1. Bank Of America V. CA , G.R. No.

120135, March 31, 2003

FACTS:

Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas) were engaged in

the shipping business owning 2 vessels: Don Aurelio and El Champion

Because their business where doing well, Bank of America (BA) offered them

to take a loan for them to increase their ships.

BA acquired through them as borrowers four more ships: (a) El Carrier; (b)

El General; (c) El Challenger; and (d) El Conqueror. Theregistration, operation,

income, funds, possession of the vessel belonged to the corporation.
May 10, 1993: Litonjuas filed a complaint to the RTC Pasig claming that

during its operations and the foreclosure sale, BA as trutees failed to fully
render an account of the income. They lost all their 6vessels and 10% of their
personal funds and they still have an unpaid balance of their loans.
BA NT&SA, and BA international filed a Motion to Dismiss on grounds of forum

non conveniens and lack of cause of action against them

RTC and CA: Dismissed

ISSUE:
1. W/N there is grounds of forum non conveniens
2. W/N there is litis pendentia
HELD: Denied
1. NO.

The doctrine of forum non-conveniens, literally meaning 'the forum is

inconvenient', emerged in private international law to deter the practice of

global forum shopping
Under this doctrine, a court, in conflicts of law cases, may refuse impositions

on its jurisdiction where it is not the most "convenient" or available forum and
the parties are not precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said

doctrine depends largely upon the facts of the particular case and is addressed
to the sound discretion of the trial court.
Philippine Court may assume jurisdiction over the case if it chooses to do so;

provided, that the following requisites are met:

(1) that the Philippine Court is one to which the parties may
conveniently resort to; - present

(2) that the Philippine Court is in a position to make an intelligent

decision as to the law and the facts; and, - present

(3) that the Philippine Court has or is likely to have power to enforce its

decision - present
This Court further ruled that while it is within the discretion of the trial court
to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require
the court's desistance; and that the propriety of dismissing a case based on this
principle of forum non conveniens requires a factual determination, hence it is
more properly considered a matter of defense

2. NO.

litis pendentia to be a ground for the dismissal of an action there must be:
(a) identity of the parties or at least such as to represent the same

interest in both actions -present

(b) identity of rights asserted and relief prayed for, the relief being

founded on the same acts - not shown

(c) the identity in the two cases should be such that the judgment

which may be rendered in one would, regardless of which party is successful,

amount to res judicata in the other - not shown
It merely mentioned that civil cases were filed in Hongkong and England

2. Philippine Export and Foreign Loan Guarantee Corporation v V.P.

Eusebio Construction Inc.
Facts:
1. The State Organization of Buildings (SOB), Ministry of Housing and Construction,
Baghdad, Iraq awarded the construction of the Institute of Physical Therapy-Medical
Rehabilitation Center in Iraq to Ayjal Trading and Contracting Company for a total
contract price of about $18M.
2. Spouses Santos, in behalf of 3-Plex International, Inc., a local contractor engaged
in construction business, entered into a joint venture agreement with Ayjal wherein
the former undertook the execution of the entire a project, while the latter would be
entitled to a commission of 4%.
3. 3-Plex not accredited by the Philippine Overseas Construction Board (POCB)
assigned and transferred all its rights and interests to VPECI.
4. The SOB required the contractors to submit a performance bond representing 5%
of the total contract price, an advance payment bond representing 10% of the
advance payment to be released upon signing of the contract. To comply with these
requirements 3-Plex and VPECI applied for a guarantee with Philguarantee, a

