Conflicts Finals No. 3

CONTRACTUAL RELATIONS
Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad. (9a)
Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which
they are executed.
When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country,
the solemnities established by Philippine laws shall be observed in their execution.
Prohibitive laws concerning persons, their acts or property, and those which have, for their object, public order, public policy and good
customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a
foreign country. (11a)
Title II. - CONTRACTS
CHAPTER 1
GENERAL PROVISIONS
Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something
or to render some service. (1254a)
Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or public policy. (1255a)
CHAPTER 2
ESSENTIAL REQUISITES OF CONTRACTS
GENERAL PROVISIONS
SECTION 1. - Consent
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in
such a case, is presumed to have been entered into in the place where the offer was made. (1262a)
SECTION 4. - Common Carriers (n)
SUBSECTION 2. - Vigilance Over Goods
Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss,
destruction or deterioration.
1 CHAPTER 3
VOID AND VOIDABLE MARRIAGES
Art. 80. The following marriages shall be void from the beginning:
(1) Those contracted under the ages of sixteen and fourteen years by the male and female respectively, even with the consent of the
parents;
Conflicts Finals No. 3

(2) Those solemnized by any person not legally authorized to perform marriages;
(3) Those solemnized without a marriage license, save marriages of exceptional character;
(4) Bigamous or polygamous marriages not falling under Article 83, Number 2;
(5) Incestuous marriages mentioned in Article 81;
(6) Those where one or both contracting parties have been found guilty of the killing of the spouse of either of them;
(7) Those between stepbrothers and stepsisters and other marriages specified in Article 82. (n)
Art. 81. Marriages between the following are incestuous and void from their performance, whether the relationship between the parties be
legitimate or illegitimate:
(1) Between ascendants and descendants of any degree;
(2) Between brothers and sisters, whether of the full or half blood;
(3) Between collateral relatives by blood within the fourth civil degree. (28a)
KING MAU WU v. FRANCISCO SYCIP [G.R. No. L-5897. April 23, 1954. ]
Nature of the Case: This is an action to collect P59,082.92, together with lawful interests from 14 October 1947, the date of the written
demand for payment, and costs.
Facts of the Case: The claim arises out of a shipment2 of 1,000 tons of coconut oil emulsion sold by the plaintiff, as agent of the
defendant, to Jas. Maxwell Fassett, who in turn assigned it to Fortrade Corporation.
Under an agency agreement in New York addressed to the defendant and accepted by the latter, the plaintiff was made the exclusive
agent of the defendant in the sale of Philippine coconut oil and its derivatives outside the Philippines and was to be paid 2 1/2 per cent on
the total actual sale price of sales obtained through his efforts and in addition thereto 50 per cent of the difference between the authorized
sale price and the actual sale price.

Both parties are in agreement that the only transaction or sale made by the plaintiff, as agent of the defendant, was that of 1,000 metric
tons of coconut oil emulsion f.o.b. in Manila, Philippines, to Jas. Maxwell Fassett.
Prior proceedings: A judgment was rendered as prayed for in the complaint of the plaintiff. A motion for reconsideration was denied. A
motion for new trial was filed but the same was denied. The defendant is appealing from said judgment.
Issue: Is the plaintiff entitled to 2 percent commission unpaid on the remaining shipment of coconut oil emulsion?
Held and Ratio: YES. The defendant contends that the transaction for the sale of 1,000 metric tons of coconut oil emulsion was not
covered by the agency contract and that it was an independent and separate transaction for which the plaintiff has been duly
compensated.
The letter upon which defendant relies for his defense does not stipulate on the commission to be paid to the plaintiff as agent, and yet if
he paid the plaintiff a 2 1/2 per cent commission on the first three coconut oil emulsion shipments, there is no reason why he should not
pay him the same commission on the last shipment amounting to $3,794.94. There can be no doubt that the sale of 1,000 metric tons of
coconut oil emulsion was not a separate and independent contract from that of the agency agreement of 7 November and accepted on 22
November 1946 by the defendant as evidenced by various correspondence between the plaintiff and the defendant recognizing the fact
that the transaction was part of the agency contract.
Although the contract of agency was executed in New York, the Court of First Instance of Manila has jurisdiction to try a personal action
for the collection of a sum of money arising from such contract, because a non-resident may sue a resident in the courts of this country
where the defendant may be summoned and his property leviable upon execution in case of a favorable, final and executory judgment.
There is no conflict of laws involved in this case because it is only a question of enforcing an obligation created by or arising from
contract; and unless the enforcement of the contract be against public policy of the forum, it must be enforced.
RULING: The plaintiff is entitled to collect P7,589.88 for commission and P50,000 for one-half of the overprice, or a total of P57,589.88,
lawful interests thereon from the date of the filing of the complaint, and costs in both instances. As thus modified the judgment appealed
from is affirmed, with costs against the Appellant.
EN BANC
[G.R. No. 9403. November 4, 1914. ]
ALLAN A. BRYAN ET AL., Plaintiffs-Appellees, v. EASTERN & AUSTRALIAN S. S. CO., LTD., Defendant-Appellant.
Haussermann, Cohn & Fisher, for Appellant.
Southworth, Hargis, Adams & Jordain for Appellees.
SYLLABUS
1. SHIPPING; TRANSPORTATION OF PERSONS AND BAGGAGE FROM HONGKONG TO MANILA; LAW OF CONTRACT. A
contract made in Hongkong for the transportation of persons and baggage from Hongkong to Manila will be construed according to the
law of the Colony of Hongkong and will be enforced in the Philippine Islands in accordance with that law, provided it is not in violation of a
law or the public 3 policy of the Philippine Islands.
2. ID.; ID.; ID.; LIMITATION OF LIABILITY OF CARRIER. A contract printed in legible type upon the back of a ticket purchased in
Hongkong for the transportation of purchaser and his baggage to Manila, limiting the liability of the carrying company with respect to
purchasers baggage, is, according to the law of that colony, a valid and binding contract even though the attention of the purchaser is not
specially drawn thereto at the time of purchase, and will be so regarded here provided it does not violate a law or the public policy of the
Philippine Islands.
3. ID., ID.; ID., ID. A contract printed in legible type upon the back of a ticket purchased in Hongkong for the transportation of purchaser
and baggage to Manila, providing that "the company will not hold itself responsible for any loss, or damage to or detention, or overcarriage

of luggage, under any circumstances whatsoever unless it has been booked and paid for as freight" is valid and binding in the Colony of
Hongkong upon the purchaser of the ticket. Such a stipulation, however, does not, according to the law of that colony, relieve the carrying
company from liability for negligence of its servants by which the baggage of the passenger is lost or damaged.
4. ID.; ID.; ID.; ID. Such a limitation, according to the law of the Colony of Hongkong, is strictly construed against the carrier and will
not, by construction or interpretation, be held to include an exemption from damages by negligence.
5. ID.; ID.; ID.; ID.; ACTION FOR DAMAGES. Therefore, when the baggage of a passenger who has purchased a ticket with the
limitation as to liability above set forth, is injured or destroyed in Manila by the negligence of the carriers servants, the passenger is
entitled, under the lex loci contractus, to recover for the damages caused thereby in spite of the limitations upon the carriers liability as
above set forth.
6. ID.; NEGLIGENCE. Where it appears undisputed that the usual and customary method of unloading baggage from a ship is by a
rope or wire net attached to a rope running over the end of a crane, which net completely surrounds and incloses the baggage and
thereby prevents it from escaping, or by means of a cargo chute running from the deck of the ship to the pier, it is negligence for a
carriers servants, in unloading the baggage of a passenger, simply to wrap a single rope about the center of the pieces of baggage, and,
suspending the same by a rope running over the end of a crane, swing it over the water; and where said baggage, by reason of such
negligent handling, slips from the rope so attached and falls into the water, the carrier is responsible for the damages naturally and
ordinarily flowing from such negligence.
7. EVIDENCE; FOREIGN STATUTES. This court is not, by reason of the opinion expressed by an expert witness as to the law of a
foreign country, precluded from advising itself from other sources as to the law of that country.
[G.R. No. 9403. November 4, 1914. ]
ALLAN A. BRYAN ET AL., v. EASTERN & AUSTRALIAN S. S. CO., LTD., D
Facts:
The plaintiffs were passengers on the streamer St. Albans, which was the property of the defendant corporation and was engaged in
carrying freight and passengers between Shanghai, China, and Manila, Philippine Islands.
On or about the end of December, 1912, the plaintiffs bought from the defendants agent in Shanghai, two first-class tickets for Manila
aboard steamship St. Albans. The tickets delivered to them were in English, which language plaintiffs read with ease and understand
perfectly, and bore on their face, in large print, a statement that they were issued subject to the conditions printed on the back. One of
these conditions, printed in legible type, was as follows: "Personal baggage. In order to insure as far as possible the safe custody of
luggage, passengers should personally see their luggage delivered on board. Each adult saloon passenger may carry, free of charge, but
at his own risk, 20 cubic feet of luggage; and each steerage passenger 10 cubic feet, under similar conditions (all in excess of these
quantities must be paid for at the current rate of freight); but the company will not hold itself responsible for any loss, or damage to or
detention, or overcarriage of luggage, under any circumstances whatsoever unless it has been booked and paid for as freight."
At the time the tickets were delivered to plaintiffs in Shanghai their attention was not especially drawn to the provisions on the back of the
ticket. The plaintiffs put their baggage on the St. Albans without paying for its transportation as freight and traveled with such baggage to
Manila.
Shortly after its arrival in Manila,the plaintiffs baggage was taken out of the hold of the ship to be placed on the dock alongside of which
the vessel was berthed. The baggage was placed in a sling, consisting of a single rope wound once around the trunks, and was swung
from the side of the vessel. While still several feet above the wharf, the employee of the defendant company who was operating the
winch, by some act or other, permitted the baggage to drop with great rapidity. In its passage downward, it struck the side of the ship with
such force as to release it from the sling and it dropped into the water alongside of the ship.
The defendant, while admitting the damage caused 4to plaintiffs baggage, denied that it was the result of the companys negligence and
set up as a special defense the limitation of liability established by the contract under which the defendant undertook to transport the
plaintiffs from the city of Hongkong to Manila.
The trial court ruled in favor of the plaintiffs. The shipping company appealed.
Issues:
1. What law should govern the contract between plaintiffs and respondent company.
2. Whether respondent company is liable for the negligence of its employees.

Held:
1. A contract made in Hongkong for the transportation of persons and baggage from Hongkong to Manila will be construed according to
the law of the Colony of Hongkong and will be enforced in the Philippine Islands in accordance with that law, provided it is not in violation
of a law or the public policy of the Philippine Islands.
The evidence relative to the law governing contracts in Hongkong consists of the testimony of a Hongkong barrister, learned in the law of
England and her colonies, and is to the effect that, under the law inforce at the place where the contract was made, the contract was valid
and enforceable, and that it is not necessary that the attention of persons purchasing tickets from common carriers be drawn specially to
the terms thereof when printed upon a ticket which on its face shows that it is issued subject to such conditions.The barrister also testified
that under the law of England and her colonies everything was done which was necessary to make the terms printed on the back of the
tickets a part of the contract between the parties. Herein, it is undoubted that the contract found upon the back of the tickets is a contract
perfectly valid in England and her colonies and one which would be enforced according to its terms in British jurisdictions.
2. The respondent company is liable for the negligence of its employees.
An exemption in general words not expressly relating to negligence, even though the words are wide enough to include loss by
negligence or default of carriers servants, must be construed as limiting the liability of the carrier as assurer, and not as relieving him from
the duty of exercising reasonable skill and care. Unless the contract of exemption specifically refers to exemption for negligence, it will be
construed as simply exempting the carrier from his liability as insurer.

