RULE 6

Kinds Of Pleadings
Section 1. Pleadings defined. Pleadings are the written statements of the respective claims and defenses of the
parties submitted to the court for appropriate judgment. (1a)
Section 2. Pleadings allowed. The claims of a party are asserted in a complaint, counterclaim, cross-claim, third
(fourth, etc.)-party complaint, or complaint-in-intervention.
The defenses of a party are alleged in the answer to the pleading asserting a claim against him.
An answer may be responded to by a reply. (n)
Section 3. Complaint. The complaint is the pleading alleging the plaintiff's cause or causes of action. The names
and residences of the plaintiff and defendant must be stated in the complaint. (3a)
Section 4. Answer. An answer is a pleading in which a defending party sets forth his defenses. (4a)
Section 5. Defenses. Defenses may either be negative or affirmative.
(a) A negative defense is the specific denial of the material fact or facts alleged in the pleading of the
claimant essential to his cause or causes of action.
(b) An affirmative defense is an allegation of a new matter which, while hypothetically admitting the material
allegations in the pleading of the claimant, would nevertheless prevent or bar recovery by him. The
affirmative defenses include fraud, statute of limitations, release, payment, illegality, statute of frauds,
estoppel, former recovery, discharge in bankruptcy, and any other matter by way of confession and
avoidance. (5a)
Section 6. Counterclaim. A counterclaim is any claim which a defending party may have against an opposing
party. (6a)
Section 7. Compulsory counterclaim. A compulsory counterclaim is one which, being cognizable by the regular
courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the
opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to the amount and the
nature thereof, except that in an original action before the Regional Trial Court, the counter-claim may be considered
compulsory regardless of the amount. (n)
Section 8. Cross-claim. A cross-claim is any claim by one party against a co-party arising out of the transaction or
occurrence that is the subject matter either of the original action or of a counterclaim therein. Such cross-claim may
include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a
claim asserted in the action against the cross-claimant. (7)
Section 9. Counter-counterclaims and counter-crossclaims. A counter-claim may be asserted against an original
counter-claimant.
A cross-claim may also be filed against an original cross-claimant. (n)
Section 10. Reply. A reply is a pleading, the office or function of which is to deny, or allege facts in denial or
avoidance of new matters alleged by way of defense in the answer and thereby join or make issue as to such new
matters. If a party does not file such reply, all the new matters alleged in the answer are deemed controverted.
If the plaintiff wishes to interpose any claims arising out of the new matters so alleged, such claims shall be set forth
in an amended or supplemental complaint. (11)
Section 11. Third, (fourth, etc.)party complaint. A third (fourth, etc.) party complaint is a claim that a
defending party may, with leave of court, file against a person not a party to the action, called the third (fourth, etc.)
party defendant for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim. (12a)
Section 12. Bringing new parties. When the presence of parties other than those to the original action is required
for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to
be brought in as defendants, if jurisdiction over them can be obtained. (14)
Section 13. Answer to third (fourth, etc.)party complaint. A third (fourth, etc.) party defendant may allege in
his answer his defenses, counterclaims or cross-claims, including such defenses that the third (fourth, etc.) party
plaintiff may have against the original plaintiff's claim. In proper cases, he may also assert a counterclaim against the
original plaintiff in respect of the latter's claim against the third-party plaintiff. (n)

RULE 7
Parts of a Pleading
Section 1. Caption. The caption sets forth the name of the court, the title of the action, and the docket number if
assigned.
The title of the action indicates the names of the parties. They shall all be named in the original complaint or petition;
but in subsequent pleadings, it shall be sufficient if the name of the first party on each side be stated with an
appropriate indication when there are other parties.
Their respective participation in the case shall be indicated. (1a, 2a)
Section 2. The body. The body of the pleading sets fourth its designation, the allegations of the party's claims or
defenses, the relief prayed for, and the date of the pleading. (n)
(a) Paragraphs. The allegations in the body of a pleading shall be divided into paragraphs so numbered
to be readily identified, each of which shall contain a statement of a single set of circumstances so far as
that can be done with convenience. A paragraph may be referred to by its number in all succeeding
pleadings. (3a)
(b) Headings. When two or more causes of action are joined the statement of the first shall be prefaced
by the words "first cause of action,'' of the second by "second cause of action", and so on for the others.
When one or more paragraphs in the answer are addressed to one of several causes of action in the
complaint, they shall be prefaced by the words "answer to the first cause of action" or "answer to the second
cause of action" and so on; and when one or more paragraphs of the answer are addressed to several
causes of action, they shall be prefaced by words to that effect. (4)
(c) Relief. The pleading shall specify the relief sought, but it may add a general prayer for such further or
other relief as may be deemed just or equitable. (3a, R6)
(d) Date. Every pleading shall be dated. (n)
Section 3. Signature and address. Every pleading must be signed by the party or counsel representing him,
stating in either case his address which should not be a post office box.
The signature of counsel constitutes a certificate by him that he has read the pleading; that to the best of his
knowledge, information, and belief there is good ground to support it; and that it is not interposed for delay.
An unsigned pleading produces no legal effect. However, the court may, in its discretion, allow such deficiency to be
remedied if it shall appear that the same was due to mere inadvertence and not intended for delay. Counsel who
deliberately files an unsigned pleading, or signs a pleading in violation of this Rule, or alleges scandalous or indecent
matter therein, or fails promptly report to the court a change of his address, shall be subject to appropriate disciplinary
action. (5a)
Section 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under
oath, verified or accompanied by affidavit .(5a)
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and
correct of his knowledge and belief.
A pleading required to be verified which contains a verification based on "information and belief", or upon "knowledge,
information and belief", or lacks a proper verification, shall be treated as an unsigned pleading. (6a)
Section 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading
has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings
therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall
be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions. (n)

RULE 8
Manner of Making Allegations in Pleadings
Section 1. In general. Every pleading shall contain in a methodical and logical form, a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be,
omitting the statement of mere evidentiary facts. (1)
If a defense relied on is based on law, the pertinent provisions thereof and their applicability to him shall be clearly
and concisely stated. (n)
Section 2. Alternative causes of action or defenses. A party may set forth two or more statements of a claim or
defense alternatively or hypothetically, either in one cause of action or defense or in separate causes of action or
defenses. When two or more statements are made in the alternative and one of them if made independently would be
sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. (2)
Section 3. Conditions precedent. In any pleading a general averment of the performance or occurrence of all
conditions precedent shall be sufficient. (3)
Section 4. Capacity. Facts showing the capacity of a party to sue or be sued or the authority of a party to sue or
be sued in a representative capacity or the legal existence of an organized association of person that is made a party,
must be averred. A party desiring to raise an issue as to the legal existence of any party or the capacity of any party
to sue or be sued in a representative capacity, shall do so by specific denial, which shall include such supporting
particulars as are peculiarly within the pleader's knowledge. (4)
Section 5. Fraud, mistake, condition of the mind. In all averments of fraud or mistake the circumstances
constituting fraud or mistake must be stated with particularity. Malice, intent, knowledge, or other condition of the
mind of a person may be averred generally.(5a)
Section 6. Judgment. In pleading a judgment or decision of a domestic or foreign court, judicial or quasi-judicial
tribunal, or of a board or officer, it is sufficient to aver the judgment or decision without setting forth matter showing
jurisdiction to render it. (6)
Section 7. Action or defense based on document. Whenever an action or defense is based upon a written
instrument or document, the substance of such instrument or document shall be set forth in the pleading, and the
original or a copy thereof shall be attached to the pleading as an exhibit, which shall be deemed to be a part of the
pleading, or said copy may with like effect be set forth in the pleading. (7)
Section 8. How to contest such documents. When an action or defense is founded upon a written instrument,
copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due
execution of the instrument shall be deemed admitted unless the adverse party, under oath specifically denies them,
and sets forth what he claims to be the facts, but the requirement of an oath does not apply when the adverse party
does not appear to be a party to the instrument or when compliance with an order for an inspection of the original
instrument is refused. (8a)
Section 9. Official document or act. In pleading an official document or official act, it is sufficient to aver that the
document was issued or the act done in compliance with law. (9)
Section 10. Specific denial. A defendant must specify each material allegation of fact the truth of which he does
not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his
denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and
material and shall deny only the remainder. Where a defendant is without knowledge or information sufficient to form
a belief as to the truth of a material averment made to the complaint, he shall so state, and this shall have the effect
of a denial. (10a)
Section 11. Allegations not specifically denied deemed admitted. Material averment in the complaint, other than
those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied. Allegations
of usury in a complaint to recover usurious interest are deemed admitted if not denied under oath. (1a, R9)
Section 12. Striking out of pleading or matter contained therein. Upon motion made by a party before responding
to a pleading or, if no responsive pleading is permitted by these Rules, upon motion made by a party within twenty
(20) days after the service of the pleading upon him, or upon the court's own initiative at any time, the court may order
any pleading to be stricken out or that any sham or false, redundant, immaterial, impertinent, or scandalous matter be
stricken out therefrom. (5, R9)

RULE 9
Effect of Failure to Plead
Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record
that the court has no jurisdiction over the subject matter, that there is another action pending between the same
parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall
dismiss the claim. (2a)
Section 2. Compulsory counterclaim, or cross-claim, not set up barred. A compulsory counterclaim, or a cross-
claim, not set up shall be barred. (4a)
Section 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court
shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the
defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as
his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception
of evidence may be delegated to the clerk of court. (1a, R18)
(a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but
not to take part in the trial. (2a, R18)
(b) Relief from order of default. A party declared in default may at any time after notice thereof and before
judgment file a motion under oath to set aside the order of default upon proper showing that his failure to
answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense.
In such case, the order of default may be set aside on such terms and conditions as the judge may impose
in the interest of justice. (3a, R18)
(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against
several defending parties, some of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the evidence presented. (4a, R18).
(d) Extent of relief to be awarded. A judgment rendered against a party in default shall not exceed the
amount or be different in kind from that prayed for nor award unliquidated damages. (5a, R18).
(e) Where no defaults allowed. If the defending party in an action for annulment or declaration of nullity of
marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate
whether or not a collusion between the parties exists, and if there is no collusion, to intervene for the State in
order to see to it that the evidence submitted is not fabricated. (6a, R18)

RULE 10
Amended and Supplemental Pleadings
Section 1. Amendments in general. Pleadings may be amended by adding or striking out an allegation or the
name of any party, or by correcting a mistake in the name of a party or a mistaken or inadequate allegation or
description in any other respect, so that the actual merits of the controversy may speedily be determined, without
regard to technicalities, and in the most expeditious and inexpensive manner. (1)
Section 2. Amendments as a matter of right. A party may amend his pleading once as a matter of right at any time
before a responsive pleading is served or, in the case of a reply, at any time within ten (10) days after it is served.
(2a)
Section 3. Amendments by leave of court. Except as provided in the next preceding section, substantial
amendments may be made only upon leave of court. But such leave may be refused if it appears to the court that the
motion was made with intent to delay. Orders of the court upon the matters provided in this section shall be made
upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard. (3a)
Section 4. Formal amendments. A defect in the designation of the parties and other clearly clerical or
typographical errors may be summarily corrected by the court at any stage of the action, at its initiative or on motion,
provided no prejudice is caused thereby to the adverse party. (4a)
Section 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the
pleadings are tried with the express or implied consent of the parties they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform
to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment;
but failure to amend does not effect 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. (5a)
Section 6. Supplemental pleadings. Upon motion of a party the court may, upon reasonable notice and upon such
terms as are just, permit him to serve a supplemental pleading setting forth transactions, occurrences or events which
have happened since the date of the pleading sought to be supplemented. The adverse party may plead thereto
within ten (10) days from notice of the order admitting the supplemental pleading. (6a)
Section 7. Filing of amended pleadings. When any pleading is amended, a new copy of the entire pleading,
incorporating the amendments, which shall be indicated by appropriate marks, shall be filed. (7a)
Section 8. Effect of amended pleadings. An amended pleading supersedes the pleading that it amends. However,
admissions in superseded pleadings may be received in evidence against the pleader, and claims or defenses
alleged therein not incorporated in the amended pleading shall be deemed waived. (n)

RULE 11
When to File Responsive Pleadings
Section 1. Answer to the complaint. The defendant shall file his answer to the complaint within fifteen (15) days
after service of summons, unless a different period is fixed by the court. (la)
Section 2. Answer of a defendant foreign private juridical entity. Where the defendant is a foreign private juridical
entity and service of summons is made on the government official designated by law to receive the same, the answer
shall be filed within thirty (30) days after receipt of summons by such entity. (2a)
Section 3. Answer to amended complaint. When the plaintiff files an amended complaint as a matter of right, the
defendant shall answer the same within fifteen (15) days after being served with a copy thereof.
Where its filing is not a matter of right, the defendant shall answer the amended complaint within ten (l0) days from
notice of the order admitting the same. An answer earlier filed may serve as the answer to the amended complaint if
no new answer is filed.
This Rule shall apply to the answer to an amended counterclaim, amended cross-claim, amended third (fourth,
etc.)party complaint, and amended complaint-in-intervention. (3a)
Section 4. Answer to counterclaim or cross-claim. A counterclaim or cross-claim must be answered within ten (10)
days from service. (4)
Section 5. Answer to third (fourth, etc.)-party complaint. The time to answer a third (fourth, etc.)party complaint
shall be governed by the same rule as the answer to the complaint. (5a)
Section 6. Reply. A reply may be filed within ten (10) days from service of the pleading responded to. (6)
Section 7. Answer to supplemental complain. A supplemental complaint may be answered within ten (10) days
from notice of the order admitting the same, unless a different period is fixed by the court. The answer to the
complaint shall serve as the answer to the supplemental complaint if no new or supplemental answer is filed. (n)
Section 8. Existing counterclaim or cross-claim. A compulsory counterclaim or a cross-claim that a defending
party has at the time he files his answer shall be contained therein. (8a, R6)
Section 9. Counterclaim or cross-claim arising after answer. A counterclaim or a cross-claim which either matured
or was acquired by a party after serving his pleading may, with the permission of the court, be presented as a
counterclaim or a cross-claim by supplemental pleading before judgment. (9, R6)
Section 10. Omitted counterclaim or cross-claim. When a pleader fails to set up a counterclaim or a cross-claim
through oversight, inadvertence, or excusable neglect, or when justice requires, he may, by leave of court, set up the
counterclaim or cross-claim by amendment before judgment. (3, R9)
Section 11. Extension of time to plead. Upon motion and on such terms as may be just, the court may extend the
time to plead provided in these Rules.
The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules.
(7)

RULE 12
Bill of Particulars
Section 1. When applied for; purpose. Before responding to a pleading, a party may move for a definite statement
or for a bill of particulars of any matter which is not averted with sufficient definiteness or particularity to enable him
properly to prepare his responsive pleading. If the pleading is a reply, the motion must be filed within ten (10) days
from service thereof. Such motion shall point out the defects complained of, the paragraphs wherein they are
contained, and the details desired. (1a)
Section 2. Action by the court. Upon the filing of the motion, the clerk of court must immediately bring it to the
attention of the court which may either deny or grant it outright, or allow the parties the opportunity to be heard. (n)
Section 3. Compliance with order. If the motion is granted, either in whole or in part, the compliance therewith
must be effected within ten (10) days from notice of the order, unless a different period is fixed by the court. The bill of
particulars or a more definite statement ordered by the court may be filed either in a separate or in an amended
pleading, serving a copy thereof on the adverse party. (n)
Section 4. Effect of non-compliance. If the order is not obeyed, or in case of insufficient compliance therewith, the
court may order the striking out of the pleading or the portions thereof to which the order was directed or make such
other order as it deems just. (1[c]a)
Section 5. Stay of period to file responsive pleading. After service of the bill of particulars or of a more definite
pleading, or after notice of denial of his motion, the moving party may file his responsive pleading within the period to
which he was entitled at the time of filing his motion, which shall not be less than five (5) days in any event. (1[b]a)
Section 6. Bill a part of pleading. A bill of particulars becomes part of the pleading for which it is intended. (1[a]a)