government financial institution empowered to issue guarantees for qualified

Filipino contractors.
5. But what SOB required was a guarantee from the Rafidain Bank of Baghdad so
Rafidain Bank issued a performance bond in favor of SOB on the condition that
another foreign bank (not Phil Guarantee) would issue the counter-guarantee.
Hence, Al Ahli Bank of Kuwait was chosen to provide the counter guarantee.
6.Afterwards, SOB and the joint venture of VPECI and Ayjal executed the service
contract. Under the contract, the joint venture would supply manpower and
materials, SOB would refund 25% of the project cost in Iraqi Dinar and 75% in US
dollars at an exchange rate of 1 Dinar to $3.37.
7.The project was not completed. Upon seeing the impossibility of meeting the
deadline, the joint venture worked for the renewal or extension (12x) of the
performance bond up to December 1986.
8. In October 1986, Al Ahli Bank sent a telex call demanding full payment of its
performance bond counter-guarantee. Upon receipt, VPECI requested Iraq Trade and
Economic Development Minister Fadhi Hussein to recall the telex for being in
contravention of its mutual agreement that the penalty will be held in abeyance
until completion of the project. It also wrote SOB protesting the telex since the Iraqi
government lacks foreign exchange to pay VPECI and the non-compliance with the
75% billings in US dollars.
9. Philguarantee received another telex from Al Ahli stating that it already paid to
Rafidain Bank. The Central Bank authorized the remittance to Al Ahli Bank
representing the full payment of the performance counter-guarantee for VPECI's
project in Iraq.
10. Philguarantee sent letters to respondents demanding the full payment of the
surety bond. Respondents failed to pay so petitioner filed a civil case for collection
of sum of money.
11. Trial Court ruling: Dismissed. Philguarantee had no valid cause of action against
the respondents. The joint venture incurred no delay in the execution of the project
considering that SOB's violations of the contract rendered impossible the
performance of its undertaking.
12. CA: Affirmed.

Issue:
What law should be applied in determining whether or not contractor (joint venture)
has defaulted?

Held:
The question of whether there is a breach of the agreement which includes default
pertains to the INTRINSIC validity of the contract.
No conflicts rule on essential validity of contracts is expressly provided for in our laws. The rule
followed by most legal systems is that the intrinsic validity of a contract must be governed by lex
contractus (proper law of the contract). This may be the law voluntarily agreed upon by the
parties (lex loci voluntatis) or the law intended by them either expressly or implicitly (lex loci
intentionis). The law selected may be implied from factors such as substantial connection with
the transaction, or the nationality or domicile of the parties. Philippine courts adopt this: to allow
the parties to select the law applicable to their contract, SUBJECT to the limitation that it is not
against the law, morals, public policy of the forum and that the chosen law must bear a
substantive relationship to the transaction.
In the case, the service contract between SOB and VPECI contains no express choice of law.
The laws of Iraq bear substantial connection to the transaction and one of the parties is the Iraqi
government. The place of performance is also in Iraq. Hence, the issue of whether VPECI
defaulted may be determined by the laws of Iraq.
BUT! Since foreign law was not properly pleaded or proved, processual presumption will apply.
According to Art 1169 of the Civil Code: In reciprocal obligations, neither party incurs in delay if
the other party does not comply or is not ready to comply in a proper manner what is incumbent
upon him.
As found by the lower courts: the delay or non-completion of the project was caused by factors
not imputable to the Joint Venture, it was rather due to the persistent violations of SOB,
particularly it's failure to pay 75% of the accomplished work in US dollars. Hence, the joint
venture does not incur in delay if the other party(SOB) fails to perform the obligation incumbent
upon him.

3. Northwest Orient Airlines, Inc. V. CA (1995), G.R. No. 112573 February 9, 1995

FACTS:

Northwest Airlines (Northwest) and C.F. Sharp & Company (C.F.), through its
Japan

branch,

entered

into

an

International

Passenger

Sales

Agency

Agreement, whereby the Northwest authorized the C.F. to sell its air
transportation tickets

March

25,

1980: Unable

to

remit

the

proceeds

of

the

ticket

sales, Northwest sued C.F. in Tokyo, Japan, for collection of the unremitted
proceeds of the ticket sales, with claim for damages

April 11, 1980: writ of summons was issued by the 36th Civil Department,
Tokyo District Court of Japan

The attempt to serve the summons was unsuccessful because Mr.