EN BANC
[G.R. No. L-20099. July 7, 1966.]
PARMANAND SHEWARAM, Plaintiff-Appellee, v. PHILIPPINE AIR LINES, INC., Defendant-Appellant.
Ponce Enrile, Siguion Reyna, Montecillo & Belo,, for Defendant-Appellant.
Climaco and Associates for Plaintiff-Appellee.
SYLLABUS
1. COMMON CARRIER; LIMITATION OF LIABILITY CLAUSE; ITS EFFECT; CASE AT BAR. the only issue in this case is whether or
not the limitation of pecuniary liability clause printed at the back of the ticket stubs is binding upon plaintiff-appellee. Held: Under the
provisions of Article 1750 of the new Civil Code, the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount.
It is required, however, that the contract must be reasonable and just under the circumstances and has been fairly and freely agreed
upon. In the instant case, the fact that the conditions are printed at the back of the ticket stub in letters so small that they are hard to read
would not warrant the presumption that the appellee was aware of those conditions such that he had "fairly and freely agreed" to those
conditions. Appellee, therefore, is not and cannot be bound, by the conditions of carriage found at the back of the ticket stub issued to him
when he made the flight on appellants plane on November 23, 1959.
2. ID.; ID.; ID.; WHEN NEGLIGENCE OF CARRIER IS CAUSE OF LOSS; LIABILITY OF CARRIER. It having been clearly found by
the trial court that the transistor radio and the camera of the appellee were lost as a result of the negligence of the appellant as a common
carrier, the liability of the appellant is clear it must pay the appellee the value of those two articles. This court had laid down the rule
that the carrier cannot limit its liability for injury to or loss of goods shipped where such injury or loss was caused by its own negligence.
(Ysmael and Co. v. Barretto, 51 Phil. 90).
Shewaram vs, Philippine Airlines
17 SCRA 606, (1966)
Facts:
A PAL ticket, on the reverse side, stated in fine print that if the value of baggage is not stated, and the baggage is lost, the maximum
liability of PAL is P100.00 if value in excess of P100.00 is stated, PAL will charge extra because PAL is being held liable for an amount
exceeding P100.00. Shewaram, a Hindu from Davao, boarded a PAL plane for Manila. Among his baggage was a camera with P800.00
and it was lost. PAL offered to pay P100.00. Shewaram wanted full payment of P800.00.
Issue:
Whether the limited liability rule shall apply in the case at bar?
Held:
The limited liability rule shall not apply. Since this is a stipulation on qualified liability, which operates to reduce the liability of the carrier,
the carrier and the shipper must agree thereupon. Otherwise, the carrier will be liable for full. PAL is fully liable (for full) because
6
Shewaran did not agree to the stipulation on the ticket, as manifested by the fact that Shewaram did not sign the ticket. Ticket should
have been signed.
Shewarma vs. PAL
FACTS:

Plaintiff paid for his ticket for his flight from Zamboanga to Manila. He checked in 3 luggages. Upon arrival in Manila, one of his luggages
which contained a radio and a camera worth P353 was missing. Upon investigation by PAL, it was found out that it was mistagged and
was sent to Iligan. The next day the lugggage was returned but the camera and radio were already missing.
Plaintiff now wants PAL to pay for the original amount of the camera and radio but PAL invoked the provision at the back of the ticket. The
provision provided that the company would pay only P100 for any lost item not initially declared.
ISSUE:
Whether PAL is liable and to what extent.
HELD:
Yes. PAL being a common carrier is liable. Its contention that the liability limitation to P100 cannot be enforced. Accdg. to SC, there is
nothing wrong in limiting the liability but first there must be a contract which is just and reasonable under the circumstances and must
fairly be agreed upon (Art. 1750).
In this case, the print at the back of the ticket was so small and there was no signature at the back of the ticket to manifest a fairly agreed
contract. Hence, PAL is liable for the whole amount of the objects although they were not initially declared.
To establish negligence, SC used Art 1734 and 1735. In these articles, there is an exclusive list where common
carriers are exempted from liablility. These are the following:
1) flood , storm, earthquake, lightning or other natural disaster
2) act of the public enemyin war, whether international or civil
3) act or omission of the shipper or owner of goods
4) the cahracter of the goods or defects in the packing or in containers
5) order or act of competent public authorities
Since in the case at bar, none of these fall in the categories cited, PAL is considered negligent and liable.
FIRST DIVISION
[G.R.
7 No. L-31150. July 22, 1915.]
KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise known as KLM ROYAL DUTCH AIRLINES, Petitioner, v. THE
HONORABLE COURT OF APPEALS, CONSUELO T. MENDOZA and RUFINO T. MENDOZA, Respondents.
Picazo, Agcaoili, Santayana, Reyes & Tayao for Petitioner.
Bengzon, Villegas, Zarraga, Narciso & Cudala for Respondents.
SYNOPSIS

The KLM Dutch Airlines secured seat reservation for respondents and their two companions from carriers that would ferry them through
their world tour. Their itinerary included the Barcelona-Lourdes route, serviced by only one airline, the Aer Lingus. They were issued KLM
tickets for their entire trip, but their coupon for the Aer Lingus portion (Flight 861, June 22, 1965) was marked "RQ" which means "on
request." At the KLM office in Frankfurt, Germany, respondents obtained a confirmation from Aer Lingus of seat reservations on flight 861.
In the afternoon of June 22, 1965, the Aer Lingus manager at Barcelona Airport directed respondents to check in. They did as instructed
and were accepted for passage. However, although their companions were allowed to take the plane, respondents were brusquely off-
loaded and shoved aside on orders of the Aer Lingus manager with the aid of policeman who shouted at them "Coos! Ignorantes
Filipinos." As a result they had to take a train to Lourdes.
Respondents sued petitioner for damages arising from breach of carriage and for humiliating treatment received by them in the hands of
Aer Lingus. After the hearing, the trial court awarded damages to respondents. On appeal, the KLM sought exoneration, but the Court of
Appeals sustained the trial court and increased the award of damages.
Petitioner assailed the decision of the Court of Appeals, and prayed for exculpation. It argued that its liability for damages is limited only to
occurrence on its own lines citing. Art. 30 of the Warsaw Convention which provides that in the case of transportation to be performed by
various successive carriers the passenger can take action only against the carrier who performed the transportation during which the
accident or delay occurred.
The Supreme Court affirmed the judgment of the Court of Appeals.
SYLLABUS
1. AIR CARRIER; DAMAGES; ARTICLE 30 OF WARSAW CONVENTION DOES NOT APPLY TO DAMAGE RESULTING FROM
WILLFUL MISCONDUCT. Article 30 of the Warsaw providing that in case of transportation to be performed by various successive
carriers, the passenger can take action only against the carrier who performed the transportation during which the accident or the delay
occurred presupposes the occurrence of either an accident or delay in the course of the air strip, and does not apply if the damage is
caused by the willful misconduct on the part of the carriers employee or agent acting within the scope of his employment.
2. ID.; DUTY OF CARRIER TO INFORM PASSENGER OF TERMS AND CONDITIONS OF A CONTRACT. It would be unfair and
inequitable to charge a passenger with automatic knowledge or notice of a condition which purportedly would excuse the carrier from
liability, where the notice is written at the back of the ticket in letters so small that one has to use a magnifying glass to read the words. To
preclude any doubt that the contract was fairly and freely agreed upon when the passenger accepted the passage ticket, the carrier who
issued the ticket must inform the passenger of the conditions prescribed in the ticket or, in the very least, ascertain that the passenger
read them before he accepted the passage ticket. Absent any showing that the carriers officials or employees discharged this
responsibility to the passenger, the latter cannot be bound by the conditions by which the carrier assumed the role of a mere ticket-issuing
agent for other airlines and limited its liability only to untoward occurrences in its own lines.
3. ID.; LIABILITY OF TICKET ISSUING CARRIER IN CONTRACT OF CARRIAGE TO BE PERFORMED BY SUCCESSIVE CARRIERS.
Where the passage tickets provide that the carriage to be performed thereunder by several successive carriers "is to be regarded as a
single operation," the carrier which issued the tickets for the entire trip in effect guaranteed to the passenger that the latter shall have sure
space in the various carriers which would ferry him through the various segments of the trip, and the ticket-issuing carrier assumes full
responsibility for the entire trip and shall be held accountable for the breach of that guaranty whether the breach occurred in its own lines
or in those of the other carriers.
4. COURTS; DUTY OF COURTS TO ASSIST THE AGGRIEVED PARTY. It is but and in full accord with the policy expressly embodied
in our civil law which enjoins courts to be more vigilant for the protection of a contracting party who occupies an inferior position with
respect to the other contracting party.
8
KLM Royal Dutch Airlines vs Court of Appeals
(65 SCRA 237)
Facts:
Spouses Mendoza approached Mr. Reyes, the branch manager of Philippine Travel Bureau, for consultation about a world tour which they
were intending to make with their daughter and niece. Three segments of the trip, the longest, was via KLM. Respondents decided that

one of the routes they will take was a Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, served it. Reyes made
the necessary reservations. To this, KLM secured seat reservations for the Mendozas and their companions from the carriers which
would ferry them throughout their trip, which the exception of Aer Lingus. When the Mendozas left the Philippines, they were issued KLM
tickets for the entire trip. However, their coupon for Aer Lingus was marked on request.
When they were in Germany, they went to the KLM office and obtained a confirmation from Aer Lingus. At the airport in Barcelona, the
Mendozas and their companions checked in for their flight to Lourdes. However, although their daughter and niece were allowed to take
the flight, the spouses Mendozas were off loaded on orders of the Aer Lingus manager, who brusquely shoved them aside and shouted at
them. So the spouses Mendozas took a train ride to Lourdes instead.
Thus, they filed a complaint for damages against KLM for breach of contract of carriage. The trial court decided in favor of the Mendozas.
On appeal, the CA affirmed the decision. Hence, KLM brings this petition to the Supreme Court. KLM cites Art 30 of the Warsaw
Convention, which states: the passenger or his representatives can take action only against the carrier who performed the transportation
during which the accident or delay occurred. Also, KLM avers that the front cover of each ticket reads: that liability of the carrier for
damages shall be limited to occurrences on its own line.
Issue:
Whether or not KLM is liable for breach of contract of carriage?
Held:
The applicability of Art. 30 of the Warsaw Convention cannot be sustained. The article presupposes the occurrence of delay or accident.
What is manifest here is that the Aer Lingus refused to transport the spouses Mendozas to their planned and contracted destination.
As the airline which issued the tickets, KLM was chargeable with the duty and responsibility of specifically informing the spouses of the
conditions prescribed in their tickets or to ascertain that the spouses read them before they accepted their passage tickets.
The Supreme Court held that KLM cannot be merely assumed as a ticket-issuing agent for other airlines and limit its liability to untoward
occurrences on its own line.
The court found, that the passage tickets provide that the carriage to be performed therein by several successive carriers is to be
regarded as a single operation.

THIRD DIVISION
[G.R. No. 60673. May 19, 1992.]
PAN AMERICAN WORLD AIRWAYS, INC., Petitioner, v. JOSE K. RAPADAS and THE COURT OF APPEALS, Respondents.
Froilan P. Pobre for Private Respondent.
SYLLABUS
1. COMMERCIAL LAW; COMMON CARRIER; WARSAW CONVENTION; INTERNATIONAL CARRIAGE; DEFINED. The Warsaw
Convention, as amended, specifically provides that it is applicable to international carriage which it defines in Article 1, par. 2 as follows:"
(2) For the purposes of this Convention, the expression international carriage means any carriage in which, according to the agreement
between the parties, the place of departure and the place of destination, whether or not there be a breach in the carriage or a
transhipment, are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting
Party if there is an agreed stopping place within the territory of another State, even if that State is not a High Contracting Party. Carriage
between two points within the territory of a single High Contracting Party without an agreed stopping place within the territory of another
State is not international carriage for the purposes of this Convention." ("High Contracting Party" refers to a state which has ratified or
adhered to the Convention, or which has not effectively denounced the Convention [Article 40A(1)]).
2. ID.; ID.; ID.; ID.; PLANE TICKETS; BEING A CONTRACT OF ADHESION THOUGH NOT ENTIRELY PROHIBITED; BLIND RELIANCE
THEREON, NOT ENCOURAGED. The Convention governs the availment of the liability limitations where the baggage check is
combined with or incorporated in the passenger ticket which complies with the provisions of Article 3, Par. 1 (c). (Article 4, Par. 2) In the
case at bar, the baggage check is combined with the passenger ticket in one document of carriage. We have held in the case of Ong Yiu
v. Court of Appeals, supra, and reiterated in a similar case where herein petitioner was also sued for damages, Pan American World
Airways v. Intermediate Appellate Court (164 SCRA 268 [1988]) that: "It (plane ticket) is what is known as a contract of adhesion, in
regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it
entirely; if he adheres, he gives his consent. (Tolentino, Civil Code, Vol. IV, 1962 ed., p. 462, citing Mr. Justice J.B.L. Reyes, Lawyers
Journal, January 31, 1951, p. 49) And as held in Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein v. Trans
World Airlines, Inc., 349 S.W. 2d 483, a contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence. "Considering, therefore, that petitioner had failed to declare a higher value for
his baggage, he cannot be permitted a recovery in excess of P100.00 . . ." (91 SCRA 223 at page 231)" We hasten to add that while
contracts of adhesion are not entirely prohibited, neither is a blind reliance on them encouraged. In the face of facts and circumstances
showing they should be ignored because of their basically one sided nature, the Court does not hesitate to rule out blind adherence to
their terms. (See Sweet Lines, Inc. v. Teves, 83 SCRA 361, 368-369 [1978])
3. ID.; ID.; ID.; ID.; ID.; RECEIPT THEREOF BY PASSENGER