RULE 13
Filing and Service of Pleadings, Judgments and Other Papers
Section 1. Coverage. This Rule shall govern the filing of all pleadings and other papers, as well as the service
thereof, except those for which a different mode of service is prescribed. (n)
Section 2. Filing and service, defined. Filing is the act of presenting the pleading or other paper to the clerk of
court.
Service is the act of providing a party with a copy of the pleading or paper concerned. If any party has appeared by
counsel, service upon him shall be made upon his counsel or one of them, unless service upon the party himself is
ordered by the court. Where one counsel appears for several parties, he shall only be entitled to one copy of any
paper served upon him by the opposite side. (2a)
Section 3. Manner of filing. The filing of pleadings, appearances, motions, notices, orders, judgments and all other
papers shall be made by presenting the original copies thereof, plainly indicated as such, personally to the clerk of
court or by sending them by registered mail. In the first case, the clerk of court shall endorse on the pleading the date
and hour of filing. In the second case, the date of the mailing of motions, pleadings, or any other papers or payments
or deposits, as shown by the post office stamp on the envelope or the registry receipt, shall be considered as the date
of their filing, payment, or deposit in court. The envelope shall be attached to the record of the case. (1a)
Section 4. Papers required to be filed and served. Every judgment, resolution, order, pleading subsequent to the
complaint, written motion, notice, appearance, demand, offer of judgment or similar papers shall be filed with the
court, and served upon the parties affected. (2a)
Section 5. Modes of service. Service of pleadings motions, notices, orders, judgments and other papers shall be
made either personally or by mail. (3a)
Section 6. Personal service. Service of the papers may be made by delivering personally a copy to the party or his
counsel, or by leaving it in his office with his clerk or with a person having charge thereof. If no person is found in his
office, or his office is not known, or he has no office, then by leaving the copy, between the hours of eight in the
morning and six in the evening, at the party's or counsel's residence, if known, with a person of sufficient age and
discretion then residing therein. (4a)
Section 7. Service by mail. Service by registered mail shall be made by depositing the copy in the post office in a
sealed envelope, plainly addressed to the party or his counsel at his office, if known, otherwise at his residence, if
known, with postage fully prepaid, and with instructions to the postmaster to return the mail to the sender after ten
(10) days if undelivered. If no registry service is available in the locality of either the senders or the addressee,
service may be done by ordinary mail. (5a; Bar Matter No. 803, 17 February 1998)
Section 8. Substituted service. If service of pleadings, motions, notices, resolutions, orders and other papers
cannot be made under the two preceding sections, the office and place of residence of the party or his counsel being
unknown, service may be made by delivering the copy to the clerk of court, with proof of failure of both personal
service and service by mail. The service is complete at the time of such delivery. (6a)
Section 9. Service of judgments, final orders, or resolutions. Judgments, final orders or resolutions shall be served
either personally or by registered mail. When a party summoned by publication has failed to appear in the action,
judgments, final orders or resolutions against him shall be served upon him also by publication at the expense of the
prevailing party. (7a)
Section 10. Completeness of service. Personal service is complete upon actual delivery. Service by ordinary mail
is complete upon the expiration of ten (10) days after mailing, unless the court otherwise provides. Service by
registered mail is complete upon actual receipt by the addressee, or after five (5) days from the date he received the
first notice of the postmaster, whichever date is earlier. (8a)
Section 11. Priorities in modes of service and filing. Whenever practicable, the service and filing of pleadings and
other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other
modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of
this Rule may be cause to consider the paper as not filed. (n)
Section 12. Proof of filing. The filing of a pleading or paper shall be proved by its existence in the record of the
case. If it is not in the record, but is claimed to have been filed personally, the filing shall be proved by the written or
stamped acknowledgment of its filing by the clerk of court on a copy of the same; if filed by registered mail, by the
registry receipt and by the affidavit of the person who did the mailing, containing a full statement of the date and place
of depositing the mail in the post office in a sealed envelope addressed to the court, with postage fully prepaid, and
with instructions to the postmaster to return the mail to the sender after ten (10) days if not delivered. (n)
Section 13. Proof of Service. Proof of personal service shall consist of a written admission of the party served, or
the official return of the server, or the affidavit of the party serving, containing a full statement of the date, place and
manner of service. If the service is by ordinary mail, proof thereof shall consist of an affidavit of the person mailing of
facts showing compliance with section 7 of this Rule. If service is made by registered mail, proof shall be made by
such affidavit and the registry receipt issued by the mailing office. The registry return card shall be filed immediately
upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the certified or sworn copy of the
notice given by the postmaster to the addressee. (10a)
Section 14. Notice of lis pendens. In an action affecting the title or the right of possession of real property, the
plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of
deeds of the province in which the property is situated notice of the pendency of the action. Said notice shall contain
the names of the parties and the object of the action or defense, and a description of the property in that province
affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property
affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency
against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper
showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the
rights of the rights of the party who caused it to be recorded. (24a, R-14)

RULE 14
Summons
Section 1. Clerk to issue summons. Upon the filing of the complaint and the payment of the requisite legal fees,
the clerk of court shall forthwith issue the corresponding summons to the defendants. (1a)
Section 2. Contents. The summons shall be directed to the defendant, signed by the clerk of court under seal and
contain (a) the name of the court and the names of the parties to the action; (b) a direction that the defendant answer
within the time fixed by these Rules; (c) a notice that unless the defendant so answers plaintiff will take judgment by
default and may be granted the relief applied for.
A copy of the complaint and order for appointment of guardian ad litem if any, shall be attached to the original and
each copy of the summons. (3a)
Section 3. By whom served. The summons may be served by the sheriff, his deputy, or other proper court officer,
or for justifiable reasons by any suitable person authorized by the court issuing the summons. (5a)
Section 4. Return. When the service has been completed, the server shall, within five (5) days therefrom, serve a
copy of the return, personally or by registered mail, to the plaintiff's counsel, and shall return the summons to the
clerk, who issued it, accompanied by proof of service. (6a)
Section 5. Issuance of alias summons. If a summons is returned without being served on any or all of the
defendants, the server shall also serve a copy of the return on the plaintiff's counsel, stating the reasons for the
failure of service, within five (5) days therefrom. In such a case, or if the summons has been lost, the clerk, on
demand of the plaintiff, may issue an alias summons. (4a)
Section 6. Service in person on defendant. Whenever practicable, the summons shall be served by handling a
copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. (7a)
Section 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time
as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the
defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendant's office or regular place of business with some competent person in charge thereof. (8a)
Section 8. Service upon entity without juridical personality. When persons associated in an entity without juridical
personality are sued under the name by which they are generally or commonly known, service may be effected upon
all the defendants by serving upon any one of them, or upon the person in charge of the office or place of business
maintained in such name. But such service shall not bind individually any person whose connection with the entity
has, upon due notice, been severed before the action was brought. (9a)
Section 9. Service upon prisoners. When the defendant is a prisoner confined in a jail or institution, service shall
be effected upon him by the officer having the management of such jail or institution who is deemed deputized as a
special sheriff for said purpose. (12a)
Section 10. Service upon minors and incompetents. When the defendant is a minor, insane or otherwise an
incompetent, service shall be made upon him personally and on his legal guardian if he has one, or if none his
guardian ad litem whose appointment shall be applied for by the plaintiff. In the case of a minor, service may also be
made on his father or mother. (l0a, 11a)
Section 11. Service upon domestic private juridical entity. When the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a juridical personality, service may be made on the
president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. (13a)
Section 12. Service upon foreign private juridical entities. When the defendant is a foreign private juridical entity
which has transacted business in the Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to
that effect, or on any of its officers or agents within the Philippines. (14a)
Section 13. Service upon public corporations. When the defendant is the Republic of the Philippines, service may
be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may
be effected on its executive head, or on such other officer or officers as the law or the court may direct. (15)
Section 14. Service upon defendant whose identity or whereabouts are unknown. In any action where the
defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of
general circulation and in such places and for such time as the court may order. (16a)
Section 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and
the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the
defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines
by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for
such time as the court may order, in which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after noti ce,
within which the defendant must answer. (17a)
Section 16. Residents temporarily out of the Philippines. When any action is commenced against a defendant who
ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also
effected out of the Philippines, as under the preceding section. (18a)
Section 17. Leave of court. Any application to the court under this Rule for leave to effect service in any manner
for which leave of court is necessary shall be made by motion in writing, supported by affidavit of the plaintiff or some
person on his behalf, setting forth the grounds for the application. (19)
Section 18. Proof of service. The proof of service of a summons shall be made in writing by the server and shall
set forth the manner, place, and date of service; shall specify any papers which have been served with the process
and the name of the person who received the same; and shall be sworn to when made by a person other than a
sheriff or his deputy. (20)
Section 19. Proof of service by publication. If the service has been made by publication, service may be proved by
the affidavit of the printer, his foreman or principal clerk, or of the editor, business or advertising manager, to which
affidavit a copy of the publication shall be attached and by an affidavit showing the deposit of a copy of the summons
and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last
known address. (21)
Section 20. Voluntary appearance. The defendant's voluntary appearance in the action shall be equivalent to
service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the
person of the defendant shall not be deemed a voluntary appearance. (23a)

RULE 15
Motions
Section 1. Motion defined. A motion is an application for relief other than by a pleading. (1a)
Section 2. Motions must be in writings. All motions shall be in writing except those made in open court or in the
course of a hearing or trial. (2a)
Section 3. Contents. A motion shall state the relief sought to be obtained and the grounds upon which it is based,
and if required by these Rules or necessary to prove facts alleged therein, shall be accompanied by supporting
affidavits and other papers. (3a)
Section 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of
the adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as
to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good
cause sets the hearing on shorter notice. (4a)
Section 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify
the time and date of the hearing which must not be later than ten (10) days after the filing of the motion. (5a)
Section 6. Proof of service necessary. No written motion set for hearing shall be acted upon by the court without
proof of service thereof. (6a)
Section 7. Motion day. Except for motions requiring immediate action, all motions shall be scheduled for hearing
on Friday afternoons, or if Friday is a non-working day, in the afternoon of the next working day. (7a)
Section 8. Omnibus motion. Subject to the provisions of section 1 of Rule 9, a motion attacking a pleading, order,
judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed
waived. (8a)
Section 9. Motion for leave. A motion for leave to file a pleading or motion shall be accompanied by the pleading
or motion sought to be admitted. (n)
Section 10. Form. The Rules applicable to pleadings shall apply to written motions so far as concerns caption,
designation, signature, and other matters of form. (9a)

RULE 16
Motion to Dismiss
Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the following grounds:
(a) That the court has no jurisdiction over the person of the defending party;
(b) That the court has no jurisdiction over the subject matter of the claim;
(c) That venue is improperly laid;
(d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties for the same cause;
(f) That the cause of action is barred by a prior judgment or by the statute of limitations;
(g) That the pleading asserting the claim states no cause of action;
(h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or
otherwise extinguished;
(i) That the claim on which the action is founded is enforceable under the provisions of the statute of frauds;
and
(j) That a condition precedent for filing the claim has not been complied with. (1a)
Section 2. Hearing of motion. At the hearing of the motion, the parties shall submit their arguments on the
questions of law and their evidence on the questions of fact involved except those not available at that time. Should
the case go to trial, the evidence presented during the hearing shall automatically be part of the evidence of the party
presenting the same. (n)
Section 3. Resolution of Motion. After the hearing, the court may dismiss the action or claim, deny the motion, or
order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor. (3a)
Section 4. Time to plead. If the motion is denied, the movant shall file his answer within the balance of the period
prescribed by Rule 11 to which he was entitled at the time of serving his motion, but not less than five (5) days in any
event, computed from his receipt of the notice of the denial. If the pleading is ordered to be amended, he shall file his
answer within the period prescribed by Rule 11 counted from service of the amended pleading, unless the court
provides a longer period. (4a)
Section 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss based on
paragraphs (f), (h) and (i) of section 1 hereof shall bar the refiling of the same action or claim. (n)
Section 6. Pleading grounds as affirmative defenses. If no motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of
the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed. (5a)
The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or
separate action of a counterclaim pleaded in the answer. (n)

RULE 17
Dismissal of Actions
Section 1. Dismissal upon notice by plaintiff. A complaint may be dismissed by the plaintiff by filing a notice of
dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being
filed, the court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is
without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has
once dismissed in a competent court an action based on or including the same claim. (1a)
Section 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint shall not be
dismissed at the plaintiff's instance save upon approval of the court and upon such terms and conditions as the court
deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiffs
motion for dismissal, the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the
right of the defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of
the motion he manifests his preference to have his counterclaim resolved in the same action. Unless otherwise
specified in the order, a dismissal under this paragraph shall be without prejudice. A class suit shall not be dismissed
or compromised without the approval of the court. (2a)
Section 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time,
or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court. (3a)
Section 4. Dismissal of counterclaim, cross-claim, or third-party complaint. The provisions of this Rule shall apply
to the dismissal of any counterclaim, cross-claim, or third-party complaint. A voluntary dismissal by the claimant by
notice as in section 1 of this Rule, shall be made before a responsive pleading or a motion for summary judgment is
served or, if there is none, before the introduction of evidence at the trial or hearing. (4a)
Source:http://www.lawphil.net/courts/rules/rc_1-71_civil.html#r6
Jurisprudence:
JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, versus
PHILIPPINE AIRLINES, INC., Respondent.
G.R. No. 160798 | 2005-06-08

D E C I S I O N


CALLEJO, SR., J.:

This is a petition for review of the Resolution[1] of the Court of Appeals (CA) in CA-G.R. SP No.
59826, dismissing the petition for certiorari of the petitioners Juanito A. Garcia and Alberto J.
Dumago, as well as the Resolution[2] denying the motion for reconsideration thereof.





The petition at bench stemmed from the following backdrop:



Garcia was employed by the Philippine Airlines, Inc. (PAL) on December 3, 1973. By 1995, he was
already an inspector at the Aircraft Inspection Division of the PAL Technical Center. Dumago, on the
other hand, was employed by PAL on April 18, 1983, and was, by 1995, a Lead Master "C"
Upholsterer assigned at the Aircraft Furnishing Safety Section of the Maintenance and Engineering
Department.[3]



At 1:30 p.m. on July 24, 1995, the petitioners were at the PAL Technical Center inside the Toolroom
Section of the Plant Equipment and Maintenance Division (PEMD). With them were their co-
employees Ronaldo Broas, Roberto Buan, Almario Titco and Rodrigo Arcenas, Jr.[4] Momentarily,
an incident ensued, thereafter to be the subject of different versions: that of the petitioners; Carmelo
Villacete, then manager of the PAL Security and Investigation Division; and Field Agents Antonio P.
Ramos and Ramoncito Villar, also of the PAL Security and Investigation Division. Rodrigo Arcenas,
Jr. also gave his own version of the incident.



According to Villacete, Ramos and Villar, they barged into the Toolroom Section and caught the
petitioners with Broas, Arcenas, Buan, and Titco sniffing shabu. The security officers found and
seized from them several grams of the prohibited drug, including aluminum foil, a burner and
lighter. The security officers then searched the locker of Broas and found more of the drug, and
shabu paraphernalia, including P23,000.00 in cash. All this was witnessed by Jose S. Herrera and
Remebito F. Gorospe, representatives of the Philippine Airlines Employee's Association (PALEA).
Eliseo Maravillas of the Office of the Vice-President for Maintenance and Engineering also
witnessed the search and seizure.[5] Photographs were taken of the raid. Ramos made an inventory
of the items and substances that were found and seized from Rack B747-400 at the PEMD
Toolroom, as follows:

1. (one) 1 plastic sachet containing undetermined amount of white substance suspected as shabu

2. (four) 4 aluminum foils containing U.A.S. suspected to be shabu

3. (one) 1 aluminum foil strip (containing) with residue of substance suspected to be shabu

4. (one) 1 improvised tooter with residue susp. to be shabu

5. (one) 1 plastic sachet containing residue of susp. shabu

6. (one) 1 strip (aluminum) containing granules + white substances susp. to be shabu

7. (one) 1 PAL giveaway kit containing one plastic tube

8. (one) 1 improvised burner with extra needle

9. (four) 4 pcs. crumpled aluminum foils with residue susp. to be shabu

10. (five) 5 pcs. aluminum strips

11. (six) 6 pcs. aluminum foil

12. (one) 1 plastic sachet containing undetermined quantity of white substance susp. to be shabu
placed inside improvised metal container

13. (two) 2 plastic sachets cont. residue of white substances susp. to be shabu

14. (one) 1 lighter (disposable)

15. (seventeen) 17 aluminum strips with residue of substances susp. to be shabu

16. (two) 2 strips of aluminum foils.[6]



Ramos also prepared an inventory of the items found and seized in Broas' locker, to wit:





ITEM (QUANTITY)


DESCRIPTION

1. (one) 1


Plastic sachet containing undetermined amount of white substance suspected as shabu contained in
a blue cloth with a letter.

2. (one) 1


Plastic sachet containing undetermined amount of white substance suspected as shabu.[7]





The security officers secured urine samples from the petitioners and Arcenas, Broas and Titco,
which they turned to the Forensic and Chemistry Division of the National Bureau of Investigation
(NBI). The company, through Luis T. Castro, Jr., turned over/submitted to the NBI the paraphernalia
found in the locker of Broas.[8] The men were, likewise, turned over to the NBI for investigation.[9]
The security officers also prepared and signed Security Report No. SFPSD95/07-453 dated July 25,
1995.



Forensic Chemist Salud M. Rosales signed Dangerous Drugs Report No. DD-95-1554 stating that
the samples gave positive results for methamphetamine hydrochloride.[10] She also signed
Toxicology Report Nos. TDD-95-759 and 95-760 indicating that the urine samples given by the
petitioners tested positive for amphetamine, a metabolite of methamphetamine which is a regulated
drug.[11] Rosales also signed Toxicology Report No. TDD-95-757[12] where she stated that the
urine sample of Rodrigo Arcenas yielded negative result for the presence of amphetamine.

In the signed statement[13] he gave to Villacete on July 25, 1995, Arcenas alleged that he was on
duty at the Toolroom Section of the PEMD that fateful day of July 24, 1995. At about 1:30 p.m., he
saw the petitioners with Titco and Buan playing cards. Broas, who was beside the B747-400 tool bin,
then took a white substance from a small cellophane sachet, placed the substance in a foil and
lighted it with a small burner. The other men then approached Broas as the latter sniffed the
substance twice and passed it around to the others who did the same. Arcenas claimed that he did
not sniff the white substance. Momentarily, three persons barged into the toolroom and the men tried
to escape. Additional security then arrived and helped in the inventory of the substances and
materials found and seized from the men.[14]



Petitioners Garcia and Dumago, for their part, admitted that they were in the toolroom section of
PEMD on the day in question. Garcia had wanted to ask someone where he could take the
Tracster's wheel for vulcanizing, while Dumago went there to request for an "Allen Wrench" from
Titco. Suddenly, a PAL security officer armed with a handgun barged into the toolroom. He was
accompanied by a video cameraman. Buan, Broas, and Titco were then each subjected to a body
search and were forced to give urine specimen. Their lockers were also searched.[15]



The petitioners denied that they used the prohibited drug, alleging that the door to the toolroom was
even open. They claimed that they were in the

toolroom because they were on duty, and that the NBI agents only arrived at the scene after the
security guards had already confiscated the items and paraphernalia allegedly found in the toolroom
and in Broas' locker.[16]



A criminal complaint against the petitioners, including Buan, Broas and Titco, for violation of Section
16 of Republic Act No. 6425, as amended by Rep. Act No. 7659 was then filed with the Department
of Justice, docketed as I.S. No. 95-492. Arcenas was not included in the charge.[17]



On July 26, 1995, the petitioners were charged with violation of Section 6, Article 46, and Section 6,
Article 48 of Chapter II of the PAL Revised Code of Discipline, as follows:



1. Violation of Law/Government Regulations-Chapter II, Section 6, Article 46



"Any employee who by substantial evidence presented at an administrative hearing is found to have
violated or attempted to violate existing laws, decrees, regulations, or orders issued by the Philippine
or other governments, and their agencies and instrumentalities, which violation involves moral
turpitude is work-related, or which involves the safety, welfare, reputation, or standing of the
company in the community, shall be penalized as prescribed in the schedule of penalties under
Article 14 of this Code, depending upon the gravity and/or frequency of the offense. Where such
violation constitutes serious misconduct or breach of trust, the penalty of dismissal shall be
imposed."