Dinozo was in Manila and would be back on April 24, 1980

April 24, 1980: Mr. Dinozo returned to C.F. Office to serve the summons but
he refused to receive claiming that he no longer an employee

After the 2 attempts of service were unsuccessful, Supreme Court of Japan

sent the summons together with the other legal documents to the Ministry
of Foreign Affairs of Japan> Japanese Embassy in Manila>Ministry (now
Department) of Foreign Affairs of the Philippines>Executive Judge of the Court
of First Instance (now Regional Trial Court) of Manila who ordered Deputy
Sheriff Rolando Balingit>C.F. Main Office

August 28, 1980: C.F. received from Deputy Sheriff Rolando Balingit the writ
of summons but failed to appear at the scheduled hearing.

January 29, 1981: Tokyo Court rendered judgment ordering the C.F. to
pay 83,158,195 Yen and damages for delay at the rate of 6% per annum from
August 28, 1980 up to and until payment is completed

March 24, 1981: C.F. received from Deputy Sheriff Balingit copy of the
judgment. C.F. did not appeal so it became final and executory

May 20, 1983: Northwest filed a suit for enforcement of the judgment a RTC

July 16, 1983: C.F. averred that the Japanese Court sought to be enforced is
null and void and unenforceable in this jurisdiction having been rendered
without due and proper notice and/or with collusion or fraud and/or upon a
clear mistake of law and fact. The foreign judgment in the Japanese Court

sought in this action is null and void for want of jurisdiction over the person of
the defendant considering that this is an action in personam. The process of
the Court in Japan sent to the Philippines which is outside Japanese jurisdiction
cannot confer jurisdiction over the defendant in the case before the Japanese
Court of the case at bar

CA sustained RTC: Court agrees that if the C.F. in a foreign court is a resident
in the court of that foreign court such court could acquire jurisdiction over the
person of C.F. but it must be served in the territorial jurisdiction of the foreign
court

ISSUE: W/N the Japanese Court has jurisdiction over C.F.

HELD: YES. instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST's claims for attorneys fees, litigation
expenses, and exemplary damages

Consequently, the party attacking (C.F.) a foreign judgment has the burden of
overcoming the presumption of its validity

Accordingly, the presumption of validity and regularity of the service of

summons and the decision thereafter rendered by the Japanese court must
stand.

Applying it, the Japanese law on the matter is presumed to be similar with
the Philippine law on service of summons on a private foreign corporation
doing business in the Philippines. Section 14, Rule 14 of the Rules of Court
provides that if the defendant is a foreign corporation doing business in the
Philippines, service may be made:

(1) on its resident agent designated in accordance with law for that
purpose, or,

(2) if there is no such resident agent, on the government official

designated by law to that effect; or

(3) on any of its officers or agents within the Philippines.

If the foreign corporation has designated an agent to receive

summons, the designation is exclusive, and service of summons is without
force and gives the court no jurisdiction unless made upon him.

Where the corporation has no such agent, service shall be made on the
government official designated by law, to wit:
(a) the Insurance Commissioner in the case of a foreign

insurance company
(b)

the

Superintendent of

Banks,

in

the

case

of

foreign banking corporation

(c) the Securities and Exchange Commission, in the case of

other foreign corporations duly licensed to do business in the Philippines.

Whenever service of process is so made, the government office or official
served shall transmit by mail a copy of the summons or other legal proccess to
the corporation at its home or principal office. The sending of such copy is a
necessary part of the service.

The service on the proper government official under Section 14, Rule 14 of
the Rules of Court, in relation to Section 128 of the Corporation Code

Our laws and jurisprudence indicate a purpose to assimilate foreign

corporations, duly licensed to do business here, to the status of domestic
corporations

We think it would be entirely out of line with this policy should we make a
discrimination against a foreign corporation, like the petitioner, and subject its
property to the harsh writ of seizure by attachment when it has complied not
only with every requirement of law made specially of foreign corporations, but
in addition with every requirement of law made of domestic corporations

In as much as SHARP was admittedly doing business in Japan through its four

duly registered branches at the time the collection suit against it was filed,
then in the light of the processual presumption, SHARP may be deemed a
resident of Japan, and, as such, was amenable to the jurisdiction of the courts
therein and may be deemed to have assented to the said courts' lawful
methods of serving process.
Accordingly, the extraterritorial service of summons on it by the Japanese