10 WILL BIND HIM FROM STIPULATIONS THEREIN; CASE AT BAR. The
arguments of the petitioner do not belie the fact that it was indeed accountable for the loss of the attache case. What the petitioner is
concerned about is whether or not the notice, which it did not fail to state in the plane ticket and which it deemed to have been read and
accepted by the private respondent will be considered by this Court as adequate under the circumstances of this case. As earlier stated,
the Court finds the provisions in the plane ticket sufficient to govern the limitations of liabilities of the airline for loss of luggage. The
passenger, upon contracting with the airline and receiving the plane ticket, was expected to be vigilant insofar as his luggage is
concerned. If the passenger fails to adduce evidence to overcome the stipulations, he cannot avoid the application of the liability
limitations.
4. ID.; ID.; ID.; ID.; ID.; STIPULATION ON LIABILITY LIMITATION; APPLICATION. We are not by any means suggesting that

passengers are always bound to the stipulated amounts printed on a ticket, found in a contract of adhesion, or printed elsewhere but
referred to in handouts or forms. We simply recognize that the reasons behind stipulations on liability limitations arise from the difficulty, if
not impossibility, of establishing with a clear preponderance of evidence the contents of a lost valise or suitcase. Unless the contents are
declared, it will always be the word of a passenger against that of the airline. If the loss of life or property is caused by the gross
negligence or arbitrary acts of the airline or the contents of the lost luggage are proved by satisfactory evidence other than the self-serving
declarations of one party, the Court will not hesitate to disregard the fine print in a contract of adhesion. (See Sweet Lines Inc. v. Teves,
supra) Otherwise, we are constrained to rule that we have to enforce the contract as it is the only reasonable basis to arrive at a just
award.
5. ID.; ID.; ID.; ID.; LIABILITY ON LOST UNCHECKED LUGGAGE; RULE; CASE AT BAR. The attache case was originally
handcarried does not beg the conclusion that the amount of $4,750.00 in cash could have been placed inside. It may be noted that out of
a claim for US$42,403.90 as the amount lost, the trial court found for only US$5,228.90 and 100 paengs. The court had doubts as to the
total claim. The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. At $20.00 per kilogram, the
petitioner offered to pay $160.00 as a higher value was not declared in advance and additional charges were not paid. We note, however,
that an amount of $400.00 per passenger is allowed for unchecked luggage. Since the checking-in was against the will of the respondent,
we treat the lost bag as partaking of involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked
luggage. The fair liability under the petitioners own printed terms is $400.00. Since the trial court ruled out discriminatory acts or bad faith
on the part of Pan Am or other reasons warranting damages, there is no factual basis for the grant of P20,000.00 damages.
6. ID.; ID.; ID.; AWARD OF ATTORNEYS FEES; NOT PRECLUDED THEREFROM. As to the question of whether or not private
respondent should be paid attorneys fees, the Court sustains the finding of the trial court and the respondent appellate court that it is just
and equitable for the private respondent to recover expenses for litigation in the amount of P5,000.00. Article 22(4) of the Warsaw
Convention, as amended does not preclude an award of attorneys fees. That provision states that the limits of liability prescribed in the
instrument "shall not prevent the court from awarding, in accordance with its own law, in addition, the whole or part of the court costs and
other expenses of litigation incurred by the plaintiff." We, however, raise the award to P10,000.00 considering the resort to the Court of
Appeals and this Court.
7. ID.; ID.; CANNOT BE HELD LIABLE IN THE ABSENCE OF ARBITRARINESS, DISCRIMINATION OR MISTREATMENT ON THE
PART OF ITS PERSONNEL. Passengers are also allowed one handcarried bag each provided it conforms to certain prescribed
dimensions. If Mr. Rapadas was not allowed to handcarry the lost attache case, it can only mean that he was carrying more than the
allowable weight for all his luggages or more than the allowable number of handcarried items or more than the prescribed dimensions for
the bag or valise. The evidence on any arbitrary behavior of a Pan Am employee or inexcusable negligence on the part of the carrier is not
clear from the petition. Absent such proof, we cannot hold the carrier liable because of arbitrariness, discrimination, or mistreatment.
Pan American World Airways vs. Rapadas (G.R. No. 60673)
Facts:
Private respondent Jose Rapadas held passenger ticket and baggage claim check for petitioners flight No. 841 with the route from Guam
to Manila. While standing inline to board the flight at the Guam Airport, Rapadas was ordered by petitioners hand carry control agent
to check-in his samsonite attach case. Rapadas protested pointing to the fact that other co-pasengers were permitted to hand
carry baggage. He stepped out of the line only to go back again at the end of it to try of he can get through without having to
register his attach case. However, the same man in charge of had carry control did not fail to notice him and ordered him again to
register his baggage. Upon arriving in Manila on the same day, Rapadas claimed and was given all his checked in baggage except
the attach case.
11
Issue:
Whether or not a passenger is bound by the terms of a passenger under the Warsaw convention, shall apply in case of loss, damage or
destruction to a registered luggage of a passenger.

Held:
After a review of the various arguments of the appointing parties, the court found sufficient basis under the particular facts of the case for
the availment of the liability limitations under the Warsaw Convention. There is no dispute and the courts below admit that there was such
a notice appearing on page 2 of the airline ticket stating that the Warsaw Convention governs in case of death or injury of passengers or
of loss, damage or destruction to a passengers luggage. Art. 22(4) of the Warsaw Convention does not preclude an award of attorneys
fees. That provision states that the limits of liability prescribed in the instrument shall not prevent the court from awarding in accordance
with its own law, in addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff.
PAN AMERICAN WORLD AIRWAYS V. RAPADAS
FACTS: Private respondent Jose Rapadas was standing in line to board the flight at the Guam airport when he was ordered by Pan Ams
employee to check-in his Samsonite attach case. Rapadas protested. He stepped out of the line only to get back again at the end of it to
try if he can get through without having to register his attach case. However, the same man in charge of handcarry control did not fail to
notice him and ordered him again to register his baggage.
For fear that he would miss the flight if he insisted, he acceded to checking it in. He then gave his attach case to his brother who
happened to be around but without declaring its contents or the value of its contents. Rapadas was given a baggage claim tag.
Upon arriving in Manila, Rapadas discovered that his attach case was missing. Pan Am exerted efforts to locate the missing luggage, but
to no avail. Pan Am offered Mr. Rapadas the sum of one hundred sixty dollars ($160.00) representing the petitioners alleged limit of
liability for loss or damage to a passengers personal property under the contract of carriage between Rapadas and Pan Am.
Rapadas refused the settlement. He filed an action for damages. The RTC decided in favor of Mr. Rapadas and rejected Pan Ams
contention limiting its liability to $160. The Court of Appeals affirmed.
ISSUE: Whether a passenger is bound by the terms of a passenger ticket declaring that the limitations of liability set forth in the Warsaw
Convention shall apply in case of loss, damage or destruction to a registered luggage of a passenger?
HELD: Yes.
The Notice and paragraph 2 of the Conditions of Contract (which provides that carriage is subject to rules and limitations established by
the Warsaw Convention) should be sufficient notice showing the applicability of the Warsaw limitation. It is not required under the Warsaw
Convention that there be a detailed notice of baggage liability limitation in the passenger ticket.
Contracts of adhesion, such as the one involved here, are not entirely prohibited, unless there are facts and circumstances showing its
one-sided nature. This does not obtain here.
Passengers are expected to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce evidence to overcome the
stipulations, he cannot avoid the application of the liability limitations.
Had Mr. Rapadas not wavered in his decision to register his luggage, he could have had enough time to disclose the true worth of the
articles in it and pay the extra charges or remove them from the checked-in-luggage.
Unless the contents are declared, it will always be the word of a passenger against that of the airline. If the loss of life or property is
caused by the gross negligence or arbitrary acts of the
12airline or the contents of the lost luggage are proved by satisfactory evidence other
than the self-serving declarations of one party, the Court will not hesitate to disregard the fine print in a contract of adhesion. Otherwise,
the contract would have to be enforced, as it is the only reasonable basis to arrive at a just award.
SECOND DIVISION
[G.R. No. 103338. January 4, 1994.]
FEDERICO SERRA, Petitioner, v. THE HON. COURT OF APPEALS AND RIZAL COMMERCIAL BANKING
CORPORATION, Respondents.

SYLLABUS
1. CIVIL LAW; CONTRACTS; CONTRACT OF ADHESION; CONSTRUED; CASE AT BAR NOT A CASE OF. A contract of adhesion is
one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other party merely affixes his signature or
his "adhesion" thereto. These types of contracts are as binding as ordinary contracts. Because in reality, the party who adheres to the
contract is free to reject it entirely. Although, this Court will not hesitate to rule out blind adherence to terms where facts and circumstances
will show that it is basically one-sided. We do not find the situation in the present case to be inequitable. Petitioner is a highly educated
man, who, at the time of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a CPA, holding a
respectable position with the Metropolitan Manila Commission. It is evident that a man of his stature should have been more cautious in
transactions he enters into, particularly where it concerns valuable properties. He is amply equipped to drive a hard bargain if he would be
so minded to.
2. ID.; ID.; PROMISE TO BUY AND SELL A DETERMINATE THING FOR A PRICE; DISTINGUISHED FROM ACCEPTED UNILATERAL
PROMISE TO BUY OR SELL A DETERMINATE THING FOR A PRICE. A promise to buy and sell a determinate thing for a price certain
is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price. (Article 1479, New Civil Code) The first is a mutual promise
and each has the right to demand from the other the fulfillment of the obligation. While the second is merely an offer of one to another,
which if accepted, would create an obligation to the offeror to make good his promise, provided the acceptance is supported by a
consideration distinct from the price. Article 1324 of the Civil Code provides that when an offeror has allowed the offeree a certain period
to accept, the offer may be withdrawn at anytime before acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised. On the other hand, Article 1479 of the Code provides that an accepted
unilateral promise to buy and sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a
consideration distinct from the price. In a unilateral promise to sell, where the debtor fails to withdraw the promise before the acceptance
by the creditor, the transaction becomes a bilateral contract to sell and to buy, because upon acceptance by the creditor of the offer to sell
by the debtor, there is already a meeting of the minds of the parties as to the thing which is determinate and the price which is certain. In
which case, the parties may then reciprocally demand performance. Jurisprudence has taught us that an optional contract is a privilege
existing only in one party the buyer. For a separate consideration paid, he is given the right to decide to purchase or not, a certain
merchandise or property, at any time within the agreed period, at a fixed price. This being his prerogative, he may not be compelled to
exercise the option to buy before the time expires.
3. ID.; ID.; ID.; ID.; APPLICATION IN CASE AT BAR; VDA. DE QUIRINO v. PALARCA (29 SCRA 1), CITED. What may be regarded as
a consideration separate from the price is discussed in the case of Vda. de Quirino v. Palarca (29 SCRA 1) wherein the facts are almost
on all fours with the case at bar. The said case also involved a lease contract with option to buy where we had occasion to say that "the
consideration for the lessors obligation to sell the leased premises to the lessee, should he choose to exercise his option to purchase the
same, is the obligation of the lessee to sell to the lessor the building and/or improvements constructed and/or made by the former, if he
fails to exercise his option to buy said premises." In the present case, the consideration is even more onerous on the part of the lessee
since it entails transferring of the building and/or improvements on the property to petitioner, should respondent bank fail to exercise its
option within the period stipulated. The bugging question then is whether the price "not greater than TWO HUNDRED PESOS" is certain
or definite. A price is considered certain if it is so with reference to another thing certain or when the determination thereof is left to the
judgment of a specified person or persons. And generally, gross inadequacy of price does not affect a contract of sale. Contracts are to be
construed according to the sense and meaning of the terms which the parties themselves have used. In the present dispute, there is
evidence to show that the intention of the parties is to peg the price at P210 per square meter. Moreover, by his subsequent acts of having
the land titled under the Torrens System, and in pursuing the bank manager to effect the sale immediately, means that he understood
perfectly well the terms of the contract. He even had the same property mortgaged to the respondent bank sometime in 1979, without the
slightest hint of wanting to abandon his offer to sell the property at the agreed price P210 per square meter.
4. ID.; ID.; EXTRAORDINARY INFLATION; WHEN CONSIDERED. We agree with the courts a quo that there is no basis, legal or
factual, in adjusting the amount of the rent. The contract is the law between the parties and if there is indeed reason to adjust the rent, the
parties could by themselves negotiate for the amendment of the contract. Neither could we consider the decline of the purchasing power
of the Philippine peso from 1983 to the time of the commencement of the present case in 1985, to be so great as to result in an
extraordinary inflation. Extraordinary inflation exists when there is an unimaginable increase or decrease of the purchasing power of the
Philippine currency, or fluctuation in the value of pesos
13manifestly beyond the contemplation of the parties at the time of the establishment
of the obligation.
Serra vs. Court of Appeals, and RCBC
229 SCRA 60