2. Prohibited Drugs-Chapter II, Section 6, Article 48



"Any employee who, while on Company premises or on duty, is found in the possession of, or uses,
or is under the influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics
shall suffer the penalty of dismissal."[18]

A formal investigation ensued during which Arcenas testified. On October 9, 1995, the Grievance
Committee rendered a Decision[19] finding petitioners Garcia and Dumago guilty as charged; both of
them were meted the penalty of dismissal.



On October 30, 1997, the petitioners instituted separate complaints[20] for illegal dismissal against
private respondent PAL and its Vice-President for Maintenance and Engineering, Jacinto F. Ortega,
Jr.[21] In its reply to the position paper of the complainants, PAL declared that:

(a) Complainants were caught by PAL personnel in flagrante delicto in the act of sniffing shabu. This
is attested to by the Joint Affidavit of Messrs. Carmelo Villacete, Antonio Ramos and Ramoncito
Villar, the security personnel who caught them in the act.



(b) An eyewitness, in the person of Rodrigo Arcenas, [Jr.] confirmed that the complainants (together
with three other employees) indeed sniffed shabu inside the Toolroom of the Plant Equipment [and]
Maintenance Division.



(c) The National Bureau of Investigation confirmed that the white crystalline substance found in the
possession of the apprehended employees was "Methamphetamine Hydrochloride" or shabu, in
ordinary parlance.



(d) Drug test conducted by the National Bureau of Investigation revealed that the complainants were
positive for "AMPHETAMINE."[22]





On February 11, 1999, Labor Arbiter Ramon Valentin C. Reyes rendered a Decision, finding that the
private respondent was guilty of illegal dismissal, thus:



WHEREFORE, conformably with the foregoing, judgment is hereby rendered finding the
respondents guilty of illegal suspension and illegal dismissal and ordering them to reinstate
complainants to their former position without loss of seniority rights and other privileges.
Respondents are hereby further ordered to pay jointly and severally unto the complainants the
following:

Alberto J. Dumago - P409,500.00 backwages as of 1/10/99

P34,125.00 for 13th month pay

Juanito A. Garcia - P1,290,744.00 backwages as of 1/10/99

P107,562.00 for 13th month pay



The amounts of P100,000.00 and P50,000.00 to each complainant as and by way of moral and
exemplary damages; and



The sum equivalent to ten percent (10%) of the total award as and for attorney's fees.



Respondents are directed to immediately comply with the reinstatement aspect of this Decision.
However, in the event that reinstatement is no longer feasible, respondents are hereby ordered, in
lieu thereof, to pay unto the complainants their separation pay computed at one month for every year
of service.



SO ORDERED.[23]





The Labor Arbiter ruled that the NBI Toxicology Report on the urine samples of the complainants
were not admissible in evidence. And even if they were, being positive for amphetamine does not
constitute as a violation of the law.[24] The private respondent appealed the decision.



On January 31, 2000, the National Labor Relations Commission (NLRC) reversed the decision of the
Labor Arbiter and dismissed the case for lack of merit.[25] The NLRC ruled that the joint affidavit of
the three PAL security personnel, the joint affidavit of the four NBI Narcotics Division personnel, the
sworn statement of Arcenas, and the NBI toxicology reports constituted substantial evidence that the
petitioners had, indeed, used shabu within the private respondent's premises during working hours.
It held that the acts of the petitioners amounted to serious misconduct that justified their dismissal
from employment. The petitioners moved for a reconsideration of the decision, on the ground that
the urine samples were obtained from them without the assistance of counsel; hence the said
samples and the Toxicology Report of the NBI Field Agents Division were inadmissible in
evidence.[26] The NLRC denied the said motion for lack of merit.[27]



Dissatisfied, the petitioners filed a petition for certiorari with the CA based on the following grounds:



6.1 The public respondent NLRC erred and committed grave abuse of discretion amounting to lack
of jurisdiction in:



(a) Reversing the decision of the labor arbiter;

(b) Concluding that the petitioners were caught sniffing shabu;

(c) Disregarding the petitioners' Constitutional rights to counsel and due process of law.



6.2 The contradictory findings and conclusions of the labor arbiter and the NLRC provide strong and
compelling reasons to warrant judicial review of the instant case to prevent a miscarriage of justice.



6.3 There is no appeal or any other plain, speedy and adequate remedy in the ordinary course of
law.[28]



On August 10, 2000, the CA dismissed the petition for failure to append copies of the material
documents referred to therein, such as (a) the petitioners' complaint for illegal dismissal and
damages; (b) the private respondent's position paper filed with the Labor Arbiter; and (c) the Labor
Arbiter's Order dated June 16, 1998 submitting the case for resolution.[29] The petitioners received a
copy of the resolution on August 21, 2000 and filed on August 29, 2000 a motion for its
reconsideration, appending the pleadings and the order adverted to in the CA resolution.[30]

On November 5, 2003, the CA denied the petitioners' motion for reconsideration for lack of merit, on
the ground that the said motion did not contain an affidavit of proof of service under Section 13 of
Rule 13 of the Rules of Court. The appellate court also held that the petitioners failed to give a valid
justification for their failure to comply with the rules.[31]



The petitioners received a copy of the said resolution, and forthwith filed the instant petition for
review on certiorari, where they raise the following issues:



1. Whether or not the Honorable Court of Appeals decided CA-G.R. SP No. 59826 in a way not in
accord with the law or the decisions of this Honorable Supreme Court, and the Constitutional
mandate of protection to labor, when it dismissed the Petition for Certiorari on purely technical
grounds (i.e., failure to append 3 documents), and denied the petitioners' motion for reconsideration,
despite the fact that the petitioners already submitted the documents in their motion for
reconsideration.



2. Whether or not the Honorable Court of Appeals departed from the accepted and usual course of
judicial proceedings in deciding CA-G.R. SP No. 59826, by not resolving the case on the merits
despite the conflicting findings and conclusions of the Labor Arbiter and the NLRC.[32]



The petitioners argue that their failure to append the three documents to their petition was not fatal
because they had substantially complied with all the formal requirements under Section 1, Rule 65 of
the Rules of Court, in relation to Section 3 of Rule 46. They aver that they submitted certified true
copies of the decision and the resolution subject of the petition, copies of relevant pleadings, as well
as the documents necessary for a complete understanding of the issues raised, and a certificate of
non-forum shopping.[33]

They posit that should the CA disagree on what they had considered relevant to their petition, the
petition should not have been dismissed outright; instead, the CA should have required them to
submit the requisite documents.[34]



The petitioners stress that the dismissal of the petition on a purely technical ground is inconsistent
with the constitutional mandate on protection to labor. They maintain that in denying their motion for
reconsideration, the CA acted harshly and in complete disregard of the law's tenderness for the
plight of labor. The petitioners point out that even this Court has been lenient in more serious cases
of non-observance of procedural rules, such as the failure to perfect an appeal within the
reglementary period.[35]



The petitioners further posit that judicial review is warranted in this case since the findings of the
Labor Arbiter were reversed by the NLRC; hence, the CA should have resolved the petition for
certiorari on its merits. They contend that the evidence shows that no drugs were found in their
possession and that as such, their dismissal could not have been based on a valid cause. They
claim that the NLRC erred in giving credence to the joint affidavit of the private respondent's security
personnel and the sworn statement of Arcenas.[36]

For its part, the private respondent avers that the CA did not err in dismissing the petition for the
petitioners' failure to append the required pleadings and order. It asserts that the petitioners even
failed to give a justification for their failure to comply with the Rules of Court. The private respondent
further points out that the petitioners failed to append an affidavit of proof of service under Section
13, Rule 13 of the Rules of Court to their motion for reconsideration of the August 10, 2000
Resolution of the CA, and even failed to give a valid justification for such failure. Thus, the private
respondent avers, the ruling of the CA is in accord with the Rules of Court.



The petition is meritorious.



The CA erred in dismissing the petition on the ground that the petitioner failed to comply with the last
paragraph of Section 1 of Rule 65 of the Rules of Court, which provides:



SECTION 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.



The petition shall be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.





The provision mandates that the following documents should be appended to the petition: a certified
copy of the judgment, order or resolution subject of the petition; copies of all pleadings and
documents



relevant and pertinent thereto; and a sworn statement of non-forum shopping as provided in the third
paragraph of Section 3, Rule 46, which reads:



SEC. 3. Contents and filing of petition, effect of non-compliance with requirements. -

...



The petitioner shall also submit together with the petition a sworn certification that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the Court
of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action
or proceeding, he must state the status of the same; and if he should thereafter learn that a similar
action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five (5) days therefrom.



...



It is evident, therefore, that aside from the assailed decision, order or resolution, not every pleading
or document mentioned in the petition is required to be submitted - only those that are pertinent and
relevant to the judgment, order or resolution subject of the petition. The initial determination of what
pleadings, documents or orders are relevant and pertinent to the petition rests on the petitioner. If,
upon its initial review of the petition, the CA is of the view that additional pleadings, documents or
order should have been submitted and appended to the petition, the following are its options: (a)
dismiss the petition under the last paragraph of Rule 46 of the Rules of Court; (b) order the petitioner
to submit the required additional pleadings, documents, or order within a specific period of time; or
(c) order the petitioner to file an amended petition appending thereto the required pleadings,
documents or order within a fixed period.

If the CA opts to dismiss the petition outright and the petitioner files a motion for the reconsideration
of such dismissal, appending thereto the requisite pleadings, documents or order/resolution with an
explanation for the failure to append the required documents to the original petition, this would
constitute substantial compliance with the Rules of Court. In such case, then, the petition should be
reinstated. As this Court emphasized in Cusi-Hernandez v. Diaz:[37]



Under the circumstances, we hold that there was substantial compliance with Section 2, Rule 42 of
the Rules of Court. In dismissing the Petition before it, the appellate court clearly put a premium on
technicalities at the expense of a just resolution of the case.



We must stress that "cases should be determined on the merits after full opportunity to all parties for
ventilation of their causes and defenses, rather than on technicality or some procedural
imperfections. In that way, the ends of justice would be served better." Moreover, the Court has
held:



"Dismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought
not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override,
substantial justice, and thereby defeat their very aims."



Rules of procedure are mere tools designed to expedite the decision or resolution of cases and other
matters pending in court. A strict and rigid application of rules that would result in technicalities that
tend to frustrate rather than promote substantial justice must be avoided.[38]





In this case, the petitioners filed a motion for the reconsideration of the August 10, 2000 CA
Resolution, and appended thereto the required pleadings and order; they likewise explained that
they failed to append the same to their original petition because they believed that the said pleadings
and order did not affect the substance of the petition filed before the CA. Indeed, there is merit in
their contention because the substance of their complaint with the Labor Arbiter, as well as that of
the private respondent's position paper, were already embodied in the decisions of the Labor Arbiter
and the NLRC, certified copies of which were appended to the original petition. The petitioners thus
believed in good faith that the pleadings and order required by the CA were no longer necessary.



It would be more in accord with substantial justice and equity to overlook the procedural lapse, and
allow the petition to be resolved on its merits. It is well-settled that the application of technical rules
of procedure may be relaxed to serve the demands of substantial justice, particularly in labor
cases.[39] Labor cases must be decided according to justice and equity

and the substantial merits of the controversy.[40] As the Court stressed in a recent case:[41]



The policy of our judicial system is to encourage full adjudication of the merits of an appeal. In the
exercise of its equity jurisdiction, this Court may reverse the dismissal of appeals that are grounded
merely on technicalities. Moreover, procedural niceties should be avoided in labor cases in which the
provisions of the Rules of Court are applied only in suppletory manner. Indeed, rules of procedure
may be relaxed to relieve a part of an injustice not commensurate with the degree of noncompliance
with the process required.[42]





The Court thus holds that the petitioners deserve to be heard on their petition for certiorari,
considering the conflicting findings and conclusions of the Labor Arbiter and the NLRC based on
their calibration of the evidence on record. Moreover, the petitioners' plea that urine samples were
extracted from them without the assistance of counsel and that the Toxicology Reports of the NBI
Forensic and Chemistry Division are inadmissible in evidence must also be considered. The joint
affidavits of Villacete, Ramos, Villar and Arcenas that the petitioners were caught sniffing
methamphetamine hydrochloride are contradicted by the NBI's Toxicology Reports that the urine
samples provided by the petitioners were found positive for amphetamine. There is thus a need for
the CA to resolve the issues of whether amphetamine is indeed a metabolite of methamphetamine
and whether the possession and use of such substance is a violation of the law.



We note that the petitioners indeed failed to append to their motion for reconsideration in the CA the
affidavit required by Rule 13, Section 13 of the Rules of Court, to wit:



SEC. 13. Proof of service. - Proof of personal service shall consist of a written admission of the party
served, or the official return of the server, or the affidavit of the party serving, containing a full
statement of the date, place and manner of service. If the service is by ordinary mail, proof thereof
shall consist of an affidavit of the person mailing of facts showing compliance with Section 7 of this
Rule. If service is made by registered mail, proof shall be made by such affidavit and the registry
receipt issued by the mailing office. The registry return card shall be filed immediately upon its
receipt by the sender, or in lieu thereof the unclaimed letter together with the certified or sworn copy
of the notice given by the postmaster to the addressee.



Nonetheless, in the interest of substantial justice, taking into account the fact that this is a labor
case, the Court opts to overlook the procedural lapse of the petitioners, conformably with the ruling
of the Court in ABD Overseas Manpower Corporation v. NLRC:[43]



Under the Rules of Court which were then in effect and applicable to the case at bar, when MARS
failed to file an answer to petitioner's cross-claim, it should have been declared in default with
respect to such claim. In labor cases, however, technical rules of procedure are not applicable, but
may apply only by analogy or in a suppletory character, for instance, when there is a need to attain
substantial justice and an expeditious, practical and convenient solution to a labor problem. Hence,
when the POEA opted to overlook petitioner's cross-claim against MARS, petitioner was denied
substantial justice.[44]







Indeed, technicalities should not be permitted to stand in the way of equitably and completely
resolving the rights and obligations of the parties. The Court reiterates that where the ends of
substantial justice would be better served, the application of technical rules of procedure may be
relaxed.[45]



WHEREFORE, the Resolutions of the Court of Appeals dated August 10, 2000 and November 5,
2003 are SET ASIDE. The records of the case are REMANDED to the Court of Appeals for further
proceedings. The appellate court is DIRECTED to REINSTATE CA-G.R. SP No. 59826 in its docket
and to require private respondent Philippine Airlines, Inc. to file its Comment on the petition for
certiorari. No costs.

https://web.mylegalwhiz.com/cases/detail/47818


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. No. 104776 | 1994-12-05

D E C I S I O N

QUIASON, J p:

The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine Overseas
Employment Administration's Administrator, et. al.," was filed under Rule 65 of the Revised Rules of
Court:
(1) to modify the Resolution dated September 2, 1991 of the National Labor Relations Commission
(NLRC) in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460;

(2) to render a new decision: (i) declaring private respondents as in default; (ii) declaring the said
labor cases as a class suit; (iii) ordering Asia International Builders Corporation (AIBC) and Brown
and Root International Inc. (BRII) to pay the claims of the 1,767 claimants in said labor cases; (iv)
declaring Atty. Florante M. de Castro guilty of forum-shopping; and (v) dismissing POEA Case No. L-
86-05-460; and

(3) to reverse the Resolution dated March 24, 1992 of the NLRC, denying the motion for
reconsideration of its Resolution dated September 2, 1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National Labor
Relations Commission, et. al.," was filed under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555,
L-85-10-777, L-85-10-799 and L-86-05-460 insofar as it: (i) applied the three-year prescriptive period
under the Labor Code of the Philippines instead of the ten-year prescriptive period under the Civil
Code of the Philippines; and (ii) denied the "three-hour daily average" formula in the computation of
petitioners' overtime pay; and

(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration
of its Resolution dated September 2, 1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al., v.
National Labor Relations Commission, et. al." was filed under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555,
L-85-10-777, L-85-10-779 and L-86-05-460, insofar as it granted the claims of 149 claimants; and

(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied the motions for
reconsideration of AIBC and BRII (Rollo, pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA in four
labor cases: (1) awarded monetary benefits only to 149 claimants and (2) directed Labor Arbiter
Fatima J. Franco to conduct hearings and to receive evidence on the claims dismissed by the POEA
for lack of substantial evidence or proof of employment.
Consolidation of Cases

G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R. Nos.
104911-14 were raffled to the Second Division. In the Resolution dated July 26, 1993, the Second
Division referred G.R. Nos. 104911-14 to the Third Division (G.R. No. 104911-14, Rollo, p. 895).

In the Resolution dated September 29, 1993, the Third Division granted the motion filed in G.R. Nos.
104911-14 for the consolidation of said cases with G.R. Nos. 104776 and 105029-32, which were
assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107; G.R. Nos. 105029-30,
Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the First Division granted
the motion to consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo,
p. 1109; G.R. No. 105029-32, Rollo, p. 1562).
I

On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their own
behalf and on behalf of 728 other overseas contract workers (OCWs) instituted a class suit by filing
an "Amended Complaint" with the Philippine Overseas Employment Administration (POEA) for
money claims arising from their recruitment by AIBC and employment by BRII (POEA Case NO. L-
84-06-555). The claimants were represented by Atty. Gerardo del Mundo.

BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction;
while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and deploy
Filipino workers for overseas employment on behalf of its foreign principals.