Court was valid not only under the processual presumption but also because of
the presumption of regularity of performance of official duty.
3. Northwest Orient Airlines v. CA 241 SCRA 192 [1995]
FACTS
[In 1974, an International Passenger Sales Agency Agreement was entered into by
plaintiff Northwest Orient Airlines (Northwest) and defendant C.F. Sharp & Co.
(Sharp), through its Japan branch, whereby Northwest authorized Sharp to sell the
former's
airlines
tickets.
Sharp failed to remit the proceeds of the ticket sales it made on behalf of Northwest
under the agreement which led the latter to sue in Tokyo for collection of the
unremitted amount, with claim for damages.
The Tokyo District Court of Japan issued a writ of summons against Sharp at its
office in Yokohama, Japan but the bailiff failed twice to serve the writs. Finally, the
Tokyo District Court decided to have the writs of summons served at Sharp's head
office in Manila. Sharp accepted the writs but despite such receipt, it failed to
appear at the hearings. The District Court proceeded to hear the complaint and
rendered judgment ordering Sharp to pay Northwest the sum of 83,158,195 Yen plus
damages. Sharp failed to appeal and the judgment became final and executory.
Northwest failed to execute the decision in Japan, hence, it filed a suit for
enforcement of the judgment before the Regional Trial Court of Manila. Sharp filed
its answer averring that the judgment of the Japanese court is null and void and
unenforceable in this jurisdiction having been rendered without due and proper
notice to Sharp.
The case for enforcement of judgment was tried on the merits. Sharp filed a Motion
for Judgment on a Demurrer to Evidence. The trial court granted the demurrer
motion, holding that the foreign judgment in the Japanese court sought to be

enforced is null and void for want of jurisdiction over the person of the defendant.
Northwest appealed but the Court of Appeals sustained the trial court, holding that
the process of the court has no extraterritorial effect and no jurisdiction was
acquired over the person of the defendant by serving him beyond the boundaries of
the state. Hence, this appeal by Northwest.]
RULING
"A foreign judgment is presumed to be valid and binding in the country from which
it comes, until the contrary is shown. It is also proper to presume the regularity of
the proceedings and the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in
personam of a tribunal of a foreign country having jurisdiction to pronounce the
same is presumptive evidence of a right as between the parties and their
successors-in-interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud, or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court,
whether of the Philippines or elsewhere, enjoys the presumption that it was acting
in the lawful exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming
the presumption of its validity. Being the party challenging the judgment rendered
by the Japanese court, SHARP had the duty to demonstrate the invalidity of such
judgment. In an attempt to discharge that burden, it contends that the
extraterritorial service of summons effected as its home office in the Philippines was
not only ineffectual but also void, and the Japanese Court did not, therefore, acquire
jurisdiction over it.
It is settled that matters of remedy and procedure such as those relating to the
service of process upon a defendant are governed by the lex fori or the internal law
of the forum. In this case, it is the procedural law of Japan where the judgment was
rendered that determines the validity of the extraterritorial service'of process on
SHARP. As to what this law is is a question of fact, not of law. It may not be taken
judicial notice of and must be pleaded and proved like any other fact. Sections 24
and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an
official publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon SHARP to present evidence as to what that Japanese procedural
law is and to show taat under it, the assailed extraterritorial service is invalid. It did
not. Accordingly, the presumption of validity and regularity of the service of
summons and the decision thereafter rendered by the Japanese court must stand.
Alternatively, in the light of the absence of proof regarding Japanese law, the
presumption of identity or similarity or the so-called processual presumpcion may
be invoked. Applying it, the Japanese law on the matter is presumed to be similar
with the Philippine law on service of summons on a private foreign corporation