January 1994
FACTS:
Petitioner Federico Serra, who is the owner of a 374 square meter parcel of land located at Masbate, Masbate, and private respondent
Rizal Commercial Banking Corporation (RCBC) entered into a "Contract of Lease with Option to Buy" in May 25, 1975 which provided that
Serra will lease the subject land to RCBC for a period of 25 years from June 1, 1975 to June 1, 2000, that the RCBC has the option to
purchase the same at P210.00 per square meter within a period of 10 years from May 25, 1975, the date of the signing of the Contract,
and that Serra will have to register said land under the Torrens System to the Register of Deeds of Province of Masbate within the same
10-year option period. Pursuant to said contract, RCBC constructed improvements on the subject land to house its branch office, while the
petitioner had the property, within 3 years from 1975, duly registered with OCT No. 0-232 under the Torrens System. Later, petitioner
alleged that as soon as he had the property registered, he kept on pursuing the branch manager for the sale of the lot as per their
agreement, but it was not until September 4, 1984, that RCBC decided to exercise the option.
RCBC informed petitioner, through a letter, of its intention to buy the property at the agreed price of not greater than P210.00 per square
meter or a total of P78,430.00, but petitioner replied that he is no longer selling the property. RCBC then filed an action for specific
performance and damages against Serra in March 1985 alleging that during the negotiations it made clear to petitioner that it intends to
stay permanently on property once its branch office is opened unless the exigencies of the business requires otherwise.
Although finding that the contract was valid, the lower court ruled that the option to buy is unenforceable because it lacked a consideration
distinct from the price and RCBC did not exercise its option within the reasonable time. Upon motion for reconsideration, however, the
lower court reversed itself on the 2nd issue, declared the contract as valid, and ordered Serra to deliver the proper deed of sale to RCBC.
The Court of Appeals likewise affirmed said decision.
ISSUE:
Was there a valid contract of lease with option to buy between the parties? Was there a consideration distinct from the price to support the
option given to RCBC?
COURT RULING:
The Supreme Court affirmed the appellate courts decision. A contract of adhesion is one wherein a party, usually a corporation, prepares
the stipulations in the contract, while the other party merely affixes his signature or his "adhesion" thereto. These types of contracts are as
binding as ordinary contracts because in reality, the party who adheres to the contract is free to reject it entirely.
In the case at bar, the Supreme Court did not find the situation to be inequitable because petitioner is a highly educated man, who, at the
time of the trial was already a CPA-Lawyer, and when he entered into the contract, was already a CPA, holding a respectable position with
the Metropolitan Manila Commission. It is evident that a man of his stature should have been more cautious in transactions he enters into,
particularly where it concerns valuable properties. Also, in the present case, the consideration is even more onerous on the part of the
lessee since it entails transferring of the building and/or improvements on the property to petitioner, should respondent bank fail to
exercise its option within the period stipulated.
Federico Serra vs Court of Appeals
229 SCRA 60 Civil Law Contracts Option Contract Consideration Distinct from the Price
In 1975, a Lease Contract with Option to Buy was executed between Federico Serra and the Rizal Commercial Banking Corporation
(RCBC). It was agreed that Serra shall lease to RCBC his land from the year 1975 to 2000. It was also agreed that within 10 years from
1975, RCBC shall exercise an option whether or not to buy the said lot at a price not exceeding P210.00 per square meter. However, no
option money was provided for in the contract hence, RCBC did not pay any option money for the exercise of such option to buy. What
was provided, however, was a clause which states that 14 in case RCBC fails to exercise such option to buy, it shall forfeit all improvements
it made (or will make) on said land in favor of Serra.
In 1984, RCBC communicated to Serra that it now wants to buy the said land. Serra however refused. RCBC sued Serra. Serra now
contends that the option to buy was ineffective because it was not supported by any consideration distinct from the price hence, it is not
binding upon him.
ISSUE:
Whether or not there was no consideration distinct from the price.

HELD:
No, there is a consideration here. The Supreme Court ruled that in this case, the consideration which is distinct from the price was the
agreement in the contract which stated that if RCBC fails to exercise its option to buy, it shall transfer all improvements made on the land
[by RCBC] in favor of Serra. Such is an agreement more onerous than the payment of option money. Since there is a consideration
distinct from the price, Serra is bound by the option contract. Therefore, he cannot refuse to sell the land to RCBC.
SECOND DIVISION
[G.R. No. L-37750. May 19, 1978.]
SWEET LINE, INC., Petitioner, v. HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental, Branch VII, LEOVIGILDO
TANDOG, JR., and ROGELIO TIRO, Respondents.
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for Petitioner.
Leovigildo Vallar for Private Respondents.
SYNOPSIS
Two passengers of an inter-island vessel sued petitioner company in the Court o First Instance of Misamis Oriental for breach of contract
of carriage. Petitioner moved to dismiss the complaint on the ground of improper venue. The motion was premised on the condition
printed att he back of the tickets that actions arising from "the provisions of this ticket shall be filed in the competent courts in the City oif
Cebu.
The trial court denied the motion to dismiss as well as the motion for reconsideration. The Supreme Court sustained the trial court and
declared the condition void and unenforceable as contrary to public policy which is to make the courts accessible to all who may have
need of their services.
15
SYLLABUS
1. CONTRACT; CONTRACTS OF ADHESION, VALIDITY OF. The validity or enforceability of contracts of adhesion are to be
determined by the peculiar circumstances obtaining in each case and the nature and conditions or terms sought to be enforced. For, while
generally, stipulations in a contract come about after deliberate drafting by the parties thereto, in a contract of adhesion, however, all its
provisions have been drafted only by one party, usually a corporation, and the only participation of the other party is the signing of his
signature or his adhesion thereto.

2. CIVIL ACTIONS; VENUE; SUBJECT TO PARTIES AGREEMENT. A written agreement of the parties as to venue, as authorized by
Section 3, Rule 4, is not only binding between the parties but also enforceable by the courts. After an action has been filed, change or
transfer of venue by agreement of the parties is controllable in the discretion of the court.
3. ID.; ID.; ID.; WHEN CONTRARY TO PUBLIC POLICY. The Court may declare the agreement as to venue to be in effect contrary to
public policy, despite that in general, changes and transfers of venue by written agreement of the parties are allowable whenever it
is shown that a stipulation as to venue works injustice by practically denying to the party concerned designated by the rules.
Sweet Lines Inc. vs. Teves, et. Al.

G.R. No. L-37750 May 19, 1978
Lessons Applicable: Contract of Adhesion (Transportation)

Laws Applicable:
FACTS: Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of Cebu Since many passengers were
bound for Surigao, M/S "Sweet Hope would not be proceeding to Bohol. They went to the proper brancg office and was relocated to M/S
"Sweet Town" where they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine
Coastguard." and they were exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits and their
tickets were not honored so they had to purchase a new one. They sued Sweet Lines for damages and for breach of contract of carriage
before the Court of First Instance of Misamis Oriental who dismissed the complaint for improper venue. A motion was premised on the
condition printed at the back of the tickets dismissed instant petition for prohibition for preliminary injunction
ISSUE: W/N a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its
vessels that any and all actions arising out of the contract of carriage should be filed only in a particular province or city
HELD: NO. petition for prohibition is DISMISSED. Restraining order LIFTED and SET ASIDE
contract of adhesion not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its terms, but
rather, one which respondents took no part at all in preparing just imposed upon them when they paid for the fare for the freight they
wanted to ship. We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons circumstances obligation in the inter-island ship will prejudice rights and interests of innumerable
passengers in different s of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu
subversive of public policy on transfers of venue of actions philosophy underlying the provisions on transfer of venue of actions is the
convenience of the plaintiffs as well as his witnesses and to promote 21 the ends of justice.
16

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-58011-12 July 20, 1982
VIR-JEN SHIPPING AND MARINE SERVICES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO BISULA, RUBEN ARROZA, JUAN GACUTNO, LEONILO ATOK, NILO
CRUZ, ALVARO ANDRADA, NEMESIO ADUG, SIMPLICIO BAUTISTA, ROMEO ACOSTA, and JOSE ENCABO, respondents.
Maximo A. Savellano, Jr., for petitioner.
Solicitor General and Romeo M. Devera for respondents.
BARREDO, J.:
Petition for certiorari seeking the annulment or setting aside, on the grounds of excess of jurisdiction and grave abuse of discretion, of the
decision of the National Labor Relations Commission in consolidated NSB Cases Nos. 2250-79 and 2252-79 thereof, 1 the dispositive
portion of which reads thus:
WHEREFORE, the Decision appealed from should be, as it is hereby modified in this wise:
Respondent Vir-jen Shipping and Marine Services, Inc., is hereby ordered to pay the following to the complainant Seamen who have not
withdrawn from the case, namely: Capt. Rogelio H. Bisula, Ruben Arroza, Juan Gacutno, Leonilo Atok, Nilo Cruz, Alvaro Andrada,
Nemesio Adug, Simplicio Bautista, Romeo Acosta and Jose Encabo:
1. their earned wages corresponding to the period from 16 to 19 April 1979;
2. the wages corresponding to the unexpired portion of their contracts, as adjusted by the respondent Company effective 1 March 1979;
3. the adjusted representation allowances of the complainant Seamen who served as officers and who have not withdrawn from the case,
namely: Capt. Rogelio Bisula, Ruben Arroza, Juan Gacutno, Leonilo Atok and Nilo Cruz;
4. their vacation pay equivalent to one-half () month's pay after six (6) months of service and another one-half () month's pay after the
completion of the one-year contract;
17
5. their tanker service bonus equivalent to one-half () month's pay; and
6. their earned overtime pay from l to l9 April 1979.
The Secretariat of the National Seamen Board is also hereby directed to issue within five (5) days from receipt of this Decision the
necessary clearances to the suspended Seamen. (pp. 86-87, Record.)
The factual and legal background of these cases is related most comprehensively in the "Manifestation and Comment" filed by the
Solicitor General. It is as follows:

