upang
ipagbili at sa lahat ng pagbibilhan ay aawasin ang kangyang komissiong 5 porciento.
Ikaapat. Na ang nasabing halaga ay aking bibigyan ng tubo o interest ng 12 porciento
isang taon sa nasabing Ginang mula ngayon araw na ito hanggang sa Deciembre 31,
1951.
Ikalima. Na kung sakalit hindi ako makabayad sa aking utang sa nasabing Ginang sa
taning na nakalagay dito, at ang pagsigil sa akin ay umabot sa jusgado ako ay
nangangako na magbabayad ng aking pagkakautang at bukod sa doon ay magbabayad
ako ng 25 porciento ng aking pagkakautang bilang daos y perjuicios o costas ng
abogado.
SA KATUNAYAN NG LAHAT NG ITO, ako ay lumagda sa ibaba nito, dito sa
Malabon, Rizal ngayong ika 23 ng Julio, 1951.
Jose Lacsamana
On February 27, 1953, he again executed another document, presented at the trial as
Exhibit D, which read:
chanroblesvirtuallawlibrary

SA LAHAT AY AKING PINATUTUNAYAN:

chanroblesvirtuallawlibrary

Ako, si JOSE LACSAMANA, matapos na makapanumpa, ay nagsasalaysay ng mga

sumusunod:
chanroblesvirtuallawlibrary

1. Na ako ay may nakuhang cualta sa Gng. Maria Pascual, sa halagang Anim na libong
piso at apat na daan at lima at limanput tatlong centimos (P6,405.53) noong 23 ng Julio
ng 1951.
2. Na bilang katunayan na ako ay handang magbayad ng nasabing utang ako ay
nangakong maghuhulog ng isda kay Gng. Maria Pascual, at bukod ditoy akoy
nangakong magpapatong ng nuukol na interes sa halagang aking nautang hanggang sa
mabayaran ang halagang aking nakuha.
3. Na akoy nangakong magbayad ng nasabing utang, kasama and nauukol na interes,
sangayon sa kasulatang aking nilagdaan, noong ika a 31 ng Deciembre, 1951.
4. Na hangga sa ngayon ay hindi pa ako nagbabayad ng nasabing utang kay Gng. Maria
Pascual.
5. Na noong Deciembre, 1952, ako ay nakipagusap kay Gng. Maria Pascual at ulit ay
nangakong magbabayad ng nasabing utang nitong katapusan ng Febrero, 1953, ngunit
hindi pa rin ako nagbayad ng nasabing utang.
6. Na ngayong ika 27 ng Febrero, akoy muling nakipagusap sa kay Gng. Maria Pascual
at sa kay Atty. Arsenio Roldan, Jr., at sa harap nitong huli, ako ay nangakong muli na
magbabayad ng nasabing utang sa fecha 20 ng Marzo, 1953.
SA KATUNAYAN NG LAHAT NG ITO, ako ay lumagda sa kasulatang ito, ngayong ika
27 ng Febroro, 1953.
Manila, Philippines
JOSE LACSAMANA
Plaintiff brought this action alleging that Defendant has not paid the indebtedness that he
had agreed and promised to pay in accordance with his promisory note of July 23, 1951
(Exhibit A); that Defendant also promised therein to sell all the fish that would be
harvested from his two fishponds, through the Plaintiff, who will receive 5 per cent
commission, but failed to comply with this obligation, depriving Plaintiff of an unrealized
commission estimated at P700. She, therefore, prays that Defendant be sentenced to pay
the sum of P6,405.53, the amount of the debt, plus interest thereon at the rate of 12% per
annum from the date of the execution of the instrument until the debt is fully paid, and
that she also be ordered to pay Plaintiff P700, representing the 5 per cent commission
which the Plaintiff failed to realize. She also prays that Defendant be sentenced to pay
P1,601.38, representing 25 per cent of the debt, as liquidated damages.
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The Defendant claims that the facts are not presented clearly by Plaintiff. He alleges that
on February 27, 1953, he and Plaintiff settled and liquidated all their outstanding
accounts, and in consideration of said cancellation and renovation, Defendant executed
the contract, Exhibit D . By way of counterclaim, he alleges that he had delivered fish
valued at P1,198.15, and that after deducting Plaintiffs commission thereon, Plaintiff still
owed him a balance of P1,004.25. He, therefore, asks that Plaintiffs complaint be
dismissed, and that Plaintiff be sentenced to pay the sum stated in his counterclaim.
After the trial and on January 4, 1954, the court rendered judgment sentencing Defendant
to pay the sum of P6,405.53, plus interest thereon at 12% per annum from July 23, 1951
until the whole amount is fully paid, and the further sum of P1,601.38, representing 25

per cent of the aforementioned amount, as liquidated damages and attorneys fees, plus
the costs. Defendants counterclaim was dismissed.
Against the above judgment, Defendant appealed to the Court of Appeals, which in due
time, certified the case to Us, on the ground that only questions of law are involved. The
only error assigned in the appeal is that the lower court erred in holding that Exhibit D
did not novate Exhibit A.
A comparison between the two instruments will readily show that the second one, Exhibit
D, is absolutely silent on Defendants obligation to deliver all the fish produced from his
two fishponds to the Plaintiff, as well as on the payment of liquidated damages of 25 per
cent. It contains nothing but a recital of past unfulfilled promises to pay made by
Defendant, and a final promise to pay the obligation on March 20, 1953. Whether or not
Plaintiff agreed to this date of payment does not appear, but even if she did, the change
would be limited to the date of payment and it cannot be held to extend to all other
particulars of the contract. For a novation to exist, there must be a change, substitution, or
renewal of an obligation or obligatory relation, with the intention of extinguishing or
modifying essentially the former, debitum pro debito. (4 S. R. 424.) If the second
instrument was accepted by Plaintiff so that the period for the payment was intended to
be postponed, there would still be no novation because mere extension of payment and
the addition of another obligation not incompatible with the old one is not a novation
thereof (Inchausti & Co. vs. Yulo, 34 Phil. 978). Furthermore, novation is never
presumed; there must be a declaration to that effect in unequivocal terms, or that the
old and the new obligations must be incompatible (Article 1292, Civil Code).
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Finding no error in the judgment of the court a quo, the same is hereby affirmed in toto,
and it appearing that the appeal is frivolous, Defendant is hereby sentenced to pay double
costs.