doing business ir, the Philippines. Section 14 of the Rules of Court provides that if
the defendant is a foreign corporation doing business in the Philippines, service may
be made: 1) on its resident agent designated in accordance with law for that
purpose, or 2) if there is no such resident agent, on the government official
designated by law to that effect, or 3) on any of its officers or agents within the
Philippines.
If the foreign corporation has designated an agent to receive summons, the
designation is exclusive, and service of summons is without force and gives the
court no jurisdiction unless made upon him.
Where the corporation has no such great agent, service shall be made on the
government official designated by law, to wit: (a) the Insurance Commissioner, in
the case of a foreign insurance company; (b) the Superintendent of Banks, in the
case of a foreign banking corporation; and (c) the Securities and Exchange
Commission, in the case of other foreign corporations duly licensed to do business
in the Philippines. Whenever service of process is so made, the government office or
official served shall transmit by mail a copy of the summons or other legal process
to the corporation at its home or principal office. The sending of such copy is a
necessary part of the service.
Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only mean, or at
least create an impression, that it had none. Hence, service on the designated
government official or any of its officers or agents in Japan could be availed of.
As found by the Court of Appeals, it was the Tokyo District Court which ordered that
summons for SHARP be served at its head office in the Philippines after the two
attempts of service had failed. The Tokyo District Court requested the Supreme
Court of Japan to cause the delivery of the summons and other legal documents to
the Philippines. Acting on that request, the Supreme Court of Japan sent the
summons together with the other legal documents to the Ministry of Foreign Affairs
of Japan, which in turn, forwarded the same to the Japanese Embassy in Manila.
Thereafter, the court processes were delivered to the Ministry (now Department) of
Foreign Affairs of the Philippines then to the Executive Judge of the Court of First
Instance (now Regional Trial Court) of Manila, who forthwith ordered Deputy Sheriff
Rolando Balingit to serve the same on SHARP at its principal office in Manila. This
service is equivalent to service on the proper government official under Section 14,
Rule 14 of the Rules of Court, in relation to Section 128 of the Corporation Code.
Hence, SHARP's contention that such manner of service is not valid under Philippine
law holds no water.
Inasmuch as SHARP was admittedly doing business in Japan through its four
registered branches at the time the collection suit against it was filed, then in the
light of the processual presumption, SHARP may be deemed a resident of JAPAN,

and, as such, was amenable to the jurisdiction of the courts therein and may be
deemed to have assented to the said courts' lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by the Japanese Court was
valid not only under the processual presumption but also because of the
presumption of regularity of performance of official duty.

4. BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA,

and the rest of 1,767 NAMED-COMPLAINANTS, thru and by their Attorneyin-fact, Atty. GERARDO A. DEL MUNDOvs. PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATIONS ADMINISTRATOR, NLRC, BROWN & ROOT
INTERNATIONAL,
INC.
AND/OR
ASIA
INTERNATIONAL
BUILDERS
CORPORATION, GRN 104776, December 5,1994.
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court for
Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf of
728 other OCWs instituted a class suit by filing an Amended Complaint with the
POEA for money claims arising from their recruitment by ASIA INTERNATIONAL
BUILDERS CORPORATION (AIBC) and employment by BROWN & ROOT
INTERNATIONAL, INC (BRI) which 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 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;
reimbursement 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
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.
AIB and BRII kept on filing Motion for Extension of Time to file their answer. The
POEA kept on granting such motions.