The records show that private respondents have a manning contract for a period of one (1) year with petitioner in representation of its
principal Kyoei Tanker Co. Ltd. The terms and conditions of said contract were based on the standard contract of the NSB. The manning
contract was approved by the NSB. Aware of the problem that vessels not paying rates imposed by the International Transport Workers
Federation (ITF) would be detained or interdicted in foreign ports controlled by the ITF, petitioner and private respondents executed a side
contract to the effect that should the vessel M/T Jannu be required to pay ITF rates when it calls on any ITF controlled foreign port, private
respondents would return to petitioner the amounts so paid to them.
On March 23, 1979, the master of the vessel who is one of the private respondents sent a cable to petitioner, while said vessel was en
route to Australia which is an ITF controlled port, stating that private respondents were not contented with the salary and benefits
stipulated in the manning contract, and demanded that they be given 50% increase thereof, as the "best and only solution to solve ITF
problem." Apparently, reference to "ITF" in private respondents' cable made petitioner apprehensive since the vessel at that time was en
route to Australia, an ITF port, and would be interdicted and detained thereat, should private respondents denounce the existing manning
contract to the ITF and should petitioner refuse or be unable to pay the ITF rates, which represent more than 100% of what is stipulated in
the manning contract. Placed under such situation, petitioner replied by cable dated March 24, 1979 to private respondents, as follows:
... WE ARE SURPRISED WITH THIS SUDDEN CHANGE OF ATTITUDE AND DEMANDS FOR WE HAVE THOROUGHLY EXPLAINED
AND DISCUSSED ALL MATTERS PERTAINING TO YOUR PRESENT EMPLOYMENT AND BELIEVED THAT WE FULLY
UNDERSTOOD EACH OTHER ... WE SHALL SUFFER AND ABSORB CONSIDERABLE AMOUNT OF LOSSES WITH YOUR DEMAND
OF FIFTY PERCENT AS WE ARE ALREADY COMMITTED TO PRINCIPALS THEREFORE TO MINIMIZE OUR LOSSES WE PROPOSE
AN INCREASE OF TWENTY FIVE PERCENT ON YOUR BASIC PAYS PLUS THE SPECIAL COMPENSATION FOR THIS PARTICULAR
VOYAGE ... (p. 7 Comment)
On March 26, 1979, petitioner wrote a letter to the NSB denouncing the conduct of private respondents as follows:
This is to inform you that on March 24, 1979, we received a cable from Capt. Rogelio Bisula, Master of the above-reference vessel
reading as follows:
URINFO ENTIRE JANNU OFFICERS AND CREW NOT CONTENTED WITH PRESENT SALARY BASED ON VOLUME OF WORK
TYPE OF SHIP WITH HAZARDOUS CARGO AND REGISTERED IN A WORLDWIDE TRADE STOP WHAT WE DEMAND IS ONLY
FIFTY PERCENT INCREASE BASED ON PRESENT BASIC SALARY STOP THIS DEMAND THE BEST AND ONLY SOLUTION TO
SOLVE PROBLEM DUE YOUR PRESENT RATES ESPECIALLY TANKERS VERY FAR IN COMPARISON WITH OTHER SHIPPING
AGENCIES IN MANILA.
to which we replied on March 24, 1979, as follows:
WE ARE SURPRISED WITH SUDDEN CHANGE, OF ATTITUDE AND DEMANDS FOR WE HAVE THOROUGHLY EXPLAINED AND
DISCUSSED ALL MATTERS PERTAINING TO YOUR PRESENT EMPLOYMENT AND BELIEVED THAT WE FULLY UNDERSTOOD
EACH OTHER STOP FRANKLY SPEAKING WE SHALL SUFFER AND ABSORB CONSIDERABLE AMOUNT OF LOSSES WITH YOUR
DEMAND OF FIFTY PERCENT AS WE ARE COMMITTED TO PRINCIPALS THEREFORE TO MINIMIZE OUR LOSSES WE PROPOSE
AN INCREASE OF TWENTY FIVE PERCENT ON YOUR BASIC PAY STOP YOUR UNDERSTANDING AND FULL COOPERATION WILL
BE VERY MUCH APPRECIATED STOP PLS CONFIRM SOONEST.
On March 25, 1979 we received the following communication from the Master of said vessel:
OFFICERS AND CREW HESITATING TO GIVE UP DEMAND OF FIFTY PERCENT INCREASE BUT FOR THE GOOD AND
HARMONIOUS RELATIONSHIP ON BOARD AND RECONSIDERING YOUR SUPPOSED TO BE LOSSES IN CASE WE
CONDITIONALLY COOPERATE WITH YOUR PROPOSED INCREASE AND TWENTY FIVE PERCENT BASED ON INDIVIDUAL BASIC
PAY WITH THE FOLLOWING TERMS AND CONDITION STOP EFFECTIVITY OF TWENTY FIVE PERCENT INCREASE MUST BE
MARCH/79 STOP INCREASE MUST BE COLLECTIBLE ON BOARD EFFECTIVE ABOVE DATE UNTIL DISEMBARKATION STOP
ALLOTMENT TO ALLOTEES REMAIN AS IS STOP REASONABLE REPALLOWS FOR ALL OFFICERS BE GIVEN EFFECTIVE
18
MARCH/79 STOP BONUS FOR 6 MONTHS SERVICES RENDERED BE COLLECTIBLE ON BOARD STOP OFFICERS/CREW 30PCT
O/T SHUD BE BASED NEW UPGRADED SALARY SCALE STOP MASTER/CHENGR/CHMATE SPECIAL COMPENSATION GIVE BY
YOUR COMPANY PRIOR DEPARTURE MANILA REMAIN AS IS.
to which we replied on March 25, 1979, as follows:
WE AGREE ALL CONDITIONS AND CONFIRM IT SHALL BE PROPERLY ENFORCED STOP WILL PREPARE ALL REQUIRED
DOCUMENTS AND WILL BE DELIVERED ON BOARD.

For your further information and guidance, the abovementioned demands of the officers and crew (25% increase in basic pay, increase in
overtime pay and increase in representation allowance) involve an additional amount of US$3,096.50 per month, which our company is
not in a position to shoulder.
We are, therefore, negotiating with our Principals, Messrs. Kyoei Tanker Company, Limited, for the amendment of our agency agreement
in the sense that our monthly fee be increased correspondingly. We have sent our Executive Vice-President, Mr. Ericson M. Marquez, to
Japan to represent us in said negotiation and we will inform you of the results thereof. (Annex "E" of Petition)
In view of private respondents' conduct and breach of contract, petitioner's principal, Kyoei Tanker Co., Ltd. terminated the manning
contract in a letter dated April 4, 1979, which reads in part;
This is with reference to your letter of March 26, 1979 and our conference with Mr. Ericson Marquez in Tokyo on March 29, 1979,
regarding the unexpected and unreasonable demand for salary increase of your officers and crew on the above vessel.
Frankly speaking, we fully agree with you that this action taken by your officers and crew in demanding increase in their salaries and
overtime after being on board for only three months was very unreasonable. Considering the circumstances when the demand was made,
we believe that their action was definitely abusive and plain blackmail.
We regret to advise you that since this vessel is only under our management, we also cannot afford to grant your request for an increase
of US$3,096.50 effective March 1, 1979, as demanded by your crew. Your crew should respect their employment contracts which was
approved by your government and your National Seamen Board should make sure that all seamen should follow their contracts.
For your information, we have discussed this matter with the owners of the vessel, particularly the attitude and mentality of your crew on
board. Our common and final decision is not to grant your request but also to terminate our Manning Agreement effective upon crew's
change when the vessel arrives at Japan or at any possible port about end April, 1979.
We regret that we have to take this drastic step in order to protect ourselves from further problem if we continue with your present officers
and crew because if their demand is granted, there is no guarantee that they will not demand further increase in salaries in the future
when they have chance. Also, as you know the present freight market is very bad and we cannot afford an unexpected increase in cost of
operations and more so with a troublesome and unreliable crew that you have on board.
In view of the circumstances mentioned above, please consider this letter as our official notice of cancellation of our Manning Agreement
effective upon the date of crew's change. (Annex "F" of Petition).
On April 6, 1979, petitioner wrote the NSB asking permission to cancel the manning contract with petitioner, said letter reading as follows:
This is with reference to our letter of March 26, 1979, informing you of the sudden and unexpected demands of the officers and crew of
the above vessel for a twenty five percent (25%) increase in their basic salaries and overtime, plus an increase of the officers'
representation allowances, involving a total of US$3,096.50 per month.
As we have advised in our afore-mentioned letter, we have negotiated with our Principals, Messrs. Kyoei Tanker Co., Ltd., to amend our
Agency Agreement by increasing our monthly fee by US$3,096.50, and attached herewith is copy of our letter dated March 26, 1979 duly
received by our Principals on March 31, 1979.
In this connection, we wish to inform your good office that our Principals have refused to consider our request for an increase and have
also advised us of their final decision to terminate our Manning Agreement effective upon vessel's arrival in Japan on or about April 17,
1979.
For your further information, we enclose herewith xerox copy of the Kyoei Tanker Co., Ltd. letter dated April 4, 1979, which we just
received today via airfreight. 19
This is the first time that a cancellation of this nature has been made upon us, and needless to say, we feel very embarrassed and
disappointed but we have no other alternative but to accept the said cancellation.
In view of the foregoing, we respectfully request your authority to cancel our Contracts of Employment and to disembark the entire officers
and crew upon vessel's arrival in Japan on or about 17th April, 1979. (Annex "G", of Petition).

On April 10, 1979, the NSB through its Executive Director Cresencio C. Dayao wrote petitioner authorizing it to cancel the manning
contract. The NSB letter to petitioner reads:
We have for acknowledgment your letter of 6 April 1979 in connection with the above-captioned subject.
Considering the circumstances enumerated in your letter under reply (and also in your letter of March 1979), we authorize you to cancel
your contracts of employment with the crew/members of the M/T "Jannu" and you may now disembark the whole compliment upon the
vessel's arrival in Japan on or about April 17, 1979.
We trust that you will not encounter any difficulty in connection with the disembarkation of the crew/members. (Annex "H" of Petition).
The seamen were accordingly disembarked in Japan and repatriated to Manila. They then filed a complaint with the NSB for illegal
dismissal and non-payment of wages. After trial, the NSB found that the termination of the services of the seamen before the expiration of
their employment contract was justified "when they demanded and in fact received from the company wages over and above the
contracted rates which in effect was an alteration and modification of a valid and existing contract ..." (Annex "D", Petition). The seamen
appealed the decision to the NLRC which reversed the decision of the NSB and required the petitioner to pay the wages and other
monetary benefits corresponding to the unexpired portion of the manning contract on the ground that the termination of the said contract
by petitioner was without valid cause. Hence, the present petition. (Pp. 2-9, Manifestation & Comment)
In its petition which contains practically the same facts and circumstances above-quoted, petitioner submits for Our resolution the
following issues:
I. That the respondent NLRC acted without or in excess of its jurisdiction, or with grave abuse of discretion in said NSB Cases Nos. 2250-
79 and 2252-79 when it adjudged the petitioner Vir-jen liable to the respondents-seamen for terminating its employment contracts with
them despite the fact that prior authorization to terminate or cancel said employment contracts and to disembark the said respondents
was first secured from and was granted by, the National Seamen Board, the government agency primarily charged with the supervision
and discipline of seamen and the approval and enforcement of employment contracts;
II. That the respondent NLRC acted with grave abuse of discretion, or without or in excess of its jurisdiction, or contrary to law and the
evidence when it concluded that "there is nothing on record to show that respondents-seamen made any threat that they would complain
or report to the ITF their low wage rates if their demand or proposal for a wage increase was not met", despite the fact that in their cable
of March 23, 1979 to the petitioner, the said respondents made the following threats and impositions: "WHAT WE DEMAND IS ONLY 50
PERCENT INCREASE BASED ON PRESENT BASIC SALARY STOP THIS DEMAND THE BEST AND ONLY SOLUTION TO SOLVE
ITF PROBLEMS", that there are other substantial and conclusive evidence to support the existence of such threats and intimidation which
the respondent NLRC failed and refused to consider; and that the evidence substantially and conclusively shows that the petitioner Vir-jen
was, in fact, threatened and intimidated into giving such salary increases due to such cabled threats and intimidation of the private
respondents;
III. That the respondent NLRC acted with grave abuse of discretion or without or in excess of jurisdiction when it concluded, in effect, that
the respondents-seamen acted within their rights when they imposed upon their employer, the herein petitioner, their demands for salary
and wages increases, in disregard of their existing NSB-approved contracts of employment, notwithstanding the substantial and
conclusive findings of the NSB, the trier of facts which is in the best position to assess the special circumstances of the case, that the said
respondents breached their respective contracts of employment with the petitioner, without securing the prior approval of the NSB as
required by the New Labor Code, as amended, and with the use of threats, intimidation and coercion, when they demanded and, in fact,
received from the petitioner salaries or wages over and above their contracted rates which the petitioner was "constrained to make" in
order "to prevent the vessel from being interdicted and/or detained by the ITF because at the time the demand for salary increase was
made the vessel was en route to Kwinana, Australia (via Senipah, Indonesia), a port were the ITF is strong and militant," "for in the event
the vessel would be detained and/or interdicted the company (petitioner) would suffer more losses than paying the seamen 25 % increase
of their salary";
20
IV. That respondent NLRC committed a grave abuse of discretion or exceeded its jurisdiction or acted contrary to law when it failed and
refused to admit and take into account the ADDENDUM AGREEMENT, dated December 27, 1978, entered into between the petitioner
and the private respondents, which would have further enlightened the respondent NLRC on the "ITF PROBLEMS" insinuated by the
private respondents in their cable of March 23, 1979 to threaten and intimidate the petitioner into granting the salary increases in
question;
V. That respondent NLRC committed a grave abuse of discretion or acted without or in excess of its jurisdiction or contrary to law when it
ordered the petitioner Vir-jen to pay, among others, to the private respondents their "wages corresponding to the unexpired portion of their
contracts" the said petitioner having already lost its trust and confidence on the private respondents; that the employer cannot be legally