The amended complaint principally sought the payment of the unexpired portion of the employment
contracts, which was terminated prematurely, and secondarily, the payment of the interest of the
earnings of the Travel and Reserved Fund, interest on all the unpaid benefits; area wage and salary
differential pay; fringe benefits; refund of SSS and premium not remitted to the SSS; refund of
withholding tax not remitted to the BIR; penalties for committing prohibited practices; as well as the
suspension of the license of AIBC and the accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).

At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was given,
together with BRII, up to July 5, 1984 to file its answer.

On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the claimants to file a
bill of particulars within ten days from receipt of the order and the movants to file their answers within
ten days from receipt of the bill of particulars. The POEA Administrator also scheduled a pre-trial
conference on July 25, 1984.

On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23, 1984,
AIBC filed a "Motion to Strike Out of the Records", the "Complaint" and the "Compliance and
Manifestation." On July 25, 1984, the claimants filed their "Rejoinder and Comments," averring,
among other matters, the failure of AIBC and BRII to file their answers and to attend the pre-trial
conference on July 25, 1984. The claimants alleged that AIBC and BRII had waived their right to
present evidence and had defaulted by failing to file their answers and attend the pre-trial
conference.

On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the Records" filed
by AIBC but required the claimants to correct the deficiencies in the complaint pointed out in the
order.

On October 10, 1984, claimants asked for time within which to comply with the Order of October 2,
1984 and filed an "Urgent Manifestation," praying that the POEA Administrator direct the parties to
submit simultaneously their position papers, after which the case should be deemed submitted for
decision. On the same day, Atty. Florante de Castro filed another complaint for the same money
claims and benefits in behalf of several claimants, some of whom were also claimants in POEA
Case No. L-84-06-555 (POEA Case No. 85-10-779).

On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2, 1984 and
an "Urgent Manifestation," praying that the POEA direct the parties to submit simultaneously their
position papers after which the case would be deemed submitted for decision. On the same day,
AIBC asked for time to file its comment on the "Compliance" and "Urgent Manifestation" of
claimants. On November 6, 1984, it filed a second motion for extension of time to file the comment.

On November 8, 1984, the POEA Administrator informed AIBC that its motion for extension of time
was granted.

On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked
that AIBC and BRII be declared in default for failure to file their answers.

On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs, that
claimants should be ordered to amend their complaint.

On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their
answers within ten days from receipt of the order.

On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said order of
the POEA Administrator. Claimants opposed the appeal, claiming that it was dilatory and praying
that AIBC and BRII be declared in default.

On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position Paper" dated
March 24, 1985, adding new demands: namely, the payment of overtime pay, extra night work pay,
annual leave differential pay, leave indemnity pay, retirement and savings benefits and their share of
forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA Administrator directed
AIBC to file its answer to the amended complaint (G.R. No. 104776, Rollo, p. 20).

On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the same day, the
POEA issued an order directing AIBC and BRII to file their answers to the "Amended Complaint,"
otherwise, they would be deemed to have waived their right to present evidence and the case would
be resolved on the basis of complainants' evidence.

On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and Motion for
Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants opposed the motions.

On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to file their
answers in POEA Case No. L-84-06-555.

On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for the
issuance of a writ of injunction. On September 19, 1985, NLRC enjoined the POEA Administrator
from hearing the labor cases and suspended the period for the filing of the answers of AIBC and
BRII.

On September 19, 1985, claimants asked the POEA Administrator to include additional claimants in
the case and to investigate alleged wrongdoings of BRII, AIBC and their respective lawyers.

On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-85-
10-777) against AIBC and BRII with the POEA, demanding monetary claims similar to those subject
of POEA Case No. L-84-06-555. In the same month, Solomon Reyes also filed his own complaint
(POEA Case No. L-85-10-779) against AIBC and BRII.

On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the substitution
of the original counsel of record and the cancellation of the special powers of attorney given the
original counsel.

On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce attorney's
lien.

On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-460) in
behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.

On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and
September 18, 1985 by AIBC and BRII.

In narrating the proceedings of the labor cases before the POEA Administrator, it is not amiss to
mention that two cases were filed in the Supreme Court by the claimants, namely - G.R. No. 72132
on September 26, 1985 and Administrative Case No. 2858 on March 18, 1986. On May 13, 1987,
the Supreme Court issued a resolution in Administrative Case No. 2858 directing the POEA
Administrator to resolve the issues raised in the motions and oppositions filed in POEA Cases Nos.
L-84-06-555 and L-86-05-460 and to decide the labor cases with deliberate dispatch.

AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order dated
September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC to answer the
amended complaint in POEA Case No. L-84-06-555. In a resolution dated November 9, 1987, we
dismissed the petition by informing AIBC that all its technical objections may properly be resolved in
the hearings before the POEA.

Complaints were also filed before the Ombudsman. The first was filed on September 22, 1988 by
claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator and several NLRC
Commissioners. The Ombudsman merely referred the complaint to the Secretary of Labor and
Employment with a request for the early disposition of POEA Case No. L-84-06-555. The second
was filed on April 28, 1989 by claimants Emigdio P. Bautista and Rolando R. Lobeta charging AIBC
and BRII for violation of labor and social legislations. The third was filed by Jose R. Santos,
Maximino N. Talibsao and Amado B. Bruce denouncing AIBC and BRII of violations of labor laws.

On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution dated
December 12, 1986.

On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for suspension of
the period for filing an answer or motion for extension of time to file the same until the resolution of
its motion for reconsideration of the order of the NLRC dismissing the two appeals. On April 28,
1987, NLRC en banc denied the motion for reconsideration.

At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the same hearing,
the parties were given a period of 15 days from said date within which to submit their respective
position papers. On June 24, 1987 claimants filed their "Urgent Motion to Strike Out Answer,"
alleging that the answer was filed out of time. On June 29, 1987, claimants filed their "Supplement to
Urgent Manifestational Motion" to comply with the POEA Order of June 19, 1987. On February 24,
1988, AIBC and BRII submitted their position paper. On March 4, 1988, claimants filed their "Ex-
parte Motion to Expunge from the Records" the position paper of AIBC and BRII, claiming that it was
filed out of time.

On September 1, 1988, the claimants represented by Atty. De Castro filed their memorandum in
POEA Case No. L-86-05-460. On September 6, 1988, AIBC and BRII submitted their Supplemental
Memorandum. On September 12, 1988, BRII filed its "Reply to Complainant's Memorandum." On
October 26, 1988, claimants submitted their "Ex-parte Manifestational Motion and Counter-
Supplemental Motion," together with 446 individual contracts of employments and service records.
On October 27, 1988, AIBC and BRII filed a "Consolidated Reply."

On January 30, 1989, the POEA Administrator rendered his decision in POEA Case No. L-84-06-
555 and the other consolidated cases, which awarded the amount of $824,652.44 in favor of only
324 complainants.

On February 10, 1989, claimants submitted their "Appeal Memorandum for Partial Appeal" from the
decision of the POEA. On the same day, AIBC also filed its motion for reconsideration and/or appeal
in addition to the "Notice of Appeal" filed earlier on February 6, 1989 by another counsel for AIBC.

On February 17, 1989, claimants filed their "Answer to Appeal," praying for the dismissal of the
appeal of AIBC and BRII.

On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal Memorandum,"
together with their "newly discovered evidence" consisting of payroll records.

On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating among other
matters that there were only 728 named claimants. On April 20, 1989, the claimants filed their
"Counter-Manifestation," alleging that there were 1,767 of them.

On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision dated January
30, 1989 on the grounds that BRII had failed to appeal on time and AIBC had not posted the
supersedeas bond in the amount of $824,652.44.

On December 23, 1989, claimants filed another motion to resolve the labor cases.

On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the 1,767
claimants be awarded their monetary claims for failure of private respondents to file their answers
within the reglamentary period required by law.

On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
"WHEREFORE, premises considered, the Decision of the POEA in these consolidated cases is
modified to the extent and in accordance with the following dispositions:

1. The claims of the 94 complainants identified and listed in Annex "A" hereof are dismissed for
having prescribed;

2. Respondents AIBC and Brown & Root are hereby ordered, jointly and severally, to pay the 149
complainants, identified and listed in Annex "B" hereof, the peso equivalent, at the time of payment,
of the total amount in US dollars indicated opposite their respective names;

3. The awards given by the POEA to the 19 complaints classified and listed in Annex "C" hereof,
who appear to have worked elsewhere than in Bahrain are hereby set aside.

4. All claims other than those indicated in Annex "B", including those for overtime work and favorably
granted by the POEA, are hereby dismissed for lack of substantial evidence in support thereof or are
beyond the competence of this Commission to pass upon.
In addition, this Commission, in the exercise of its powers and authority under Article 218 (c) of the
Labor Code, as amended by R.A. 6715, hereby directs Labor Arbiter Fatima J. Franco of this
Commission to summon parties, conduct hearings and receive evidence, as expeditiously as
possible, and thereafter submit a written report to this Commission (First Division) of the proceedings
taken, regarding the claims of the following:
(a) complainants identified and listed in Annex "D" attached and made an integral part of this
Resolution, whose claims were dismissed by the POEA for lack of proof of employment in Bahrain
(these complainants numbering 683, are listed in pages 13 to 23 of the decision of POEA, subject of
the appeals) and,

(b) complainants identified and listed in Annex "E" attached and made an integral part of this
Resolution, whose awards decreed by the POEA, to Our mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp. 113-115; G.R. Nos. 104911-14, pp. 85-87; G.R. Nos.
105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12 co-claimants, who were former clients
of Atty. Del Mundo, filed a petition for certiorari with the Supreme Court (G.R. Nos. 120741-44). The
petition was dismissed in a resolution dated January 27, 1992.

Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were filed. The
first, by the claimants represented by Atty. Del Mundo; the second, by the claimants represented by
Atty. De Castro; and the third, by AIBC and BRII.

In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.

Hence, these petitions filed by the claimants represented by Atty. Del Mundo (G.R. No. 104776), the
claimants represented by Atty. De Castro (G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos.
105029-32).
II

Compromise Agreements

Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have submitted,
from time to time, compromise agreements for our approval and jointly moved for the dismissal of
their respective petitions insofar as the claimants-parties to the compromise agreements were
concerned (See Annex A for list of claimants who signed quitclaims).

Thus the following manifestations that the parties had arrived at a compromise agreement and the
corresponding motions for the approval of the agreements were filed by the parties and approved by
the Court:
1) Joint Manifestation and Motion involving claimant Emigdio Abarquez and 47 co-claimants dated
September 2, 1992 (G.R. Nos. 104911-14, Rollo, pp. 263-406; G.R. Nos. 105029-32, Rollo, pp. 470-
615);

2) Joint Manifestation and Motion involving petitioner Bienvenido Cadalin and 82 co-petitioners
dated September 3, 1992 (G.R. No. 104776, Rollo, pp. 364-507);

3) Joint Manifestation and Motion involving claimant Jose M. Aban and 36 co-claimants dated
September 17, 1992 (G.R. Nos. 105029-32, Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-
626; G.R. Nos. 104911-14, Rollo, pp. 407-516);

4) Joint Manifestation and Motion involving claimant Antonio T. Anglo and 17 co-claimants dated
October 14, 1992 (G.R. Nos. 105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713;
G.R. Nos. 104911-14, Rollo, pp. 530-590);

5) Joint Manifestation and Motion involving claimant Dionisio Bobongo and 6 co-claimants dated
January 15, 1993 (G.R. No. 104776, Rollo, pp. 813-836; G.R. Nos. 104911-14, Rollo, pp. 629-652);

6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista and 4 co-claimants dated
March 10, 1993 (G.R. Nos. 104911-14, Rollo, pp. 731-746; G.R. No. 104776, Rollo, pp. 1815-1829);

7) Joint Manifestation and Motion involving claimants Palconeri Banaag and 5 co-claimants dated
March 17, 1993 (G.R. No. 104776, Rollo, pp. 1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655-675);

8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15 other co-claimants
dated May 4, 1993 (G.R. No. 105029-32, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-
729; G.R. No. 104776, Rollo, pp. 1773-1814);

9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-claimants dated May 10,
1993 (G.R. No. 104776, Rollo, pp. 1815-1829);

10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and 36 co-claimants dated
June 14, 1993 (G.R. Nos. 105029-32, Rollo, pp. 974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-
864; G.R. No. 104776, Rollo, pp. 1066-1183);

11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo and 19 co-claimants dated
July 22, 1993 (G.R. No. 104776, Rollo, pp. 1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256;
G.R. Nos. 104911-14, Rollo, pp. 896-959);

12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2 co-claimants dated
September 7, 1993 (G.R. Nos. 105029-3, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-
1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);

13) Joint Manifestation and Motion involving claimant Dante C. Aceres and 37 co-claimants dated
September 8, 1993 (G.R. No. 104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-
1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);

14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-claimants dated January
10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);

15) Joint Manifestation and Motion involving Domingo B. Solano and six co-claimants dated August
25, 1994 (G.R. Nos. 105029-32; G.R. No. 104776; G.R. No. 104911-14).
III

The facts as found by the NLRC are as follows:

"We have taken painstaking efforts to sift over the more than fifty volumes now comprising the
records of these cases. From the records, it appears that the complainants-appellants allege that
they were recruited by respondent-appellant AIBC for its accredited foreign principal, Brown & Root,
on various dates from 1975 to 1983. They were all deployed at various projects undertaken by
Brown & Root in several countries in the Middle East, such as Saudi Arabia, Libya, United Arab
Emirates and Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia.

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 (emphasis supplied):
Art. 79: . . . A worker shall receive payment for each extra hour equivalent to his wage entitlement
increased by a minimum of twenty-five per centum thereof for hours worked during the day; and by a
minimum of fifty per centum thereof for hours worked during the night which shall be deemed to
being from seven o'clock in the evening until seven o'clock in the morning . . . ."

Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.

. . . an employer may require a worker, with his consent, to work on his weekly day of rest if
circumstances so require and in respect of which an additional sum equivalent to 150% of his normal
wage shall be paid to him . . . ."

Art. 81: . . . When conditions of work require the worker to work on any official holiday, he shall be
paid an additional sum equivalent to 150% of his normal wage.

Art. 84: Every worker who has completed one year's continuous service with his employer shall be
entitled to leave on full pay for a period of not less than 21 days for each year increased to a period
not less than 28 days after five continuous years of service."

A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his
service in that year."

Art. 107: A contract of employment made for a period of indefinite duration may be terminated by
either party thereto after giving the other party thirty days' prior notice before such termination, in
writing, in respect of monthly paid workers and fifteen days' notice in respect of other workers. The
party terminating a contract without giving the required notice shall pay to the other party
compensation equivalent to the amount of wages payable to the worker for the period of such notice
or the unexpired portion thereof.

Art. 111: . . . the employer concerned shall pay to such worker, upon termination of employment, a
leaving indemnity for the period of his employment calculated on the basis of fifteen days' wages for
each year of the first three years of service and of one month's wages for each year of service
thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in
proportion to the period of his service completed within a year."
All the individual complainants-appellants have already been repatriated to the Philippines at the
time of the filing of these cases (R.R. No. 104776, Rollo, pp. 59-65).
IV

The issues raised before and resolved by the NLRC were:
First: - Whether or not complainants are entitled to the benefits provided by Amiri Decree No. 23 of
Bahrain;
(a) Whether or not the complainants who have worked in Bahrain are entitled to the above-
mentioned benefits.

(b) Whether or not Art. 44 of the same Decree (allegedly prescribing a more favorable treatment of
alien employees) bars complainants from enjoying its benefits.
Second: - Assuming that Amiri Decree No. 23 of Bahrain is applicable in these cases, whether or not
complainants' claim for the benefits provided therein have prescribed.

Third: - Whether or not the instant cases qualify as a class suit.

Fourth: - Whether or not the proceedings conducted by the POEA, as well as the decision that is the
subject of these appeals, conformed with the requirements of due process;
(a) Whether or not the respondent-appellant was denied its right to due process;

(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 EmployeeBenefits" (Annex "Q" of Amended
Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent of the judgment award;
n. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and the accreditation
of B & R issued by POEA;
o. Penalty for violations of Article 34 (prohibited practices), not excluding reportorial requirements
thereof.
Eight: - Whether or not the POEA Administrator erred in not dismissing POEA Case No. (L) 86-65-
460 on the ground of multiplicity of suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence
governing the pleading and proof of a foreign law and admitted in evidence a simple copy of the
Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector). NLRC invoked Article
221 of the Labor Code of the Philippines, vesting on the Commission ample discretion to use every
and all reasonable means to ascertain the facts in each case without regard to the technicalities of
law or procedure. NLRC agreed with the POEA Administrator that the Amiri Decree No. 23, being
more favorable and beneficial to the workers, should form part of the overseas employment contract
of the complainants.

NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who worked in
Bahrain, and set aside awards of the POEA Administrator in favor of the claimants, who worked
elsewhere.

On the second issue, NLRC ruled that the prescriptive period for the filing of the claims of the
complainants was three years, as provided in Article 291 of the Labor Code of the Philippines, and
not ten years as provided in Article 1144 of the Civil Code of the Philippines nor one year as
provided in the Amiri Decree No. 23 of 1976.

On the third issue, NLRC agreed with the POEA Administrator that the labor cases cannot be treated
as a class suit for the simple reason that not all the complainants worked in Bahrain and therefore,
the subject matter of the action, the claims arising from the Bahrain law, is not of common or general
interest to all the complainants.

On the fourth issue, NLRC found at least three infractions of the cardinal rules of administrative due
process: namely, (1) the failure of the POEA Administrator to consider the evidence presented by
AIBC and BRII; (2) some findings of fact were not supported by substantial evidence; and (3) some
of the evidence upon which the decision was based were not disclosed to AIBC and BRII during the
hearing.

On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and AIBC are
solidarily liable for the claims of the complainants and held that BRII was the actual employer of the
complainants, or at the very least, the indirect employer, with AIBC as the labor contractor.

NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator through the
summons served on AIBC, its local agent.

On the sixth issue, NLRC held that the POEA Administrator was correct in denying the Motion to
Declare AIBC in default.

On the seventh issue, which involved other money claims not based on the Amiri Decree No. 23,
NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims for refund of the SSS premiums
and refund of withholding taxes and the claimants should file their claims for said refund with the
appropriate government agencies;

(2) the claimants failed to establish that they are entitled to the claims which are not based on the
overseas employment contracts nor the Amiri Decree No. 23 of 1976;

(3) that the POEA Administrator has no jurisdiction over claims for moral and exemplary damages
and nonetheless, the basis for granting said damages was not established;

(4) that the claims for salaries corresponding to the unexpired portion of their contract may be
allowed if filed within the three-year prescriptive period;

(5) that the allegation that complainants were prematurely repatriated prior to the expiration of their
overseas contract was not established; and

(6) that the POEA Administrator has no jurisdiction over the complaint for the suspension or
cancellation of the AIBC's recruitment license and the cancellation of the accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460 should have
been dismissed on the ground that the claimants in said case were also claimants in POEA Case
No. (L) 84-06-555. Instead of dismissing POEA Case No. (L) 86-65-460, the POEA just resolved the
corresponding claims in POEA Case No. (L) 84-06-555. In other words, the POEA did not pass upon
the same claims twice.
V

G.R. No. 104776

Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to a speedy disposition of their
cases as guaranteed by Section 16, Article III of the 1987 Constitution. The POEA Administrator
allowed private respondents to file their answers in two years (on June 19, 1987) after the filing of
the original complaint (on April 2, 1985) and NLRC, in total disregard of its own rules, affirmed the
action of the POEA Administrator;

(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in default and
should have rendered summary judgment on the basis of the pleadings and evidence submitted by
claimants;

(3) the NLRC and POEA Administrator erred in not holding that the labor cases filed by AIBC and
BRII cannot be considered a class suit;

(4) that the prescriptive period for the filing of the claims is ten years; and

(5) that NLRC and the POEA Administrator should have dismissed POEA Case No. L-86-05-460,
the case filed by Atty. Florante de Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of the labor cases, considering the
great difficulty of getting all the records of the more than 1,500 claimants, the piece-meal filing of the
complaints and the addition of hundreds of new claimants by petitioners;

(2) that considering the number of complaints and claimants, it was impossible to prepare the
answers within the ten-day period provided in the NLRC Rules, that when the motion to declare
AIBC in default was filed on July 19, 1987, said party had already filed its answer, and that
considering the staggering amount of the claims (more than US$50,000,000.00) and the complicated
issues raised by the parties, the ten-day rule to answer was not fair and reasonable;

(3) that the claimants failed to refute NLRC's finding that there was no common or general interest in
the subject matter of the controversy - which was the applicability of the Amiri Decree No. 23.
Likewise, the nature of the claims varied, some being based on salaries pertaining to the unexpired
portion of the contracts while others being for pure money claims. Each claimant demanded
separate claims peculiar only to himself and depending upon the particular circumstances obtaining
in his case;

(4) that the prescriptive period for filing the claims is that prescribed by Article 291 of the Labor Code
of the Philippines (three years) and not the one prescribed by Article 1144 of the Civil Code of the
Philippines (ten years); and

(5) that they are not concerned with the issue of whether POEA Case No. L-86-05-460 should be
dismissed, this being a private quarrel between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien

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

On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's Lien,"
alleging that the claimants who entered into compromise agreements with AIBI and BRII with the
assistance of Atty. De Castro, had all signed a retainer agreement with his law firm (G.R. No.
104776, Rollo, pp. 623-624; 838-1535).

Contempt of Court

On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De Castro and
Atty. Katz Tierra for contempt of court and for violation of Canons 1, 15 and 16 of the Code of
Professional Responsibility. The said lawyers allegedly misled this Court, by making it appear that
the claimants who entered into the compromise agreements were represented by Atty. De Castro,
when in fact they were represented by Atty. Del Mundo (G.R. No. 104776, Rollo, pp. 1560-1614).

On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro for unethical
practices and moved for the voiding of the quitclaims submitted by some of the claimants.

G.R. Nos. 104911-14

The claimants in G.R. Nos. 104911-14 based their petition for certiorari on the grounds that NLRC
gravely abused its discretion when it: (1) applied the three-year prescriptive period under the Labor
Code of the Philippines; and (2) it denied the claimant's formula based on an average overtime pay
of three hours a day (Rollo, pp. 18-22).

The claimants argue that said method was proposed by BRII itself during the negotiation for an
amicable settlement of their money claims in Bahrain as shown in the Memorandum dated April 16,
1983 of the Ministry of Labor of Bahrain (Rollo, pp. 21-22).

BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the prescriptive
period in the Labor Code of the Philippines, a special law, prevails over that provided in the Civil
Code of the Philippines, a general law.

As to the memorandum of the Ministry of Labor of Bahrain on the method of computing the overtime
pay, BRII and AIBC claimed that they were not bound by what appeared therein, because such
memorandum was proposed by a subordinate Bahrain official and there was no showing that it was
approved by the Bahrain Minister of Labor. Likewise, they claimed that the averaging method was
discussed in the course of the negotiation for the amicable settlement of the dispute and any offer
made by a party therein could not be used as an admission by him (Rollo, pp. 228-236).

G.R. Nos. 105029-32

In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion when it: (1)
enforced the provisions of the Amiri Decree No. 23 of 1976 and not the terms of the employment
contracts; (2) granted claims for holiday, overtime and leave indemnity pay and other benefits, on
evidence admitted in contravention of petitioner's constitutional right to due process; and (3) ordered
the POEA Administrator to hold new hearings for the 683 claimants whose claims had been
dismissed for lack of proof by the POEA Administrator or NLRC itself. Lastly, they allege that
assuming that the Amiri Decree No. 23 of 1976 was applicable, NLRC erred when it did not apply
the one-year prescription provided in said law (Rollo, pp. 29-30).
VI

G.R. No. 104776
G.R. Nos. 104911-14
G.R. Nos. 105029-32

All the petitions raise the common issue of prescription although they disagreed as to the time that
should be embraced within the prescriptive period.

To the POEA Administrator, the prescriptive period was ten years, applying Article 1144 of the Civil
Code of the Philippines. NLRC believed otherwise, fixing the prescriptive period at three years as
provided in Article 291 of the Labor Code of the Philippines.

The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds, insisted
that NLRC erred in ruling that the prescriptive period applicable to the claims was three years,
instead of ten years, as found by the POEA Administrator.

The Solicitor General expressed his personal view that the prescriptive period was one year as
prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of NLRC that Article 291
of the Labor Code of the Philippines was the operative law.The POEA Administrator held the view
that:
"These money claims (under Article 291 of the Labor Code) refer to those arising from the
employer's violation of the employee's right as provided by the Labor Code.
In the instant case, what the respondents violated are not the rights of the workers as provided by
the Labor Code, but the provisions of the Amiri Decree No. 23 issued in Bahrain, which ipso facto
amended the worker's contracts of employment. Respondents consciously failed to conform to these
provisions which specifically provide for the increase of the worker's rate. It was only after June 30,
1983, four months after the brown builders brought a suit against B & R in Bahrain for this same
claim, when respondent AIBC's contracts have undergone amendments in Bahrain for the new
hires/renewals (Respondent's Exhibit 7).

Hence, premises considered, the applicable law of prescription to this instant case is Article 1144 of
the Civil Code of the Philippines, which provides:
'Art. 1144. The following actions may be brought within ten years from the time the cause of action
accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;'
Thus, herein money claims of the complainants against the respondents shall prescribe in ten years
from August 16, 1976. Inasmuch as all claims were filed within the ten-year prescriptive period, no
claim suffered the infirmity of being prescribed" (G.R. No. 104776, Rollo, 89-90).

In overruling the POEA Administrator, and holding that the prescriptive period is three years as
provided in Article 291 of the Labor Code of the Philippines, the NLRC argued as follows:
"The Labor Code provides that 'all money claims arising from employer-employee relations . . . shall
be filed within three years from the time the cause of action accrued; otherwise they shall be forever
barred' (Art. 291, Labor Code, as amended). This three-year prescriptive period shall be the one
applied here and which should be reckoned from the date of repatriation of each individual
complainant, considering the fact that the case is having (sic) filed in this country. We do not agree
with the POEA Administrator that this three-year prescriptive period applies only to money claims
specifically recoverable under the Philippine Labor Code. Article 291 gives no such indication.
Likewise, We can not consider complainants' cause/s of action to have accrued from a violation of
their employment contracts. There was no violation; the claims arise from the benefits of the law of
the country where they worked. (G.R. No. 104776, Rollo, pp. 90-91).
Anent the applicability of the one-year prescriptive period as provided by the Amiri Decree No. 23 of
1976, NLRC opined that the applicability of said law was one of characterization, i.e., whether to
characterize the foreign law on prescription or statute of limitation as "substantive" or "procedural."
NLRC cited the decision in Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955],
where the issue was the applicability of the Panama Labor Code in a case filed in the State of New
York for claims arising from said Code. In said case, the claims would have prescribed under the
Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit Court of
Appeals held that the Panamanian Law was procedural as it was not "specifically intended to be
substantive," hence, the prescriptive period provided in the law of the forum should apply. The Court
observed:
". . . And where, as here, we are dealing with a statute of limitations of a foreign country, and it is not
clear on the face of the statute that its purpose was to limit the enforceability, outside as well as
within the foreign country concerned, of the substantive rights to which the statute pertains, we think
that as a yardstick for determining whether that was the purpose this test is the most satisfactory
one. It does not lead American courts into the necessity of examining into the unfamiliar peculiarities
and refinements of different foreign legal systems. . ."
The court further noted:
xxx xxx xxx

"Applying that test here it appears to us that the libelant is entitled to succeed, for the respondents
have failed to satisfy us that the Panamanian period of limitation in question was specifically aimed
against the particular rights which the libelant seeks to enforce. The Panama Labor Code is a statute
having broad objectives, viz: 'The present Code regulates the relations between capital and labor,
placing them on a basis of social justice, so that, without injuring any of the parties, there may be
guaranteed for labor the necessary conditions for a normal life and to capital an equitable return to
its investment.' In pursuance of these objectives the Code gives laborers various rights against their
employers. Article 623 establishes the period of limitation for all such rights, except certain ones
which are enumerated in Article 621. And there is nothing in the record to indicate that the
Panamanian legislature gave special consideration to the impact of Article 623 upon the particular
rights sought to be enforced here, as distinguished from the other rights to which that Article is also
applicable. Were we confronted with the question of whether the limitation period of Article 621
(which carves out particular rights to be governed by a shorter limitation period) is to be regarded as
'substantive' or 'procedural' under the rule of 'specifity' we might have a different case; but here on
the surface of things we appear to be dealing with a 'broad,' and not a 'specific,' statute of limitations"
(G.R. No. 104776, Rollo, pp. 92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of the
Philippines, which was applied by NLRC, refers only to claims "arising from the employer's violation
of the employee's right as provided by the Labor Code." They assert that their claims are based on
the violation of their employment contracts, as amended by the Amiri Decree No. 23 of 1976 and
therefore the claims may be brought within ten years as provided by Article 1144 of the Civil Code of
the Philippines (Rollo, G.R. Nos. 104911-14, pp. 18-21). To bolster their contention, they cite PALEA
v. Philippine Airlines, Inc., 70 SCRA 244 (1976).

AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No.
23 of 1976, argue that there is in force in the Philippines a "borrowing law," which is Section 48 of
the Code of Civil Procedure and that where such kind of law exists, it takes precedence over the
common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).

First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri
Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after the lapse of one year
from the date of the expiry of the contract" (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such
as service of process, joinder of actions, period and requisites for appeal, and so forth, are governed
by the laws of the forum. This is true even if the action is based upon a foreign substantive law
(Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed
either as procedural or substantive, depending on the characterization given such a law.

Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of
limitations of New York, instead of the Panamanian law, after finding that there was no showing that
the Panamanian law on prescription was intended to be substantive. Being considered merely a
procedural law even in Panama, it has to give way to the law of the forum on prescription of actions.

However, the characterization of a statute into a procedural or substantive law becomes irrelevant
when the country of the forum has a "borrowing statute." Said statute has the practical effect of
treating the foreign statute of limitation as one of substance (Goodrich, Conflict of Laws 152-153
[1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations
to the pending claims based on a foreign law (Siegel, Conflicts 183 [1975]). While there are several
kinds of "borrowing statutes," one from provides that an action barred by the laws of the place where
it accrued, will not be enforced in the forum even though the local statute has not run against it
(Goodrich and Scoles, Conflict of Laws 152-153 [1938]). Section 48 of our Code of Civil Procedure is
of this kind. Said Section provides:
"If by the laws of the state or country where the cause of action arose, the action is barred, it is also
barred in the Philippines Islands."
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of
said Code repealed only those provisions of the Code of Civil Procedures as to which were
inconsistent with it. There is no provision in the Civil Code of the Philippines, which is inconsistent
with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws
104 [7th ed.]).

In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore
insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of
1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy
(Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To
enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in
question would contravene the public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:
"The state shall promote social justice in all phases of national development" (Sec. 10).

"The state affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare" (Sec. 18).
In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
"Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all."
Having determined that the applicable law on prescription is the Philippine law, the next question is
whether the prescriptive period governing the filing of the claims is three years, as provided by the
Labor Code or ten years, as provided by the Civil Code of the Philippines.

The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of the
Philippines, which provides:
"The following actions must be brought within ten years from the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment."
NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor Code of
the Philippines, which in pertinent part provides:
"Money claims-all money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued,
otherwise they shall be forever barred.

xxx xxx xxx"
The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70 SCRA (1976)
invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21).
The said case involved the correct computation of overtime pay as provided in the collective
bargaining agreements and not the Eight-Hour Labor Law.

As noted by the Court: "That is precisely why petitioners did not make any reference as to the
computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and
instead insisted that work computation provided in the collective bargaining agreements between the
parties be observed. Since the claim for pay differentials is primarily anchored on the written
contracts between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New
Civil Code should govern."

Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 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 claim is the cases at bench all arose from the employer-employee relations, which is
broader in scope than claims arising from a specific law or from the collective bargaining agreement.

The contention of the POEA Administrator, that the three-year prescriptive period under Article 291
of the Labor Code of the Philippines applies only to money claims specifically recoverable under said
Code does not find support in the plain language of the provision. Neither is the contention of the
claimants in G.R. No. 104911-14 that said Article refers only to claims "arising from the employer's
violation of the employee's right," as provided by the Labor Code supported by the facial reading of
the provision.
VII

G.R. No. 104776

A. As the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that while their
complaints were filed on June 6, 1984 with POEA, the case was decided only on January 30, 1989,
a clear denial of their right to a speedy disposition of the case; and (2) that NLRC and the POEA
Administrator should have declared AIBC and BRII in default (Rollo, pp. 31-35).

Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:
"Sec. 16.All persons shall have the right to a speedy disposition of their cases before all judicial,
quasi-judicial, or administrative bodies."
It is true that the constitutional right to "a speedy disposition of cases" is not limited to the accused in
criminal proceedings but extends to all parties in all cases, including civil and administrative cases,
and in all proceedings, including judicial and quasi-judicial hearings. Hence, under the Constitution,
any party to a case may demand expeditious action on all officials who are tasked with the
administration of justice.

However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition of cases" is
a relative term. Just like the constitutional guarantee of "speedy trial" accorded to the accused in all
criminal proceedings, "speedy disposition of cases" is a flexible concept. It is consistent with delays
and depends upon the circumstances of each case. What the Constitution prohibits are
unreasonable, arbitrary and oppressive delays which render rights nugatory.

Caballero laid down the factors that may be taken into consideration in determining whether or not
the right to a "speedy disposition of cases" has been violated, thus:
"In the determination of whether or not the right to a "speedy trial" has been violated, certain factors
may be considered and balanced against each other. These are length of delay, reason for the
delay, assertion of the right or failure to assert it, and prejudice caused by the delay. The same
factors may also be considered in answering judicial inquiry whether or not a person officially
charged with the administration of justice has violated the speedy disposition of cases."
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
"It must be here emphasized that the right to a speedy disposition of a case, like the right to speedy
trial, is deemed violated only when the proceeding is attended by vexatious, capricious, and
oppressive delays; or when unjustified postponements of the trial are asked for and secured, or
when without cause or justified motive a long period of time is allowed to elapse without the party
having his case tried."
Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the amended
complaint, claimants had been asking that AIBC and BRII be declared in default for failure to file
their answers within the ten-day period provided in Section 1, Rule III of Book VI of the Rules and
Regulations of the POEA. At that time, there was a pending motion of AIBC and BRII to strike out of
the records the amended complaint and the "Compliance" of claimants to the order of the POEA,
requiring them to submit a bill of particulars.

The cases at bench are not of the run-of-the-mill variety, such that their final disposition in the
administrative level after seven years from their inception, cannot be said to be attended by
unreasonable, arbitrary and oppressive delays as to violate the constitutional rights to a speedy
disposition of the cases of complainants.

The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said complaint
had undergone several amendments, the first being on April 3, 1985.

The claimants were hired on various dates from 1975 to 1983. They were deployed in different
areas, one group in and the other groups outside of, Bahrain. The monetary claims totalling more
than US$65 million according to Atty. Del Mundo, included:
"1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees Benefits consisting of 43
pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
14. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and issued by the
POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not excluding reportorial requirements
thereof" (NLRC Resolution, September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some facts, the
claimants were ordered to comply with the motion of AIBC for a bill of particulars. When claimants
filed their "Compliance and Manifestation," AIBC moved to strike out the complaint from the records
for failure of claimants to submit a proper bill of particulars. While the POEA Administrator denied the
motion to strike out the complaint, he ordered the claimants "to correct the deficiencies" pointed out
by AIBC.