On November 14, 1984, claimants filed an opposition to the motions for extension
of time and asked that AIBC and BRII declared in default for failure to file their
answers.
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.
(at madami pang motions ang na-file, new complainants joined the case, ang
daming inavail na remedies ng both parties)
On June 19, 1987, AIBC finally 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 February 24, 1988, AIBC and BRII
submitted position paper. On October 27, 1988, AIBC and BRII filed a Consolidated
Reply, POEA Adminitartor rendered his decision which awarded the amount of
$824, 652.44 in favor of only 324 complainants. Claimants submitted their Appeal
Memorandum For Partial Appeal from the decision of the POEA. AIBC also filed its
MR and/or appeal in addition to the Notice of Appeal filed earlier.
NLRC promulgated its Resolution, modifying the decision of the POEA. The resolution
removed some of the benefits awarded in favor of the claimants. NLRC denied all
the MRs. Hence, these petitions filed by the claimants and by AlBC and BRII.
The case rooted from the Labor Law enacted by Bahrain where most of the
complainants were deployed. His Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain,
issued his Amiri Decree No. 23 on June 16, 1176, otherwise known re the Labour
Law for the Private Sector. Some of the provision of Amiri Decree No. 23 that are
relevant to the claims of the complainants-appellants are as follows:
Art. 79: x x x A worker shall receive payment for each extra hour equivalent to his
wage entitlement increased by a minimum of twenty-rive per centurn thereof for
hours worked during the day; and by a minimum off fifty per centurn thereof for
hours worked during the night which shall be deemed to being from seven oclock in
the evening until seven oclock in the morning .
Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.
If employee worked, 150% of his normal wage shall be paid to him x x x.
Art. 81; x x x 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 years continuous service with his
employer shall be entitled to Laos 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 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 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. Ill: x x x 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 months 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.
ISSUE:
1. WON the foreign law should govern or the contract of the parties.(WON the
complainants who have worked in Bahrain are entitled to the above-mentioned
benefits provided by Amiri Decree No. 23 of Bahrain).
2. WON the Bahrain Law should apply in the case. (Assuming it is applicable WON
complainants claim for the benefits provided therein have prescribed.)
3. Whether or not the instant cases qualify as; a class suit (siningit ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)
RULING:
1. 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 Bahrains Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector).
NLRC applied the Amiri Deere, 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 approved 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.

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 than those stipulated
therein. However there was a part of the employment contract which provides that
the compensation of the employee may be adjusted downward so that the total
computation plus the non-waivable benefits shall be equivalent to the
compensation therein agree, 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. 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.
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. 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. 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.
A basic policy of contract is to protect the expectation of the parties. Such party
expectation is protected by giving effect to the parties own choice of the applicable
law. The choice of law must, however, bear some relationship the parties or their
transaction. 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.
2. NLRC ruled that the prescriptive period for the filing of the claims of the
complainants was 3 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.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not actionable after the lapse
of one year from the date of the expiry of the Contract.
As a general rule, a foreign procedural law will not be applied in the forum (local
court), 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.
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. 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, 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: . . . 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.
The Court further noted: Applying that test here it appears to us that the libellant 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 libellant seeks to enforce. The Panama Labor Code is a
statute having broad objectives. 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 (local Court) on prescription of actions.
However the characterization of a statute into a procedural or substantive law
becomes irrelevant when the country of the forum (local Court) has a borrowing
statute. Said statute has the practical effect of treating the foreign statute of
limitation as one of substance. A borrowing statute directs the state of the forum
(local Court) to apply the foreign statute of limitations to the pending claims based
on a foreign law. 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 was not run against it.

Section 48 of Code of Civil Procedure is of this kind. It provides: If by the laws of

the state or country where the cause of action arose, the action is barred, it is also
barred in the Philippine Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines.
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 (local Court) will not enforce any foreign claim obnoxious to
the forums public policy. To enforce the one-year prescriptive period of the Amiri
Decree No. 23 of 1976 as regards the claims in question would contravene the
public policy on the protection to labor.
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.
Thus, the applicable law on prescription is the Philippine law.
The next question is whether the prescriptive period governing the filing of the
claims is 3 years, as provided by the Labor Code or 10 years, as provided by the
Civil Code of the Philippines.
Article 1144 of the Civil Code of the Philippines provides:
The following actions must be brought within ten years from the time the right of
action accross:
(1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a
judgment
In this case, the claim for pay differentials is primarily anchored on the written
contracts between the litigants, the ten-year prescriptive period provided by Art.
1144(l) of the New Civil Code should govern.
3. NO. 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. When 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 under different terms and condition of
employment.
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 rile their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is
the same (for employees 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. A claimant has no concern in protecting the interests of the other
claimants as shown by the fact, that hundreds of them have abandoned their coclaimants and have entered into separate compromise settlements of their
respective claims. The claimants who worked in Bahrain can not be allowed to sue
in a class suit in a judicial proceeding.
WHEREFORE, all the three petitioners are DISMISSED.