compelled to continue with the employment of persons in whom it has already lost its trust and confidence; that payment to the private
respondents of their wages corresponding to the unexpired portion of their contract would be tantamount to retaining their services after
their employer, petitioner herein, had already lost its faith and trust in them;
VI. That the respondent NLRC committed a grave abuse of discretion or exceeded its jurisdiction in still including and considering
ROMEO ACOSTA as one of the appellants in the two (2) aforementioned NSB cases and making him a beneficiary of its decision, dated
July 8, 1981, modifying the NSB decision, dated July 2, 1980, despite the fact that way back on October 23, 1980, Acosta had already
filed in said NSB cases a pleading, entitled "SATISFACTION OF JUDGMENT" in which he manifested that he was not appealing the NSB
decision anymore as the judgment in his favor was already fully satisfied by the petitioner Vir-jen;
VII. That the respondent NLRC had no more jurisdiction to entertain private respondents' appeal because the NSB decision became final
and executory for failure of said respondents to serve on he petitioner a copy of their "APPEAL AND MEMORANDUM OF APPEAL" within
the ten (10) day reglementary period for appeal and even after the expiration of said period;
VIII. That the respondent NLRC had no jurisdiction to entertain the appeal by the private respondents based on the supposedly verified
"APPEAL AND MEMORANDUM OF APPEAL" because the supposed signature of the person purportedly verifying the same
is forged; and that the new counsel appearing for the private respondents on appeal was not even authorized by some of the private
respondents to appear for them;
IX. That the respondent NLRC committed a grave abuse of discretion or acted without or in excess of jurisdiction or contrary to law when
it misconstrued, misinterpreted and misapplied to the instant case the ruling of this Honorable Supreme Court in Wallem Philippines
Shipping, Inc. vs. The Hon. Minister of Labor, et al., G.R No. 50734, prom. February 20, 1981, despite distinct and fundamental
differences in facts between the Wallem Case and the instant case;
X. That the respondent NLRC committed a grave abuse of discretion or acted without or in excess of its jurisdiction or acted contrary to
law when it failed and refused to consider and pass upon the substantial issues of jurisdiction, law and facts and matters of public
interests raised by the petitioner in its URGENT MOTION/APPELLEE'S MEMORANDUM ON APPEAL, dated April 24, 1981, and in its
MOTION FOR RECONSIDERATION AND/OR NEW TRIAL, dated July 20, 1981, filed in the two (2) cases;
XI. That the respondent NLRC committed a grave abuse of discretion or acted without or in excess of jurisdiction or contrary to law when
it failed and refused to reconsider and set aside its decision subject-matter of this petition for certiorari, considering Chat if allowed to
stand, the said decision will open the floodgates for Filipino seamen to disregard NSB-approved contracts of employment with impunity,
leading to the destruction of the Philippine manning industry, which is a substantial source of revenue for the Philippine government, as
well as the image of the Filipino seamen who will undoubtedly become known far and wide as one prone to violate the solemnity of
employment contracts, compounded with the use of threats, intimidation and blackmail, thereby necessitating a policy decision by this
Honorable Supreme Court on the matter for the survival of the manning industry. (Pp. 5-9, Record.)
We shall deal first with the jurisdictional issue (No. VII above) to the effect that the appeal of private respondents from the decision of the
National Seamen's Board against them was filed out of time, considering that copy of said decision was received by them on July 9, 1980
and they filed their memorandum of appeal only on July 23, 1980 or fourteen (14) days later, whereas under article 223 of the Labor Code
which governs appeals from the National Seamen's Board to the National Labor Relations Commission per Article 20(b) of the Code
provides that such appeals must be made within ten (10) days.
In this connection, it is contended in the comment of private respondents that petitioner has overlooked that under Section 7, Rule XIII,,
Book V of the Implementing Rules of the Labor Code, the ten-day period specified in Article 223 refers to working days and that this Court
has already upheld such construction and manner of computation in Fabula vs. NLRC, G.R. No. 54247, December 19, 1980. Now,
computing the number of working days from July 9 to July 23, 1980 We find that there were exactly ten (10) days, hence, if We adhere to
Fabula, the appeal in question must be held to have been made on time.
But petitioner herein maintains that the Minister of Labor may not, under the guise of issuing implementing rules of a law as authorized by
21
the law itself, go beyond the clear and unmistakable language of the law and expand it at his discretion. In other words, since Article 223
of the Labor Code literally provides thus:
Appeal. Decisions, awards, or orders of the Labor Arbiters or compulsory arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from receipt of such awards, orders, or decisions. Such appeal may be
entertained only on any of the following grounds:
(a) If there is a prima facie evidence of abuse of discretion on the part of the labor Arbiter or compulsory arbitrator;

(b) If the decision, order, or award was secured through fraud or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable penalty, including fines or
censures, upon the erring parties.
the implementing rules may not provide that the said period should be computed on the basis of working days. This, indeed, is a legal
issue not brought up nor passed upon squarely in Fabula, and petitioner prays that this Court rule on the point once and for all.
After mature and careful deliberation, We have arrived at the conclusion that the shortened period of ten (10) days fixed by Article 223
contemplates calendar days and not working days. We are persuaded to this conclusion, if only because We believe that it is precisely in
the interest of labor that the law has commanded that labor cases be promptly, if not peremptorily, dispose of. Long periods for any acts to
be done by the contending parties can be taken advantage of more by management than by labor. Most labor claims are decided in their
favor and management is generally the appellant. Delay, in most instances, gives the employers more opportunity not only to prepare
even ingenious defenses, what with well-paid talented lawyers they can afford, but even to wear out the efforts and meager resources of
the workers, to the point that not infrequently the latter either give up or compromise for less than what is due them.
All the foregoing notwithstanding, and bearing in mind the peculiar circumstances of this case, particularly, the fact that private
respondents must have been misled by the implementing rules aforementioned. We have opted to just the same pass on the merits of the
substantial issues herein, even as We admonish all concerned to henceforth act in accordance with our foregoing view. Verily, the Minister
of Labor has no legal power to amend or alter in any material sense whatever the law itself unequivocally specifies or fixes.
We need not ponder long on the contention of petitioner regarding the alleged forgery of the signature of respondent Rogelio Bisula and
the alleged lack of authority of the new counsel of respondents, Atty. B. C. Gonzales, to appear for them. Resolution of these minor points,
considering their highly controversial nature, so much so that they could rationally to our mind, be decided either way, may be dispensed
with in order that We may go to the more transcendentally important main issues before Us.
As far as issue No. VI above regarding the inclusion of Romeo Acosta among the beneficiaries of the decision herein in question, there
can be no reason why petitioner should not be sustained. It is undenied that Acosta has filed a formal satisfaction of judgment. Indeed, it
is quite relevant to mention at this point that originally, there were twenty-eight (28) claimants against petitioner, This number was first
reduced to fifteen (15) then to ten (10) and finally to nine (9) now, by withdrawal of the claimants themselves. These series of withdrawals
lend no little degree to added enlightenment of the discussion hereunder of the adverse positions of the remaining claimants, on the one
hand, and the petitioner, on the other.
To begin with, let it be borne in mind that seamen's contracts of the nature We have before Us now are not ordinary ones. There are
specie, laws and rules governing them precisely due to the peculiar circumstances that surround them. Relatedly, We quote from the
Manifestation and Comment of the Solicitor General:
The employment contract in question is unlike any ordinary contract of employment, for the reason that a manning contract involves the
interests not only of the signatories thereto, such as the local Filipino recruiting agent (herein petitioner), the foreign owner of the vessel,
and the Filipino crew members (private respondents), but also those of other Filipino seamen in general as well as the country itself.
Accordingly, Article 12 of the Labor Code provides that it is the policy of the State not only "to insure and regulate the movement of
workers in conformity with the national interest" but also "to insure careful selection of Filipino workers for overseas employment in order
to protect the good name of the Philippines abroad". The National Seamen Board (NSB), which is the agency created to implement said
state policies, is thus empowered pursuant to Article 20 of the Labor Code "to secure the best possible terms and conditions of
employment for seamen, and to insure compliance thereof" not only on the part of the owners of the vessel but also on the part of the
crew members themselves. 22
Conformably to the power vested in the NSB, the law requires that all manning contracts shall be approved by said agency. It likewise
provides that "it shall be unlawful to substitute or alter any previously approved and certified employment contract without the approval of
NSB" (Section 35, Rules and Regulations in the recruitment and placement of Filipino seamen aboard foreign going ships) and authorizes
the employer or owner of the vessel to terminate such contract for just causes (Section 32, Ibid). Among such just causes for termination
are "bad conduct and unwanted presence prejudicial to the safety of the ship" (Guidebook for shipping employers, page 8) and material
breach of said contract.

The stringent rules governing Filipino seamen aboard foreign, going ships are dictated by national interest. There are about 120,000
registered seamen with the NSB. Only about 50,000 of them are employed and 70,000 or so are still hoping to be employed. Those
Filipino seamen already employed on board foreign-going ships should accordingly conduct themselves with utmost propriety and abide
strictly with the terms and conditions of their employment contract, and the NSB should see to that, in order that owners of foreignowned
vessels will not only be encouraged to renew their employment contract but will moreover be induced to hire other Filipino seamen as
against other competing foreign sailors. (Pp. 15-17, Manifestation & Comment of the Solicitor General)
Pertinently, the Labor Code of the Philippines provides for the creation of a National Seamen Board (NSB) thus:
ART. 20. National Seamen Board.(a) A National Seamen Board is hereby created which shall developed and maintain a comprehensive
program for Filipino seamen employed overseas. It shall have the power and duty:
(1) To provide free placement services for seamen;
(2) To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas
employment; and secure the best possible terms of employment for contract seamen workers and secure compliance therewith; and
(3) To maintain a complete registry of all Filipino seamen.
(b) The Board shall have original and exclusive jurisdiction over all matters or cases including money claims, involving employer-
employee relations, arising out of or by virtue of any law or contracts involving Filipino seamen for overseas employment. The decision of
the Board shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The
decisions of the National Labor Relations Commission shall be final and inappealable.
The finality and unappealability of the decisions of the National Labor Relations Commission conferred by the above provisions in cases
of the nature now before Us necessarily limits Our power in the premises to the exercise of Our plenary certiorari jurisdiction. And under
the scheme of said Article 20, in relation to Article 223 of the same Code, the reviewing authority of the Commission is limited only to the
following instances:
Appeal.Decisions, awards, or orders of the Labor Arbiters or compulsory arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from receipt of such awards, orders, or decisions. Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter or compulsory arbitrator;
(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;
(c) If made purely on questions of law;and
(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable penalty, including fines or
censures, upon the erring parties.
In all cases, the appellant shall furnish a copy of the memorandum of appeals to the other party who shall file an answer not later than ten
(10) days from receipt thereof.
xxx xxx xxx
23
In the light of the foregoing perspective of law and policy, all the other issues raised by petitioner may be disposed of together. Anyway
they revolve basically around the following questions:
1. In the event of conflict in the conclusions of the National Seamen Board, on the one hand, and the National Labor Relations
Commission on the other, on a matter that is fundamentally an issue of fact, which one should prevail?
2. Under the facts of this case, was it legally proper for the Commission to disregard the permission granted by the NSB to the petitioner
to disembark and discontinue the employment of herein respondents?