Before an intelligent answer could be filed in response to the complaint, the records of employment
of the more than 1,700 claimants had to be retrieved from various countries in the Middle East.
Some of the records dated as far back as 1975.

The hearings on the merits of the claims before the POEA Administrator were interrupted several
times by the various appeals, first to NLRC and then to the Supreme Court.

Aside from the inclusion of additional claimants, two new cases were filed against AIBC and BRII on
October 10, 1985 (POEA Cases No. L-85-10-777 and L-85-10-779). Another complaint was filed on
May 29, 1986 (POEA Case No. L-86-05- 460). NLRC, in exasperation, noted that the exact number
of claimants had never been completely established (Resolution, Sept. 2, 1991, G.R. No. 104776,
Rollo, p. 57). All the three new cases were consolidated with POEA Case No. L-84-06-555.

NLRC blamed the parties and their lawyers for the delay in terminating the proceedings, thus:
"These cases could have been spared the long and arduous route towards resolution had the parties
and their counsel been more interested in pursuing the truth and the merits of the claims rather than
exhibiting a fanatical reliance on technicalities. Parties and counsel have made these cases a
litigation of emotion. The intransigence of parties and counsel is remarkable. As late as last month,
this Commission made a last and final attempt to bring the counsel of all the parties (this
Commission issued a special order directing respondent Brown & Root's resident agent/s to appear)
to come to a more conciliatory stance. Even this failed" (Rollo, p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of the cases, to
the lament of NLRC, which complained:
"It is very evident from the records that the protagonists in these consolidated cases appear to be
not only the individual complainants, on the one hand, and AIBC and Brown & Root, on the other
hand. The two lawyers for the complainants, Atty. Gerardo Del Mundo and Atty. Florante De Castro,
have yet to settle the right of representation, each one persistently claiming to appear in behalf of
most of the complainants. As a result, there are two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of their respective authority to represent the
complainants prove futile. The bickerings by these two counsels are reflected in their pleadings. In
the charges and countercharges of falsification of documents and signatures, and in the disbarment
proceedings by one against the other. All these have, to a large extent, abetted in confounding the
issues raised in these cases, jumble the presentation of evidence, and even derailed the prospects
of an amicable settlement. It would not be far-fetched to imagine that both counsel, unwittingly,
perhaps, painted a rainbow for the complainants, with the proverbial pot of gold at its end containing
more than US$100 million, the aggregate of the claims in these cases. It is, likewise, not improbable
that their misplaced zeal and exuberance caused them to throw all caution to the wind in the matter
of elementary rules of procedure and evidence" (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the complainants
in both petitions filed by the two lawyers. As noted by NLRC, "the problem created by this situation is
that if one of the two petitions is dismissed, then the parties and the public respondents would not
know which claim of which petitioner was dismissed and which was not."

B. Claimants insist that all their claims could properly be consolidated in a "class suit" because "all
the name complainants have similar money claims and similar rights sought irrespective of whether
they worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya or in any part of the Middle
East" (Rollo, pp. 35-38).

A class suit is proper where the subject matter of the controversy is one of common or general
interest to many and the parties are so numerous that it is impracticable to bring them all before the
court (Revised Rules of Court, Rule 3, Sec. 12).

While all the claims are for benefits granted under the Bahrain Law, many of the claimants worked
outside Bahrain. Some of the claimants were deployed in Indonesia and Malaysia under different
terms and conditions of employment.

NLRC and the POEA Administrator are correct in their stance that inasmuch as the first requirement
of a class suit is not present (common or general interest based on the Amiri Decree of the State of
Bahrain), it is only logical that only those who worked in Bahrain shall be entitled to file their claims in
a class suit.

While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for
employee's benefits), there is no common question of law or fact. While some claims are based on
the Amiri Law of Bahrain, many of the claimants never worked in that country, but were deployed
elsewhere. Thus, each claimant is interested only in his own demand and not in the claims of the
other employees of defendants. The named claimants have a special or particular interest in specific
benefits completely different from the benefits in which the other named claimants and those
included as members of a "class" are claiming (Berses v. Villanueva, 25 Phil. 473 [1913]). It appears
that each claimant is only interested in collecting his own claims. A claimants has no concern in
protecting the interests of the other claimants as shown by the fact, that hundreds of them have
abandoned their co-claimants and have entered into separate compromise settlements of their
respective claims. A principle basic to the concept of "class suit" is that plaintiffs brought on the
record must fairly represent and protect the interests of the others (Dimayuga v. Court of Industrial
Relations, 101 Phil. 590 [1957]). For this matter, the claimants who worked in Bahrain can not be
allowed to sue in a class suit in a judicial proceeding. The most that can be accorded to them under
the Rules of Court is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule
3, Sec. 6).

The Court is extra-cautious in allowing class suits because they are the exceptions to the condition
sine qua non, requiring the joinder of all indispensable parties.

In an improperly instituted class suit, there would be no problem if the decision secured is favorable
to the plaintiffs. The problem arises when the decision is adverse to them, in which case the others
who were impleaded by their self-appointed representatives, would surely claim denial of due
process.

C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC should
have declared Atty. Florante De Castro guilty of "forum shopping, ambulance chasing activities,
falsification, duplicity and other unprofessional activities" and his appearances as counsel for some
of the claimants as illegal (Rollo, pp. 38-40).

The Anti-Forum shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the practice
of some parties of filing multiple petitions and complaints involving the same issues, with the result
that the courts or agencies have to resolve the same issues. Said Rule however, applies only to
petitions filed with the Supreme Court and the Court of Appeals. It is entitled "Additional
Requirements For Petitions Filed with the Supreme Court and the Court of Appeals To Prevent
Forum Shopping or Multiple Filing of Petitioners and Complainants." The first sentence of the circular
expressly states that said circular applies to an governs the filing of petitions in the Supreme Court
and the Court of Appeals.

While Administrative Circular No. 04-94 extended the application of the anti-forum shopping rule to
the lower courts and administrative agencies, said circular took effect only on April 1, 1994.

POEA and NLRC could not have entertained the complaint for unethical conduct against Atty. De
Castro because NLRC and POEA have no jurisdiction to investigate charges of unethical conduct of
lawyers.

Attorney's Lien

The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed by Atty.
Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services rendered in favor of
the claimants (G.R. No. 104776, Rollo, pp. 838-810; 1525).

A statement of a claim for a charging lien shall be filed with the court or administrative agency which
renders and executes the money judgment secured by the lawyer for his clients. The lawyer shall
cause written notice thereof to be delivered to his clients and to the adverse party (Revised Rules of
court, Rule 138, Sec. 37). The statement of the claim for the charging lien of Atty. Del Mundo should
have been filed with the administrative agency that rendered and executed the judgment.

Contempt of Court

The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty. Katz Tierra
for violation of the Code of Professional Responsibility should be filed in a separate and appropriate
proceeding.

G.R. No. 104911-14

Claimants charge NLRC with grave abuse of discretion in not accepting their formula of "Three
Hours Average Daily Overtime" in computing the overtime payments. They claim that it was BRII
itself which proposed the formula during the negotiations for the settlement of their claims in Bahrain
and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).

Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16, 1983, which
in pertinent part states:
"After the perusal of the memorandum of the Vice President and the Area Manager, Middle East, of
Brown & Root Co. and the Summary of the compensation offered by the Company to the employees
in respect of the difference of pay of the wages of the overtime and the difference of vacation leave
and the perusal of the documents attached thereto e.e.., minutes of the meetings between the
Representative of the employees and the management of the Company, the complaint filed by the
employees on 14/2/83 where they have claimed as hereinabove stated, sample of the Service
Contract executed between one of the employees and the company through its agent in (sic)
Philippines, Asia International Builders Corporation where it has been provided for 48 hours of work
per week and annual leave of 12 days and an overtime wage of 1 & 1/4 of the normal hourly wage.

xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35 months for the Philippino (sic)
employees . . . .

2. The average wage per hour for the Philippino (sic) employee is US$2.69 . . . .

3. The average hours for the overtime is 3 hours plus in all public holidays and weekends.

4. Payment of US$8.72 per months (sic) of service as compensation for the difference of the wages
of the overtime done for each Philippino (sic) employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a subordinate
official in the Bahrain Department of Labor; (2) that there was no showing that the Bahrain Minister
of Labor had approved said memorandum; and (3) that the offer was made in the course of the
negotiation for an amicable settlement of the claims and therefore it was not admissible in evidence
to prove that anything is due to the claimants.

While said document was presented to the POEA without observing the rule on presenting official
documents of a foreign government as provided in Section 24, Rule 132 of the 1989 Revised Rules
on Evidence, it can be admitted in evidence in proceedings before an administrative body. The
opposing parties have a copy of the said memorandum, and they could easily verify its authenticity
and occuracy.

The admissibility of the offer of compromise made by BRII as contained in the memorandum is
another matter. Under Section 27, Rule 130 of the 1989 Revised Rules on Evidence, an offer to
settle a claim is not an admission that anything is due.

Said Rule provides:
"Offer of compromise not admissible. - In civil cases, an offer of compromise is not an admission of
any liability, and is not admissible in evidence against the offeror."
This Rule is not only a rule of procedure to avoid the cluttering of the record with unwanted evidence
but a statement of public policy. There is great public interest in having the protagonists settle their
differences amicable before those ripen into litigation. Every effort must be taken to encourage them
to arrive at a settlement. The submission of offers and counter-offers in the negotiation table is a
step in the right direction. But to bind a party to his offers, as what claimants would make this Court
do, would defeat the salutary purpose of the Rule.

G.R. Nos. 105029-32

A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits than those
stipulated in the overseas-employment contracts of the claimants. It was of the belief that "where the
laws of the host country are more favorable and beneficial to the workers, then the laws of the host
country shall form part of the overseas employment contract." It quoted with approval the
observation of the POEA Administrator that ". . . in labor proceedings, all doubts in the
implementation of the provisions of the Labor Code and its implementing regulations shall be
resolved in favor of labor" (Rollo, pp. 90-94).

AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to enforce the
overseas-employment contracts, which became the law of the parties. They contend that the
principle that a law is deemed to be a part of a contract applies only to provisions of Philippine law in
relation to contracts executed in the Philippines.

The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided
that the laws of the host country became applicable to said contracts if they offer terms and
conditions more favorable that those stipulated therein. It was stipulated in said contracts that:
"The Employee agrees that while in the employ of the Employer, he will not engage in any other
business or occupation, nor seek employment with anyone other than the Employer; that he shall
devote his entire time and attention and his best energies, and abilities to the performance of such
duties as may be assigned to him by the Employer; that he shall at all times be subject to the
direction and control of the employer; and that the benefits provided to Employee hereunder are
substituted for and in lieu of all other benefits provided by any applicable law, provided of course,
that total remuneration and benefits do not fall below that of the host country regulation or custom, it
being understood that should applicable laws establish that fringe benefits, or other such benefits
additional to the compensation herein agreed cannot be waived, Employee agrees that such
compensation will be adjusted downward so that the total compensation hereunder, plus the non-
waivable benefits shall be equivalent to the compensation herein agreed" (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more felicitously. While a part thereof
provides that the compensation to the employee may be "adjusted downward so that the total
computation (thereunder) plus the non-waivable benefits shall be equivalent to the compensation"
therein agreed, another part of the same provision categorically states "that total remuneration and
benefits do not fall below that of the host country regulation and custom."

Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII,
the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257
[1979]).

Article 1377 of the Civil Code of the Philippines provides:
"The interpretation of obscure words or stipulations in a contract shall not favor the party who caused
the obscurity."
Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared
form containing the stipulations of the employment contract and the employees merely "take it or
leave it." The presumption is that there was an imposition by one party against the other and that the
employees signed the contracts out of necessity that reduced their bargaining power (Fieldmen's
Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).

Applying the said legal precepts, we read the overseas-employment contracts in question as
adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.

The parties to a contract may select the law by which it is to be governed (Cheshire, Private
International Law, 187 [7th ed]). In such a case, the foreign law is adopted as a "system" to regulate
the relations of the parties, including questions of their capacity to enter into the contract, the
formalities to be observed by them, matters of performance, and so forth (16 Am Jur 2d, 150-161).

Instead of adopting the entire mass of the foreign law, the parties may just agree that specific
provisions of a foreign statute shall be deemed incorporated into their contract "as a set of terms." By
such reference to the provisions of the foreign law, the contract does not become a foreign contract
to be governed by the foreign law. The said law does not operate as a statute but as a set of
contractual terms deemed written in the contract (Anton, Private International Law 197 [1967]; Dicey
and Morris, The Conflict of Laws 702-703, [8th ed.]).

A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law in Torts
and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]). Such party expectation is
protected by giving effect to the parties' own choice of the applicable law (Fricke v. Isbrandtsen Co.
Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must, however, bear some relationship to the
parties or their transaction (Scoles and Hayes, conflict of Law 644-647 [1982]). there is no question
that the contracts sought to be enforced by claimants have a direct connection with the Bahrain law
because the services were rendered in that country.

In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management co. and the late husband of the private
respondent, expressly provided that in the event of illness or injury to the employee arising out of
and in the course of his employment and not due to his own misconduct, "compensation shall be
paid to employee in accordance with and subject to the limitation of the Workmen's Compensation
Act of the Republic of the Philippines or the Worker's Insurance Act of registry of the vessel,
whichever is greater." Since the laws of Singapore, the place of registry of the vessel in which the
late husband of private respondent served at the time of his death, granted a better compensation
package, we applied said foreign law in preference to the terms of the contract.

The case of Bagong Filipinas Overseas Corporation v. National Labor Relations Commission, 135
SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the facts of the cases at bench.
The issue in that case was whether the amount of the death compensation of a Filipino seaman
should be determined under the shipboard employment contract executed in the Philippines or the
Hongkong law. Holding that the shipboard employment contract was controlling, the court
differentiated said case from Norse Management Co. in that in the latter case there was an express
stipulation in the employment contract that the foreign law would be applicable if it afforded greater
compensation.

B. AIBC and BRII claim that they were denied by NLRC of their right to due process when said
administrative agency granted Friday-pay differential, holiday-pay differential, annual-leave
differential and leave indemnity pay to the claimants listed in Annex B of the Resolution. At first,
NLRC reversed the resolution of the POEA Administrator granting these benefits on a finding that
the POEA Administrator failed to consider the evidence presented by AIBC and BRII, that some
findings of fact of the POEA Administrator were not supported by the evidence, and that some of the
evidence were not disclosed to AIBC and BRII (Rollo, pp. 35-36; 106-107). But instead of remanding
the case to the POEA Administrator for a new hearing, which means further delay in the termination
of the case, NLRC decided to pass upon the validity of the claims itself. It is this procedure that AIBC
and BRII complain of as being irregular and a "reversible error."

They pointed out that NLRC took into consideration evidence submitted on appeal, the same
evidence which NLRC found to have been "unilaterally submitted by the claimants and not disclosed
to the adverse parties" (Rollo, pp. 37-39).

NLRC noted that so many pieces of evidentiary matters were submitted to the POEA administrator
by the claimants after the cases were deemed submitted for resolution and which were taken
cognizance of by the POEA Administrator in resolving the cases. While AIBC and BRII had no
opportunity to refute said evidence of the claimants before the POEA Administrator, they had all the
opportunity to rebut said evidence and to present their counter-evidence before NLRC. As a matter
of fact, AIBC and BRII themselves were able to present before NLRC additional evidence which they
failed to present before the POEA Administrator.

Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process."

In deciding to resolve the validity of certain claims on the basis of the evidence of both parties
submitted before the POEA Administrator and NLRC, the latter considered that it was not expedient
to remand the cases to the POEA Administrator for that would only prolong the already protracted
legal controversies.

Even the Supreme Court has decided appealed cases on the merits instead of remanding them to
the trial court for the reception of evidence, where the same can be readily determined from the
uncontroverted facts on record (Development Bank of the Philippines v. Intermediate Appellate
Court, 190 SCRA 653 [1990]; Pagdonsalan v. National Labor Relations Commission, 127 SCRA 463
[1984]).

C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution dated
September 2, 1991 whose claims had been denied by the POEA Administrator "for lack of proof" and
for 69 claimants listed in Annex E of the same Resolution, whose claims had been found by NLRC
itself as not "supported by evidence" (Rollo, pp. 41-45).

NLRC based its ruling on Article 218 (c) of the Labor Code of the Philippines, which empowers it "[to]
conduct investigation for the determination of a question, matter or controversy, within its jurisdiction,
. . . ."

It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to remand a case
involving claims which had already been dismissed because such provision contemplates only
situations where there is still a question or controversy to be resolved (Rollo, pp. 41-42).

A principle well embedded in Administrative Law is that the technical rules of procedure and
evidence do not apply to the proceedings conducted by administrative agencies (First Asian
Transport & Shipping Agency Inc v. Ople, 142 SCRA 542 [1986]; Asiaworld Publishing House, Inc. v.
Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the Labor Code of the
Philippines and is now the bedrock of proceedings before NLRC.

Notwithstanding the non-applicability of technical rules of procedure and evidence in administrative
proceedings, there are cardinal rules which must be observed by the hearing officers in order to
comply with the due process requirements of the Constitution. These cardinal rules are collated in
Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).

The three petitions were filed under Rule 65 of the Revised Rules of Court on the grounds that
NLRC had committed grave abuse of discretion amounting to lack of jurisdiction in issuing the
questioned orders. We find no such abuse of discretion.

WHEREFORE, all the three petitions are DISMISSED.

SO ORDERED.

Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

https://web.mylegalwhiz.com/cases/detail/35192





Cases
KOREA TECHNOLOGIES CO., LTD., Petitioner, versus HON. ALBERTO A.
LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court
of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING
CORPORATION, Respondents.
G.R. No. 143581 | 2008-01-07


A discussion citing this case is available.
Interlocutory order
D E C I S I O N


VELASCO, JR., J.:

In our jurisdiction, the policy is to favor alternative methods of resolving disputes, particularly in civil
and commercial disputes. Arbitration along with mediation, conciliation, and negotiation, being
inexpensive, speedy and less hostile methods have long been favored by this Court. The petition
before us puts at issue an arbitration clause in a contract mutually agreed upon by the parties
stipulating that they would submit themselves to arbitration in a foreign country. Regrettably, instead
of hastening the resolution of their dispute, the parties wittingly or unwittingly prolonged the
controversy.

Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the
supply and installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while
private respondent Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic corporation.

On March 5, 1997, PGSMC and KOGIES executed a Contract[1] whereby KOGIES would set up an
LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was executed in the
Philippines. On April 7, 1997, the parties executed, in Korea, an Amendment for Contract No. KLP-
970301 dated March 5, 1997[2] amending the terms of payment. The contract and its amendment
stipulated that KOGIES will ship the machinery and facilities necessary for manufacturing LPG
cylinders for which PGSMC would pay USD 1,224,000. KOGIES would install and initiate the
operation of the plant for which PGSMC bound itself to pay USD 306,000 upon the plant's production
of the 11-kg. LPG cylinder samples. Thus, the total contract price amounted to USD 1,530,000.

On October 14, 1997, PGSMC entered into a Contract of Lease[3] with Worth Properties, Inc.
(Worth) for use of Worth's 5,079-square meter property with a 4,032-square meter warehouse
building to house the LPG manufacturing plant. The monthly rental was PhP 322,560 commencing
on January 1, 1998 with a 10% annual increment clause. Subsequently, the machineries,
equipment, and facilities for the manufacture of LPG cylinders were shipped, delivered, and installed
in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.

However, gleaned from the Certificate[4] executed by the parties on January 22, 1998, after the
installation of the plant, the initial operation could not be conducted as PGSMC encountered
financial difficulties affecting the supply of materials, thus forcing the parties to agree that KOGIES
would be deemed to have completely complied with the terms and conditions of the March 5, 1997
contract.

For the remaining balance of USD306,000 for the installation and initial operation of the plant,
PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for PhP
4,500,000; and (2) BPI Check No. 0316413 dated March 30, 1998 for PhP 4,500,000.[5]

When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT
STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter[6] to PGSMC threatening criminal
action for violation of Batas Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of
PGSMC's President faxed a letter dated May 7, 1998 to KOGIES' President who was then staying at
a Makati City hotel. She complained that not only did KOGIES deliver a different brand of hydraulic
press from that agreed upon but it had not delivered several equipment parts already paid for.

On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but the
payments were stopped for reasons previously made known to KOGIES.[7]

On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated March
5, 1997 on the ground that KOGIES had altered the quantity and lowered the quality of the
machineries and equipment it delivered to PGSMC, and that PGSMC would dismantle and transfer
the machineries, equipment, and facilities installed in the Carmona plant. Five days later, PGSMC
filed before the Office of the Public Prosecutor an Affidavit-Complaint for Estafa docketed as I.S. No.
98-03813 against Mr. Dae Hyun Kang, President of KOGIES.

On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined
violations by KOGIES. It also insisted that their disputes should be settled by arbitration as agreed
upon in Article 15, the arbitration clause of their contract.

On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998 letter
threatening that the machineries, equipment, and facilities installed in the plant would be dismantled
and transferred on July 4, 1998. Thus, on July 1, 1998, KOGIES instituted an Application for
Arbitration before the Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant to Art.
15 of the Contract as amended.

On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case No.
98-117[8] against PGSMC before the Muntinlupa City Regional Trial Court (RTC). The RTC granted
a temporary restraining order (TRO) on July 4, 1998, which was subsequently extended until July
22, 1998. In its complaint, KOGIES alleged that PGSMC had initially admitted that the checks that
were stopped were not funded but later on claimed that it stopped payment of the checks for the
reason that "their value was not received" as the former allegedly breached their contract by "altering
the quantity and lowering the quality of the machinery and equipment" installed in the plant and
failed to make the plant operational although it earlier certified to the contrary as shown in a January
22, 1998 Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as
amended, by unilaterally rescinding the contract without resorting to arbitration. KOGIES also asked
that PGSMC be restrained from dismantling and transferring the machinery and equipment installed
in the plant which the latter threatened to do on July 4, 1998.

On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the
TRO since Art. 15, the arbitration clause, was null and void for being against public policy as it ousts
the local courts of jurisdiction over the instant controversy.

On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim[9] asserting that it had the
full right to dismantle and transfer the machineries and equipment because it had paid for them in full
as stipulated in the contract; that KOGIES was not entitled to the PhP 9,000,000 covered by the
checks for failing to completely install and make the plant operational; and that KOGIES was liable
for damages amounting to PhP 4,500,000 for altering the quantity and lowering the quality of the
machineries and equipment. Moreover, PGSMC averred that it has already paid PhP 2,257,920 in
rent (covering January to July 1998) to Worth and it was not willing to further shoulder the cost of
renting the premises of the plant considering that the LPG cylinder manufacturing plant never
became operational.

After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order denying the
application for a writ of preliminary injunction, reasoning that PGSMC had paid KOGIES USD
1,224,000, the value of the machineries and equipment as shown in the contract such that KOGIES
no longer had proprietary rights over them. And finally, the RTC held that Art. 15 of the Contract as
amended was invalid as it tended to oust the trial court or any other court jurisdiction over any
dispute that may arise between the parties. KOGIES' prayer for an injunctive writ was denied.[10]
The dispositive portion of the Order stated:

WHEREFORE, in view of the foregoing consideration, this Court believes and so holds that no
cogent reason exists for this Court to grant the writ of preliminary injunction to restrain and refrain
defendant from dismantling the machineries and facilities at the lot and building of Worth Properties,
Incorporated at Carmona, Cavite and transfer the same to another site: and therefore denies
plaintiff's application for a writ of preliminary injunction.

On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim.[11] KOGIES
denied it had altered the quantity and lowered the quality of the machinery, equipment, and facilities
it delivered to the plant. It claimed that it had performed all the undertakings under the contract and
had already produced certified samples of LPG cylinders. It averred that whatever was unfinished
was PGSMC's fault since it failed to procure raw materials due to lack of funds. KOGIES, relying on
Chung Fu Industries (Phils.), Inc. v. Court of Appeals,[12] insisted that the arbitration clause was
without question valid.

After KOGIES filed a Supplemental Memorandum with Motion to Dismiss[13] answering PGSMC's
memorandum of July 22, 1998 and seeking dismissal of PGSMC's counterclaims, KOGIES, on
August 4, 1998, filed its Motion for Reconsideration[14] of the July 23, 1998 Order denying its
application for an injunctive writ claiming that the contract was not merely for machinery and facilities
worth USD 1,224,000 but was for the sale of an "LPG manufacturing plant" consisting of "supply of
all the machinery and facilities" and "transfer of technology" for a total contract price of USD
1,530,000 such that the dismantling and transfer of the machinery and facilities would result in the
dismantling and transfer of the very plant itself to the great prejudice of KOGIES as the still unpaid
owner/seller of the plant. Moreover, KOGIES points out that the arbitration clause under Art. 15 of
the Contract as amended was a valid arbitration stipulation under Art. 2044 of the Civil Code and as
held by this Court in Chung Fu Industries (Phils.), Inc.[15]

In the meantime, PGSMC filed a Motion for Inspection of Things[16] to determine whether there was
indeed alteration of the quantity and lowering of quality of the machineries and equipment, and
whether these were properly installed. KOGIES opposed the motion positing that the queries and
issues raised in the motion for inspection fell under the coverage of the arbitration clause in their
contract.

On September 21, 1998, the trial court issued an Order (1) granting PGSMC's motion for inspection;
(2) denying KOGIES' motion for reconsideration of the July 23, 1998 RTC Order; and (3) denying
KOGIES' motion to dismiss PGSMC's compulsory counterclaims as these counterclaims fell within
the requisites of compulsory counterclaims.

On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration[17] of the September 21,
1998 RTC Order granting inspection of the plant and denying dismissal of PGSMC's compulsory
counterclaims.

Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998 urgent
motion for reconsideration, KOGIES filed before the Court of Appeals (CA) a petition for certiorari[18]
docketed as CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998 and September 21,
1998 RTC Orders and praying for the issuance of writs of prohibition, mandamus, and preliminary
injunction to enjoin the RTC and PGSMC from inspecting, dismantling, and transferring the
machineries and equipment in the Carmona plant, and to direct the RTC to enforce the specific
agreement on arbitration to resolve the dispute.

In the meantime, on October 19, 1998, the RTC denied KOGIES' urgent motion for reconsideration
and directed the Branch Sheriff to proceed with the inspection of the machineries and equipment in
the plant on October 28, 1998.[19]

Thereafter, KOGIES filed a Supplement to the Petition[20] in CA-G.R. SP No. 49249 informing the
CA about the October 19, 1998 RTC Order. It also reiterated its prayer for the issuance of the writs
of prohibition, mandamus and preliminary injunction which was not acted upon by the CA. KOGIES
asserted that the Branch Sheriff did not have the technical expertise to ascertain whether or not the
machineries and equipment conformed to the specifications in the contract and were properly
installed.

On November 11, 1998, the Branch Sheriff filed his Sheriff's Report[21] finding that the enumerated
machineries and equipment were not fully and properly installed.

The Court of Appeals affirmed the trial court and declared

the arbitration clause against public policy

On May 30, 2000, the CA rendered the assailed Decision[22] affirming the RTC Orders and
dismissing the petition for certiorari filed by KOGIES. The CA found that the RTC did not gravely
abuse its discretion in issuing the assailed July 23, 1998 and September 21, 1998 Orders. Moreover,
the CA reasoned that KOGIES' contention that the total contract price for USD 1,530,000 was for the
whole plant and had not been fully paid was contrary to the finding of the RTC that PGSMC fully paid
the price of USD 1,224,000, which was for all the machineries and equipment. According to the CA,
this determination by the RTC was a factual finding beyond the ambit of a petition for certiorari.

On the issue of the validity of the arbitration clause, the CA agreed with the lower court that an
arbitration clause which provided for a final determination of the legal rights of the parties to the
contract by arbitration was against public policy.

On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum
shopping by PGSMC, the CA held that the counterclaims of PGSMC were compulsory ones and
payment of docket fees was not required since the Answer with counterclaim was not an initiatory
pleading. For the same reason, the CA said a certificate of non-forum shopping was also not
required.

Furthermore, the CA held that the petition for certiorari had been filed prematurely since KOGIES did
not wait for the resolution of its urgent motion for reconsideration of the September 21, 1998 RTC
Order which was the plain, speedy, and adequate remedy available. According to the CA, the RTC
must be given the opportunity to correct any alleged error it has committed, and that since the
assailed orders were interlocutory, these cannot be the subject of a petition for certiorari.

Hence, we have this Petition for Review on Certiorari under Rule 45.

The Issues

Petitioner posits that the appellate court committed the following errors:

a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND FACILITIES
AS "A QUESTION OF FACT" "BEYOND THE AMBIT OF A PETITION FOR CERTIORARI"
INTENDED ONLY FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING
THAT THE TRIAL COURT'S FINDING ON THE SAME QUESTION WAS IMPROPERLY RAISED IN
THE PETITION BELOW;

b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF THE
CONTRACT BETWEEN THE PARTIES FOR BEING "CONTRARY TO PUBLIC POLICY" AND FOR
OUSTING THE COURTS OF JURISDICTION;

c. DECREEING PRIVATE RESPONDENT'S COUNTERCLAIMS TO BE ALL COMPULSORY NOT
NECESSITATING PAYMENT OF DOCKET FEES AND CERTIFICATION OF NON-FORUM
SHOPPING;

d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING FOR THE
RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE ORDER DATED
SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO
CORRECT ITSELF;

e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998 NOT TO BE
PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING "INTERLOCUTORY IN
NATURE;"

f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION AND,
INSTEAD, DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT MERIT."[23]

The Court's Ruling

The petition is partly meritorious.

Before we delve into the substantive issues, we shall first tackle the procedural issues.

The rules on the payment of docket fees for counterclaims

and cross claims were amended effective August 16, 2004

KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket fees
and filed a certificate of non-forum shopping, and that its failure to do so was a fatal defect.

We disagree with KOGIES.

As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with
Compulsory Counterclaim dated July 17, 1998 in accordance with Section 8 of Rule 11, 1997
Revised Rules of Civil Procedure, the rule that was effective at the time the Answer with
Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states, "A compulsory
counterclaim or a cross-claim that a defending party has at the time he files his answer shall be
contained therein."

On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against
KOGIES, it was not liable to pay filing fees for said counterclaims being compulsory in nature. We
stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No.
04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or cross-claims.

As to the failure to submit a certificate of forum shopping, PGSMC's Answer is not an initiatory
pleading which requires a certification against forum shopping under Sec. 5[24] of Rule 7, 1997
Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a quo did not commit
reversible error in denying KOGIES' motion to dismiss PGSMC's compulsory counterclaims.

Interlocutory orders proper subject of certiorari

Citing Gamboa v. Cruz,[25] the CA also pronounced that "certiorari and Prohibition are neither the
remedies to question the propriety of an interlocutory order of the trial court."[26] The CA erred on its
reliance on Gamboa. Gamboa involved the denial of a motion to acquit in a criminal case which was
not assailable in an action for certiorari since the denial of a motion to quash required the accused to
plead and to continue with the trial, and whatever objections the accused had in his motion to quash
can then be used as part of his defense and subsequently can be raised as errors on his appeal if
the judgment of the trial court is adverse to him. The general rule is that interlocutory orders cannot
be challenged by an appeal.[27] Thus, in Yamaoka v. Pescarich Manufacturing Corporation, we
held:

The proper remedy in such cases is an ordinary appeal from an adverse judgment on the merits,
incorporating in said appeal the grounds for assailing the interlocutory orders. Allowing appeals from
interlocutory orders would result in the 'sorry spectacle' of a case being subject of a
counterproductive ping-pong to and from the appellate court as often as a trial court is perceived to
have made an error in any of its interlocutory rulings. However, where the assailed interlocutory
order was issued with grave abuse of discretion or patently erroneous and the remedy of appeal
would not afford adequate and expeditious relief, the Court allows certiorari as a mode of
redress.[28]

Also, appeals from interlocutory orders would open the floodgates to endless occasions for dilatory
motions. Thus, where the interlocutory order was issued without or in excess of jurisdiction or with
grave abuse of discretion, the remedy is certiorari.[29]

The alleged grave abuse of discretion of the respondent court equivalent to lack of jurisdiction in the
issuance of the two assailed orders coupled with the fact that there is no plain, speedy, and
adequate remedy in the ordinary course of law amply provides the basis for allowing the resort to a
petition for certiorari under Rule 65.

Prematurity of the petition before the CA

Neither do we think that KOGIES was guilty of forum shopping in filing the petition for certiorari. Note
that KOGIES' motion for reconsideration of the July 23, 1998 RTC Order which denied the issuance
of the injunctive writ had already been denied. Thus, KOGIES' only remedy was to assail the RTC's
interlocutory order via a petition for certiorari under Rule 65.

While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998 RTC
Order relating to the inspection of things, and the allowance of the compulsory counterclaims has not
yet been resolved, the circumstances in this case would allow an exception to the rule that before
certiorari may be availed of, the petitioner must have filed a motion for reconsideration and said
motion should have been first resolved by the court a quo. The reason behind the rule is "to enable
the lower court, in the first instance, to pass upon and correct its mistakes without the intervention of
the higher court."[30]

The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant, equipment, and
facilities when he is not competent and knowledgeable on said matters is evidently flawed and
devoid of any legal support. Moreover, there is an urgent necessity to resolve the issue on the
dismantling of the facilities and any further delay would prejudice the interests of KOGIES. Indeed,
there is real and imminent threat of irreparable destruction or substantial damage to KOGIES'
equipment and machineries. We find the resort to certiorari based on the gravely abusive orders of
the trial court sans the ruling on the October 2, 1998 motion for reconsideration to be proper.

The Core Issue: Article 15 of the Contract

We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause. It
provides:

Article 15. Arbitration.-All disputes, controversies, or differences which may arise between the
parties, out of or in relation to or in connection with this Contract or for the breach thereof, shall
finally be settled by arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules
of the Korean Commercial Arbitration Board. The award rendered by the arbitration(s) shall be final
and binding upon both parties concerned. (Emphasis supplied.)

Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and void.

Petitioner is correct.

Established in this jurisdiction is the rule that the law of the place where the contract is made
governs. Lex loci contractus. The contract in this case was perfected here in the Philippines.
Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil Code sanctions the validity
of mutually agreed arbitral clause or the finality and binding effect of an arbitral award. Art. 2044
provides, "Any stipulation that the arbitrators' award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)

Arts. 2038,[31] 2039,[32] and 2040[33] abovecited refer to instances where a compromise or an
arbitral award, as applied to Art. 2044 pursuant to Art. 2043,[34] may be voided, rescinded, or
annulled, but these would not denigrate the finality of the arbitral award.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been
shown to be contrary to any law, or against morals, good customs, public order, or public policy.
There has been no showing that the parties have not dealt with each other on equal footing. We find
no reason why the arbitration clause should not be respected and complied with by both parties. In
Gonzales v. Climax Mining Ltd.,[35] we held that submission to arbitration is a contract and that a
clause in a contract providing that all matters in dispute between the parties shall be referred to
arbitration is a contract.[36] Again in Del Monte Corporation-USA v. Court of Appeals, we likewise
ruled that "[t]he provision to submit to arbitration any dispute arising therefrom and the relationship of
the parties is part of that contract and is itself a contract."[37]

Arbitration clause not contrary to public policy

The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is final
and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration
clauses in a catena of cases. In the 1957 case of Eastboard Navigation Ltd. v. Juan Ysmael and
Co., Inc.,[38] this Court had occasion to rule that an arbitration clause to resolve differences and
breaches of mutually agreed contractual terms is valid. In BF Corporation v. Court of Appeals, we
held that "[i]n this jurisdiction, arbitration has been held valid and constitutional. Even before the
approval on June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of
disputes through arbitration. Republic Act No. 876 was adopted to supplement the New Civil Code's
provisions on arbitration."[39] And in LM Power Engineering Corporation v. Capitol Industrial
Construction Groups, Inc., we declared that:

Being an inexpensive, speedy and amicable method of settling disputes, arbitration--along with
mediation, conciliation and negotiation--is encouraged by the Supreme Court. Aside from unclogging
judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial
kind. It is thus regarded as the "wave of the future" in international civil and commercial disputes.
Brushing aside a contractual agreement calling for arbitration between the parties would be a step
backward.

Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods,
courts should liberally construe arbitration clauses. Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an order to arbitrate should be granted. Any doubt
should be resolved in favor of arbitration.[40]

Having said that the instant arbitration clause is not against public policy, we come to the question
on what governs an arbitration clause specifying that in case of any dispute arising from the contract,
an arbitral panel will be constituted in a foreign country and the arbitration rules of the foreign
country would govern and its award shall be final and binding.

RA 9285 incorporated the UNCITRAL Model law

to which we are a signatory

For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from
contractual relations. In case a foreign arbitral body is chosen by the parties, the arbitration rules of
our domestic arbitration bodies would not be applied. As signatory to the Arbitration Rules of the
UNCITRAL Model Law on International Commercial Arbitration[41] of the United Nations
Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21,
1985, the Philippines committed itself to be bound by the Model Law. We have even incorporated
the Model Law in Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute
Resolution Act of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute Resolution
System in the Philippines and to Establish the Office for Alternative Dispute Resolution, and for
Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the Model Law are
the pertinent provisions:

CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION

SEC. 19. Adoption of the Model Law on International Commercial Arbitration.--International
commercial arbitration shall be governed by the Model Law on International Commercial Arbitration
(the "Model Law") adopted by the United Nations Commission on International Trade Law on June
21, 1985 (United Nations Document A/40/17) and recommended for enactment by the General
Assembly in Resolution No. 40/72 approved on December 11, 1985, copy of which is hereto
attached as Appendix "A".

SEC. 20. Interpretation of Model Law.--In interpreting the Model Law, regard shall be had to its
international origin and to the need for uniformity in its interpretation and resort may be made to the
travaux preparatories and the report of the Secretary General of the United Nations Commission on
International Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration:
Analytical Commentary on Draft Trade identified by reference number A/CN. 9/264."

While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a
procedural law which has a retroactive effect. Likewise, KOGIES filed its application for arbitration
before the KCAB on July 1, 1998 and it is still pending because no arbitral award has yet been
rendered. Thus, RA 9285 is applicable to the instant case. Well-settled is the rule that procedural
laws are construed to be applicable to actions pending and undetermined at the time of their
passage, and are deemed retroactive in that sense and to that extent. As a general rule, the
retroactive application of procedural laws does not violate any personal rights because no vested
right has yet attached nor arisen from them.[42]

Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model Law are
the following:

(1) The RTC must refer to arbitration in proper cases

Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject of
arbitration pursuant to an arbitration clause, and mandates the referral to arbitration in such cases,
thus:

SEC. 24. Referral to Arbitration.--A court before which an action is brought in a matter which is the
subject matter of an arbitration agreement shall, if at least one party so requests not later than the
pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration
unless it finds that the arbitration agreement is null and void, inoperative or incapable of being
performed.

(2) Foreign arbitral awards must be confirmed by the RTC

Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final
and binding are not immediately enforceable or cannot be implemented immediately. Sec. 35[43] of
the UNCITRAL Model Law stipulates the requirement for the arbitral award to be recognized by a
competent court for enforcement, which court under Sec. 36 of the UNCITRAL Model Law may
refuse recognition or enforcement on the grounds provided for. RA 9285 incorporated these provisos
to Secs. 42, 43, and 44 relative to Secs. 47 and 48, thus:

SEC. 42. Application of the New York Convention.--The New York Convention shall govern the
recognition and enforcement of arbitral awards covered by said Convention.

The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court
in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award or applying for its enforcement shall file with
the court the original or authenticated copy of the award and the arbitration agreement. If the award
or agreement is not made in any of the official languages, the party shall supply a duly certified
translation thereof into any of such languages.

The applicant shall establish that the country in which foreign arbitration award was made in party to
the New York Convention.

x x x x

SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York
Convention.--The recognition and enforcement of foreign arbitral awards not covered by the New
York Convention shall be done in accordance with procedural rules to be promulgated by the
Supreme Court. The Court may, on grounds of comity and reciprocity, recognize and enforce a non-
convention award as a convention award.

SEC. 44. Foreign Arbitral Award Not Foreign Judgment.--A foreign arbitral award when confirmed by
a court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not as
a judgment of a foreign court.

A foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same
manner as final and executory decisions of courts of law of the Philippines

x x x x

SEC. 47. Venue and Jurisdiction.--Proceedings for recognition and enforcement of an arbitration
agreement or for vacations, setting aside, correction or modification of an arbitral award, and any
application with a court for arbitration assistance and supervision shall be deemed as special
proceedings and shall be filed with the Regional Trial Court (i) where arbitration proceedings are
conducted; (ii) where the asset to be attached or levied upon, or the act to be enjoined is located; (iii)
where any of the parties to the dispute resides or has his place of business; or (iv) in the National
Judicial Capital Region, at the option of the applicant.

SEC. 48. Notice of Proceeding to Parties.--In a special proceeding for recognition and enforcement
of an arbitral award, the Court shall send notice to the parties at their address of record in the
arbitration, or if any part cannot be served notice at such address, at such party's last known
address. The notice shall be sent al least fifteen (15) days before the date set for the initial hearing
of the application.

It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a
judgment of a foreign court but as a foreign arbitral award, and when confirmed, are enforced as
final and executory decisions of our courts of law.

Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to judgments
or awards given by some of our quasi-judicial bodies, like the National Labor Relations Commission
and Mines Adjudication Board, whose final judgments are stipulated to be final and binding, but not
immediately executory in the sense that they may still be judicially reviewed, upon the instance of
any party. Therefore, the final foreign arbitral awards are similarly situated in that they need first to
be confirmed by the RTC.

(3) The RTC has jurisdiction to review foreign arbitral awards

Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with specific authority and
jurisdiction to set aside, reject, or vacate a foreign arbitral award on grounds provided under Art.
34(2) of the UNCITRAL Model Law. Secs. 42 and 45 provide:

SEC. 42. Application of the New York Convention.--The New York Convention shall govern the
recognition and enforcement of arbitral awards covered by said Convention.

The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court
in accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award or applying for its enforcement shall file with
the court the original or authenticated copy of the award and the arbitration agreement. If the award
or agreement is not made in any of the official languages, the party shall supply a duly certified
translation thereof into any of such languages.

The applicant shall establish that the country in which foreign arbitration award was made is party to
the New York Convention.

If the application for rejection or suspension of enforcement of an award has been made, the
Regional Trial Court may, if it considers it proper, vacate its decision and may also, on the
application of the party claiming recognition or enforcement of the award, order the party to provide
appropriate security.

x x x x

SEC. 45. Rejection of a Foreign Arbitral Award.--A party to a foreign arbitration proceeding may
oppose an application for recognition and enforcement of the arbitral award in accordance with the
procedures and rules to be promulgated by the Supreme Court only on those grounds enumerated
under Article V of the New York Convention. Any other ground raised shall be disregarded by the
Regional Trial Court.

Thus, while the RTC does not have jurisdiction over disputes governed by arbitration mutually
agreed upon by the parties, still the foreign arbitral award is subject to judicial review by the RTC
which can set aside, reject, or vacate it. In this sense, what this Court held in Chung Fu Industries
(Phils.), Inc. relied upon by KOGIES is applicable insofar as the foreign arbitral awards, while final
and binding, do not oust courts of jurisdiction since these arbitral awards are not absolute and
without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear that
all arbitral awards, whether domestic or foreign, are subject to judicial review on specific grounds
provided for.

(4) Grounds for judicial review different in domestic and foreign arbitral awards

The differences between a final arbitral award from an international or foreign arbitral tribunal and an
award given by a local arbitral tribunal are the specific grounds or conditions that vest jurisdiction
over our courts to review the awards.

For foreign or international arbitral awards which must first be confirmed by the RTC, the grounds for
setting aside, rejecting or vacating the award by the RTC are provided under Art. 34(2) of the
UNCITRAL Model Law.

For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec. 23 of
RA 876[44] and shall be recognized as final and executory decisions of the RTC,[45] they may only
be assailed before the RTC and vacated on the grounds provided under Sec. 25 of RA 876.[46]

(5) RTC decision of assailed foreign arbitral award appealable

Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party in
cases where the RTC sets aside, rejects, vacates, modifies, or corrects an arbitral award, thus:

SEC. 46. Appeal from Court Decision or Arbitral Awards.-A decision of the Regional Trial Court
confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the
Court of Appeals in accordance with the rules and procedure to be promulgated by the Supreme
Court.

The losing party who appeals from the judgment of the court confirming an arbitral award shall be
required by the appellate court to post a counterbond executed in favor of the prevailing party equal
to the amount of the award in accordance with the rules to be promulgated by the Supreme Court.

Thereafter, the CA decision may further be appealed or reviewed before this Court through a petition
for review under Rule 45 of the Rules of Court.

PGSMC has remedies to protect its interests

Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign arbitration as
it bound itself through the subject contract. While it may have misgivings on the foreign arbitration
done in Korea by the KCAB, it has available remedies under RA 9285. Its interests are duly
protected by the law which requires that the arbitral award that may be rendered by KCAB must be
confirmed here by the RTC before it can be enforced.

With our disquisition above, petitioner is correct in its contention that an arbitration clause, stipulating
that the arbitral award is final and binding, does not oust our courts of jurisdiction as the international
arbitral award, the award of which is not absolute and without exceptions, is still judicially reviewable
under certain conditions provided for by the UNCITRAL Model Law on ICA as applied and
incorporated in RA 9285.

Finally, it must be noted that there is nothing in the subject Contract which provides that the parties
may dispense with the arbitration clause.

Unilateral rescission improper and illegal

Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and
not contrary to public policy; consequently, being bound to the contract of arbitration, a party may not
unilaterally rescind or terminate the contract for whatever cause without first resorting to arbitration.

What this Court held in University of the Philippines v. De Los Angeles[47] and reiterated in
succeeding cases,[48] that the act of treating a contract as rescinded on account of infractions by
the other contracting party is valid albeit provisional as it can be judicially assailed, is not applicable
to the instant case on account of a valid stipulation on arbitration. Where an arbitration clause in a
contract is availing, neither of the parties can unilaterally treat the contract as rescinded since
whatever infractions or breaches by a party or differences arising from the contract must be brought
first and resolved by arbitration, and not through an extrajudicial rescission or judicial action.

The issues arising from the contract between PGSMC and KOGIES on whether the equipment and
machineries delivered and installed were properly installed and operational in the plant in Carmona,
Cavite; the ownership of equipment and payment of the contract price; and whether there was
substantial compliance by KOGIES in the production of the samples, given the alleged fact that
PGSMC could not supply the raw materials required to produce the sample LPG cylinders, are
matters proper for arbitration. Indeed, we note that on July 1, 1998, KOGIES instituted an
Application for Arbitration before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as
amended. Thus, it is incumbent upon PGSMC to abide by its commitment to arbitrate.

Corollarily, the trial court gravely abused its discretion in granting PGSMC's Motion for Inspection of
Things on September 21, 1998, as the subject matter of the motion is under the primary jurisdiction
of the mutually agreed arbitral body, the KCAB in Korea.

In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the inspection
made on October 28, 1998, as ordered by the trial court on October 19, 1998, is of no worth as said
Sheriff is not technically competent to ascertain the actual status of the equipment and machineries
as installed in the plant.

For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to the
grant of the inspection of the equipment and machineries have to be recalled and nullified.

Issue on ownership of plant proper for arbitration

Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract price of
USD 1,530,000 was for the whole plant and its installation is beyond the ambit of a Petition for
Certiorari.

Petitioner's position is untenable.

It is settled that questions of fact cannot be raised in an original action for certiorari.[49] Whether or
not there was full payment for the machineries and equipment and installation is indeed a factual
issue prohibited by Rule 65.

However, what appears to constitute a grave abuse of discretion is the order of the RTC in resolving
the issue on the ownership of the plant when it is the arbitral body (KCAB) and not the RTC which
has jurisdiction and authority over the said issue. The RTC's determination of such factual issue
constitutes grave abuse of discretion and must be reversed and set aside.

RTC has interim jurisdiction to protect the rights of the parties

Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for PGSMC
to dismantle and transfer the equipment and machineries, we find it to be in order considering the
factual milieu of the instant case.

Firstly, while the issue of the proper installation of the equipment and machineries might well be
under the primary jurisdiction of the arbitral body to decide, yet the RTC under Sec. 28 of RA 9285
has jurisdiction to hear and grant interim measures to protect vested rights of the parties. Sec. 28
pertinently provides:

SEC. 28. Grant of interim Measure of Protection.-(a) It is not incompatible with an arbitration
agreement for a party to request, before constitution of the tribunal, from a Court to grant such
measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an
interim measure of protection, or modification thereof, may be made with the arbitral or to the extent
that the arbitral tribunal has no power to act or is unable to act effectivity, the request may be made
with the Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third
arbitrator, who has been nominated, has accepted the nomination and written communication of said
nomination and acceptance has been received by the party making the request.

(b) The following rules on interim or provisional relief shall be observed:

Any party may request that provisional relief be granted against the adverse party.

Such relief may be granted:

(i) to prevent irreparable loss or injury;

(ii) to provide security for the performance of any obligation;

(iii) to produce or preserve any evidence; or

(iv) to compel any other appropriate act or omission.

(c) The order granting provisional relief may be conditioned upon the provision of security or any act
or omission specified in the order.

(d) Interim or provisional relief is requested by written application transmitted by reasonable means
to the Court or arbitral tribunal as the case may be and the party against whom the relief is sought,
describing in appropriate detail the precise relief, the party against whom the relief is requested, the
grounds for the relief, and the evidence supporting the request.

(e) The order shall be binding upon the parties.

(f) Either party may apply with the Court for assistance in implementing or enforcing an interim
measure ordered by an arbitral tribunal.

(g) A party who does not comply with the order shall be liable for all damages resulting from
noncompliance, including all expenses, and reasonable attorney's fees, paid in obtaining the order's
judicial enforcement. (Emphasis ours.)

Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as:

Article 17. Power of arbitral tribunal to order interim measures

xxx xxx xxx

(2) An interim measure is any temporary measure, whether in the form of an award or in another
form, by which, at any time prior to the issuance of the award by which the dispute is finally decided,
the arbitral tribunal orders a party to:

(a) Maintain or restore the status quo pending determination of the dispute;

(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or
imminent harm or prejudice to the arbitral process itself;

(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution of the dispute.

Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue interim
measures:

Article 17 J. Court-ordered interim measures

A court shall have the same power of issuing an interim measure in relation to arbitration
proceedings, irrespective of whether their place is in the territory of this State, as it has in relation to
proceedings in courts. The court shall exercise such power in accordance with its own procedures in
consideration of the specific features of international arbitration.

In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation, we were explicit
that even "the pendency of an arbitral proceeding does not foreclose resort to the courts for
provisional reliefs." We explicated this way:

As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts
for provisional reliefs. The Rules of the ICC, which governs the parties' arbitral dispute, allows the
application of a party to a judicial authority for interim or conservatory measures. Likewise, Section
14 of Republic Act (R.A.) No. 876 (The Arbitration Law) recognizes the rights of any party to petition
the court to take measures to safeguard and/or conserve any matter which is the subject of the
dispute in arbitration. In addition, R.A. 9285, otherwise known as the "Alternative Dispute Resolution
Act of 2004," allows the filing of provisional or interim measures with the regular courts whenever the
arbitral tribunal has no power to act or to act effectively.[50]

It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures of
protection.

Secondly, considering that the equipment and machineries are in the possession of PGSMC, it has
the right to protect and preserve the equipment and machineries in the best way it can. Considering
that the LPG plant was non-operational, PGSMC has the right to dismantle and transfer the
equipment and machineries either for their protection and preservation or for the better way to make
good use of them which is ineluctably within the management discretion of PGSMC.

Thirdly, and of greater import is the reason that maintaining the equipment and machineries in
Worth's property is not to the best interest of PGSMC due to the prohibitive rent while the LPG plant
as set-up is not operational. PGSMC was losing PhP322,560 as monthly rentals or PhP3.87M for
1998 alone without considering the 10% annual rent increment in maintaining the plant.

Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the preservation
or transfer of the equipment and machineries as an interim measure, yet on hindsight, the July 23,
1998 Order of the RTC allowing the transfer of the equipment and machineries given the non-
recognition by the lower courts of the arbitral clause, has accorded an interim measure of protection
to PGSMC which would otherwise been irreparably damaged.

Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount based on
the contract. Moreover, KOGIES is amply protected by the arbitral action it has instituted before the
KCAB, the award of which can be enforced in our jurisdiction through the RTC. Besides, by our
decision, PGSMC is compelled to submit to arbitration pursuant to the valid arbitration clause of its
contract with KOGIES.

PGSMC to preserve the subject equipment and machineries

Finally, while PGSMC may have been granted the right to dismantle and transfer the subject
equipment and machineries, it does not have the right to convey or dispose of the same considering
the pending arbitral proceedings to settle the differences of the parties. PGSMC therefore must
preserve and maintain the subject equipment and machineries with the diligence of a good father of
a family[51] until final resolution of the arbitral proceedings and enforcement of the award, if any.

WHEREFORE, this petition is PARTLY GRANTED, in that:

(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE;

(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117 are
REVERSED and SET ASIDE;

(3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute and
differences arising from the subject Contract before the KCAB; and

(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if it had
not done so, and ORDERED to preserve and maintain them until the finality of whatever arbitral
award is given in the arbitration proceedings.

No pronouncement as to costs.

SO ORDERED.
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