3. As a matter of fact, did respondent breach their contract with petitioner, so as to entitle the latter to take the punitive action herein
complained of?
4. Was the conformity of petitioner to pay respondents additional compensation of 25% secured by said respondents thru threats of grave
injury to petitioner who, therefore, acceded to such increase involuntarily?
We feel that the resolution of the instant controversy hinges on whether or not it was violative of law and policy in the light of the peculiar
nature of the contracts in question as already explained at the outset of this opinion, for the respondents to make the demand for an
increase of 50% of their respective wages stipulated in their NSB approved contracts while they were already in the midst of the voyage to
Kwinana, Australia (an ITF controlled post), pointedly mentioning in their cablegram that such "demand (was) the best and only solution to
solve ITF problem"?
On these questions, the NSB found and held:
1. Whether or not the Seamen breached their respective employment contracts;
2. Whether or not the Seamen were illegally dismissed by the Company;
3. Whether or not the monetary claims of the seamen are valid and meritorious;
4. Whether or not the monetary claims of the Company are valid and meritorious;
5. Whether or not disciplinary action should be taken against the Seamen.
With respect to the first issue, the Board believes that the answer should be in the affirmative. This is so for the Seamen demanded and in
fact received from the Company wages over and above their contracted rates, which in effect is an alteration or modification of a valid and
subsisting contract; and the same not having been done thru mutual consent and without the prior approval of the Board the alteration or
modification is contrary to the provisions of the New Labor Code, as amended, more particularly Art. 34 (i) thereof which states that:
Art. 34. Prohibited practices.It shall be unlawful for any individual, entity, licensee or holder of authority:
xxx xxx xxx
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by
the parties up to and including the period of expiration of the same without the approval of the Department of Labor;
xxx xxx xxx
The revision of the contract was not done thru mutual consent for the Company did not voluntarily agree to an increase of wage, but was
only constrained to make a counter-proposal of 25% increase to prevent the vessel from being interdicted and/or detained by the ITF
because at the time the demand for salary increase was made the vessel was enroute to Kwinana, Australia (via Senipah, Indonesia), a
port where the ITF is strong and militant. However, a perusal of the Cables (Exhs. "D" & "F", "3" & "5") coming from the Seamen
addressed to the Company would show the threatening manner by which the desire for a salary increase was manifested, contrary to their
claim that it was merely a request. Aforesaid cables are hereby quoted for ready reference:
RYCV-11-12-13-14 RECEIVED URINFO ENTIRE JANNU OFFICERS AND CREW NOT AGREEABLE WITH YOUR SUGGESTIONS
THEY ARE NOT CONTENTED WITH PRESENT SALARY BASED IN VOLUME OF WORKS TYPE OF SHIP WITH HAZARDOUS
CARGO AND REGISTERED IN A WORLD WIDE TRADE STOP REGARDING URCABV-14 OFFICERS AND CREW NOT INTERESTED
IN ITF MEMBERSHIP IF NOT ACTUALLY PAID WITH ITF RATE STOP WHAT WE DEMAND IS ONLY 50 PERCENT INCREASE BASED
ON PRESENT BASIC SALARY STOP THIS DEMAND 24 THE BEST AND ONLY SOLUTION TO SOLVE ITF PROBLEM DUE YOUR
PRESENT RATE ESPECIALLY IN TANKERS VERY FAR IN COMPARISON WITH OTHER SHIPPING AGENCIES IN MANILA STOP LET
US SHARE EQUALLY THE FRUITS OF LONELINESS SACRIFICES AND HARDSHIP WE ARE ENCOUNTERING ON BOARD WE
REMAIN ...
REURVIR-JEN-15 OFFICERS AND CREW HESITATING TO GIVE UP DEMAND OF 50 PERCENT INCREASE BUT FOR GOOD AND
HARMONIOUS RELATIONSHIP ONBOARD AND RECONSIDERING YOUR SUPPOSE TO BE LOSSES IN CASE WE CONDITIONALLY
COOPERATE WITH YOUR PROPOSE INCREASE OF 25 PERCENT BASED ON INDIVIDUAL MONTHLY BASIC PAY WITH
FOLLOWING TERMS AND CONDITIONS AA EFFECTIVITY OF 25 PERCENT INCREASE MUST BE MARCH/79 PLUS SPECIAL

COMPENSATION MENTIONED URCAB VIRJEN-14 BB NEW COMPANY CIRCULAR ON UPGRADED NEW SALARY SCALE DULY
SIGNED AND APPROVED BE FORWARDED KWINANA AUSTRALIA OR HANDCARRIED BY YOUR REPRESENTATIVE TO DISCUSS
MATTERS OFFICIALLY CC 25 PERCENT INCREASE MUST BE COLLECTABLE ONBOARD EFFECTIVE ABOVE DATE UNTIL
DISEMBARKATION STOP ALLOTMENT TO ALLOTTEES REMAIN AS IS DD REASONABLE REPALLOWS FOR ALL OFFICERS BE
GIVEN EFFECTIVE MARCH/79 EE BONUS FOR 6 MONTHS SERVICE RENDERED BE COLLECTIBLE ONBOARD FF
OFFICERS/CREW 30 PERCENT' OT SHOULD BE BASED NEW UPGRADED SALARY SCALE GG MASTER/CHENGR/CHMATE
SPECIAL COMPENSATION GIVE BY YOUR COMPANY PRIOR DEPARTURE MANILA BE REMAIN AS IS STOP THE ABOVE TERMS
AND CONDITIONS SHOULD BE PROPERLY ENFORCE AND DOCUMENTED ALSO COPIES AND FORWARDED ONBOARD ON
ARRIVAL KWINANA AUSTRALIA CONFIRM ...
While the Board recognizes the rights of the Seamen to seek higher wages provided the increase is arrived at thru mutual consent, it
could not however, sanction the same if the consent of the employer is secured thru threats, intimidation or force. In the case at bar, the
Company was compelled to accede to the demand of the Seamen for a salary increase to forestall the possibility of the vessel being
interdicted by the ITF at Kwinana, Australia, for in the event the vessel would be detained and/or interdicted the Company would suffer
more losses than paying the Seamen 25% increase of their
With respect to the second issue, the Board believes that the termination of the services of the Seamen was legal and in accordance with
the provisions of their respective employment contracts. Considering the findings of the Board that the Seamen breached their contracts,
their subsequent repatriation was justified. While it may be true that the Seamen were hired for a definite period their services could be
terminated prior to the completion of the fun term thereof for a just and valid cause.
It may be stated in passing that Vir-jen Shipping & Marine Services, Inc., despite the fact that it was compelled to accede to a 25% salary
increase for the Seamen, tried to convince its principal Kyoei Tanker, Ltd. to an adjustment in their agency fee to answer for the 25%
increase, but the latter not only denied the request but likewise terminated their Manning, Agreement. The Seamen's breach of their
employment contracts and the subsequent termination of the Manning Agreement of Vir-jen Shipping & Marine Services, Inc. with the
Kyoei Tanker, Ltd., justified the termination of the Seamen's services.
With respect to the third issue the following are the findings of the Board:
As regards the claim of the Seamen for the payment of their salaries for the unexpired portion of their employment contracts the same
should be denied. This is so because of the findings of the Board that their dismissal was legal and for a just cause. Awards of this nature
is proper only in cases where a seafarer is illegally dismissed. (Pp. 148-151, Record)
Disagreeing with the foregoing findings of the NSB, the NLRC held:
The more important issue to be resolved in this case, however, is the question of whether the Seamen violated their employment
contracts when they demanded or proposed and in fact accepted wages over and above their contracted rates. Stated otherwise, could
the Seamen rightfully demand or propose the revision of their employment contracts? While they concede that they are bound by their
contracts, the Seamen claim that their cable asking for the revision of their contract rates was a valid exercise of their right to grievance.
The right to grievance is recognized in this jurisdiction even if there is a valid and subsisting contract, especially where there are
supervening facts or events of which a party to the contract was not apprised at the time of its conclusion. As pointed out by the Supreme
Court in the Wallem case, supra, it "is a basic right of all working men to seek greater benefits not only for themselves but for their families
as well ..." and the "Constitution itself guarantees the promotion of social welfare and protection to labor." In this care, records show that it
was impressed on the Seamen that their vessel would be trading only in Caribbean ports. This was admitted by the Company in its cable
to the Seamen on 10 January 1979. After the conclusion of their contracts, however, and after they had boarded the vessel, the principals
of the Company directed the vessel to can at different ports or to engage in "worldwide trade" which is admittedly more difficult and
hazardous than trading in only one maritime area. This is a substantial change in the original understanding of the parties. Thus, in their
cable asking for a wage increase, the Seamen expressed their dissatisfaction by informing the Company that they were "not contented
with (their) present salary based on volume of work, type of ship with hazardous cargo and registered in world wide trade."(emphasis
25
supplied.) With such change in the original agreement of the parties, we find that the Seamen were well within their rights in demanding
for the revision of their contract rates.
We also note that the Company was not exactly in good faith in contracting the service of the Seamen. During his briefing in Manila, the
Company instructed the master of the vessel, complainant Bisula, to prepare two (2) sets of payrolls, one set reflecting the actual salary
rates of the Seamen and the other showing higher rates based on Panamanian Shipping articles which approximate those prescribed by
ITF for its member seafarers. In compliance with this instruction, Bisula prepared the latter payrolls. These payrolls were intended for the
consumption of ITF if and when the vessel called on ports where ITF rates were operational, the evident purpose being to show ITF that
the Company was paying the same rates prescribed by said labor federation and thereby prevent the interdiction of the vessel. And when

the vessel was en route to Australia, an ITF-controlled port, the Company arranged for the Seamen's membership with ITF and actually
paid their membership fees without their knowledge and consent, thereby exposing them to the danger of being disciplined by the NSB
Secretariat for having affiliated with ITF. All these have to be mentioned here to better understand the feelings of the Seamen when they
asked for the revision of their wage rates. 2 (Pp. 83-85, Record)
Comparing these two decisions, We do not hesitate to hold that the NLRC overstepped the boundaries of its reviewing authority and was
overlenient. Whether or not respondents had breached their contract wit petitioner is a factual issue, the peculiar nuances of which were
better known to the NSB, the fact-finding authority. Indeed, even if it was nothing more than the interpretation of the cablegram sent by
respondents to petitioner on March 23, 1979 that were the only question to be resolved, that is, whether or not it carried with it or
connoted a threat which naturally panicked petitioner, which, to be sure, could be a question of law, still, as We see it, the conclusion of
the NLRC cannot be justified.
The NLRC ruled that in the exercise of their right to present any grievances they had and in their desire to alleviate their condition, it was
but well and proper for respondents to make a proposal for increase of their wages, which petitioner could accept or reject. We do not see
it that way.
Definitely, the reference in the cablegram to the conformity of petitioner to respondents' demand was "the best and only solution to ITF
problem" had an undertone which naturally placed petitioner hardly in a position to answer them with a flat denial. It would be the acme of
naivete for Us to go along with the contention that the cablegram of March 23, 1979 was a mere proposal and had no trace nor tint of
threat at all. Indeed, it is alleged in the petition and there is no denial thereof that on April 23, 1979, Chief Mate Jacobo Catabay of the M/T
Jannu, who was among the claimants at first, revealed that:
On April 23, 1979, Chief Mate Jacobo H. Catabay of the M/T Jannu, in a signed statement-report to the petitioner, marked and admitted in
evidence as Exh. "10-A" during the trial stated, as follows:
On our departure at Keelung, we did not have destination until three (3) days later that Harman cabled us to proceed to Senipah,
Indonesia to load fun cargo to be discharged at Kwinana , Australia. Captain told everyone that if only we stayed so long with the ship, he
will report to ITF personally in order to get back wages. In view that we only worked for three months so the back wages is so small and
does not worth. From that time on, Chief Engr. and Captain have a nightly closed door conference they arrived at the conclusion to ask
for 50% salary increase and they have modified a certain platforms. They certainly believe that Vir-jen have no choice because the vessel
is going to ITF port so they called a general meeting conducted at the bridge during my duty hours in the afternoon. All engine and deck
personnel were present in that meeting. (Pp. 19-20, Record.)
Well taken, indeed, is the Solicitor General's observation that:
Private respondents'conduct is uncalled for. While employees may be free to request their employers to increase their wages, they should
not use threat of such a nature and in such a situation as to put the employer at their complete mercy and with no choice but to accede to
their demands or to face bankruptcy. This is what private respondents did, which is an act of bad conduct prejudicial to the vessel, and a
material breach of the existing manning contract. It has adverse consequences that led not only to the termination of the existing manning
contract but to the rejection by Kyoei Tanker Co. Ltd. of petitioner's offer to supply crew members to three other vessels, thereby depriving
unemployed Filipino seamen of the opportunity to work on said vessels. Thus, in a letter dated May 17, 1979, Kyoei Tanker Co. Ltd. wrote
petitioner as follows:
This is with reference to your letter of Feb. 23, 1979, submitting your manning offers on our three (3) managed vessels for delivery as
follows:
1. M/V "Maya" crew,delivery end May, 1979,
2. M/T "Cedar" 28 crew, delivery end June, 1979,

26
3. M/T "Global Oath" 30 crew, delivery end, June 1979.
In this connection, we wish to advise you that, as a result of our unpleasant experience with your crew on the M/T "Jannu", owners have
decided to give the manning contracts on the above three vessels to other foreign crew instead of your company.
We deeply regret that although your crew performance on our other four (4) vessels have been satisfactory, we were unable to persuade
owners to consider your Philippine crew because of the bad attitude and actuation of your crew manned on board M/T "Jannu".

As we have already advised you, owners have spent more than US$30,000.00 to replace the crew of M/T "Jannu" in Japan last April 19,
1979 which would have been saved if your crew did not violate their employment contracts.(Annex "K"of Petition),
In the light of all the foregoing and the law and policy on the matter, it is submitted that there was valid justification on the part of petitioner
and/or its principal to terminate the manning contract. (Pp. 12-14, Manifestation and Comment of the Solicitor General.)
At first glance it might seem that the judgment of the NLRC should have more weight than that of NSB. Having in view, however, the set
up and relationship of these two entities framed by the Labor Code, the NSB is not only charged directly with the administration of
shipping companies in the hiring of seamen for overseas employment by seeing to it that our seamen "secure the best possible terms of
employment for contract seamen workers and secure compliance therewith." Its composition as of the time this controversy arose is worth
notingfor it is made up of the Minister of Labor as Chairman, the Deputy Minister as Vice Chairman, and a representative each of the
Ministries of Foreign Affairs, National Defense, Education and Culture, the Central Bank, the Bureau of Employment Service, a worker's
organization and an employee's organization and the Executive Director of the Overseas Employment Development Board. (Article 23,
Labor Code) It is such a board that has to approve all contracts of Filipino seamen (Article 18, Labor Code). And after such approval, the
contract becomes unalterable, it being "unlawful" under Article 34 of the Code "for any individual, entity, licensee or holder of authority: (i)
to substitute or alter employment contracts approved and verified by Department of Labor from the time of actual signing thereof by the
parties up to and including the period of expiration of the same without the approval of the Department of Labor." In other words, it is not
only that contracts may not be altered or modified or amended without mutual consent of the parties thereto; it is further necessary to
have the change approved by the Department, otherwise, the guilty parties would be penalized.
The power of the NLRC in relation to the works and actuations of the NSB is only appellate, according to Article 20 (b), read in relation to
Article 223, principally, over questions of law, since as to factual matters, it may exercise such appellate jurisdiction only "if errors in the
findings of fact are raised which would cause grave or irreparable damage or injury to the appellant." (par. d)
The NLRC has noted in its decision that respondents were originally made to believe that their ship would go only to the Caribbean ports
and yet after completing trips to Inchon, Korea and Kuwait and Keelung, Taiwan, it was suddenly directed to call at Kwinana, Australia, an
ITF controlled port. The record shows that this imputation is more apparent than real, for respondents knew from the very moment they
were hired that world-wide voyages or destinations were contemplated in their agreement. So much so that corresponding steps had to
be taken to avoid interference of or trouble about the ITF upon the ship's arrival at ITF controlled ports. As already stated earlier, the ITF
requires the seamen working on any vessel calling at ports controlled by them to be paid the rates fixed by the ITF which are much higher
than those provided in the contract's signed here, to the extent of causing tremendous loss if not bankruptcy of the employer.
And so, as revealed to the NLRC later, in anticipation precisely of such peril to the employer and ultimate unemployment of the seamen,
in the instant case, the usual procedure undeniably known to respondents of having two payroll's, one containing the actually agreed rates
and the other ITF rates, the latter to be shown to the ITF in order that the ship may not be detained or interdicted in Kwinana, was
followed. But according to the NLRC, this practice constitutes deception and bad faith, and worse, it is an effect within the prohibition
against alteration of contracts approved by the NSB, considering there is nothing to show that NSB was made aware of the so-called
addendum or side agreement to the effect that should the ship manned by respondents be made to call an any ITF controlled port, the
contract with ITF rates would be shown and, if for any reason, the respondents are required to be actually paid higher rates and they are
so paid, the excess over the rates agreed in the NSB contract shall be returned to petitioner later.
It is of insubstantial moment that the side agreement or addendum was not made known to or presented as evidence before the NSB. We
are persuaded that more or less the NSB knows that the general practice is to have such side contracts. More importantly, the said side
contracts are not meant at all to alter or modify the contracts approved by the NSB. Rather, they are precisely purported to enforce them
to the letter, making it clearer that even if the ships have to call at ITF controlled ports, the same shall remain to be the real and binding
agreement between the parties, in intentional disregard of whatever the ITF may exact.
We hold that there was no bad faith in having said side contracts, the intent thereof being to put into effect the NSB directed arrangements
that would protect the ship manning industry from unjust and ruinning effects of ITF intervention. Indeed, examining the said side
agreements, it is not correct to say that the respondents were caught unaware, or by surprise when they were advised that the ship would
proceed to Kwinana, Australia, even assuming they 27had been somehow informed that they would sail to the Caribbean. Said side
agreements textually provide:
KNOW ALL MEN BY THESE PRESENTS:
This Addendum Agreement entered into by and between KYOEI TANKER CO., LTD., Principals, of the vessel M.T. "JANNU", represented
herein by VIR-JEN SHIPPING & MARINE SERVICES, INC., Manila, Philippines, as Manning Agents (hereinafter referred to as the
Company),

and
The herein-mentioned officers and crew, and engaged by the Company as crewmembers of the vessel M/T "JANNU" with their positions,
seaman certificate numbers and signatures (hereinafter referred to as the Crewmember), hereunder shown:
W I T N E S S E T H that:
1. WHEREAS, the Crewmember is hired and recruited as a member of the crew on board the vessel M/T "JANNU" with the corresponding Contracts of
Employment submitted to, verified and duly approved by the National Seamen Board; that the employment contract referred to, has clearly defined the
rate of salary, wages, and/or employment benefits for a period of one (1) year (or twelve (12) months), and any extension thereof.
2. WHEREAS, the parties hereby further agree and covenant that should the above-mentioned vessel enter, dock or drop anchor in ports of other
countries, the Crewmember shall not demand, ask or receive, and the Company shall have no obligation to pay the Crewmember, salaries,, wages
and/or benefits over and above those provided for in the employment contract submitted to, verified and approved by the National Seamen Board, which
shall remain in full force and effect between the parties. The Company as well as the Owners,, Charterers, Agents shall neither be held accountable nor
liable for any amount other than what is agreed upon and stipulated in the aforesaid NSB-approved Contracts of Employment.
3. WHEREAS, the parties likewise agree that should the vessel enter, dock or drop anchor in any foreign port, and in the event that the Company (and/or
its Owners, Charterers, Agents), are forced, pressured, coerced or compelled, in any way and for whatever cause or reason, to pay the Crewmember
either directly or thru their respective allottees or other persons, salaries and benefits higher than those rates imposed in the NSB-approved contract, the
Crewmember hereby agrees and binds himself to receive the said payment in behalf of, and in trust for, the Company (and/or its Owners, Charterers,
Agents), and to return the said amount in full to the Company or to its agent/s in Manila, Philippines immediately upon his and/or his allottees receipt
thereof; the Crewmember hereby waives formal written demand by the Company or its agent/s for the return thereof. The Crewmember hereby fully
understands that failure or refusal by him to return to the Company the said amount, will render him criminally liable for Estafa, as provided for in the
Revised Penal Code of the Philippines, and in such case, the parties hereby agree that any criminal and/or civil action in connection therewith shall be
within the exclusive jurisdiction of Philippine Courts.
4. WHEREAS, if, in order to avoid delays to the vessels, the Company is forced, pressured, coerced or compelled to sign a Collective Bargaining
Agreement or any other Agreement with any foreign union, particularly ITF or ITF affiliated unions, and to sign new crews' contract of employment
stipulating higher wages, salaries or benefits than the NSB-approved contract, the said agreements and contracts shall be void from the beginning and
the Crewmember shall be deemed to have automatically waived the increased salaries and benefits stipulated in the said agreements and employment
contracts unto and in favor of the Company, and shall remain unalterably bound by the rates, terms, and conditions of the NSB-approved contract.
5. WHEREAS, the parties also agree that should the Company, as a precautionary or anticipatory measure for the purpose of avoiding costly delays to
the vessel prejudicial to its own interest, decide to negotiate and/or enter into any agreement in advance with any foreign based union, particularly ITF or
ITF affiliated unions, in any foreign port where the vessel involved herein may enter, dock or drop anchor, whatever increases in salaries or benefits to
the Crewmember that the Company may be compelled to give, over and above those stipulated in the NSB-approved employment contracts of the
Crewmember, shag, likewise, be deemed ineffective or void from the beginning as far as the Crewmember is concerned, and any such increases in
salaries or benefits which the Crewmember shall receive pursuant thereto shall be held by the Crewmembers in trust for the Company with the obligation
to return the same immediately upon receipt thereof, at the Company's or its agent's office at Manila, Philippines. It is fully understood that the rates of
pay and all other terms and conditions embodied in the NSB-approved employment contracts shall be of continuing validity and effectivity between the
parties, irrespective of the countries or ports where the said vessel shall enter, dock or drop anchor, and irrespective of any agreement which the
Company may enter or may have entered into with any union, particularly ITF or ITF affiliated unions.
6. WHEREAS, it is likewise agreed that any undertaking made by the Company and/or the National Seamen Board upon the request of the Company,
imposed by any foreign union, particularly ITF or ITF affiliated unions, which will negate or render in effective any provisions of this agreement, shall also
be considered null and void from the beginning.
7. WHEREAS, lastly, this Addendum Agreement is entered into for the mutual interest of both parties in line with the Company's desire to continue the
service of the Filipino crewmembers on board their vessel and the Crewmembers'desire to keep their employment on board the subject vessel, thus
maintaining the good image of the Filipino seamen and contributing to the development of the Philippine manning industry.
8. That both the Company and the Crewmember agree and bind themselves that this Agreement shall be considered an addendum to, or as part of, the
NSB-approved employment contract entered into by the Company and the Crewmember.
28
IN WITNESS WHEREOF, we have hereunto affixed our signatures this December 28, 1978 at Manila, Philippines.
THE COMPANY
VIR-JEN SHIPPING & MARINE SERVICES, INC.
By:

(SGD.) CAPT. RUBEN R. BALTAZAR
Operations Dept.
THE CREW MEMBERS
Name Position SC# Signature
1. Ruben Arroza 2nd Mate 104728 SGD.
2. Cresenciano Abrazaldo 3rd Mate 91663 SGD.
3. Salvador Caunan Third Engr. 84995 SGD.
4. Nilo Cruz 4th Engr. 157762 SGD.
5. Pacifico Labios A/B 139045 SGD.
6. Ramon Javier A/B 170545 SGD.
7. Joaquin Cordero A/B 96556 SGD.
8. Rodolfo Crisostomo O/S 162121 SGD.
9. Renato Oliveros O/S 137132 SGD.
10. Rogelio Saraza O/S 149635 SGD.
11. Nemesio Adug Pumpman 157215 SGD.
12. Francisco Benemerito Oiler 89467 SGD.
13. Rufino Gutierrez Oiler 173663 SGD.
14. Juol Ram Maul Oiler 84934 SGD.

29
15. Steve Mario Wiper 146096 SGD.
16. Simplicio Bautista Chief Cook 169142 SGD.
17. Romeo Acosta Second Cook 159960 SGD.

18. Delfin Dagohoy Messman 144096 SGD.
19. Jose Encabo Messman 179551 SGD.
(Pp. 99-103, Annex D-1 of Petition)
The NLRC has cited Wallem Philippine Shipping Inc. vs. The Minister of Labor, G. R. No. 50734-37, February 20, 1981 (102 SCRA 835).
No less than the Solicitor General maintains that said cited case is not controlling:
A careful examination of Wallem Philippine Shipping Inc. vs. The Minister of Labor, G. R. No. 50734-37, February, 20, 1981 shows that
the same is dissimilar to the case at bar. In the Wallem case, there was an express agreement between the employer and the ITF
representative, under which said employer bound itself to pay the crew members salary rates similar to those of ITF. When the crew
members in the Wallem case demanded that they be paid ITF rates, they were merely asking their employer to comply with what had
been agreed upon with the ITF representative, which conduct on their part cannot be said to be a violation of contract but an effort to urge
performance thereof. Such is not the situation in the case at bar. In the case at bar, petitioner and private respondents had a side
agreement, whereby private respondents agreed to return to petitioner whatever amounts petitioner would be required to pay under ITF
rates. In other words, petitioner and private respondents agreed that petitioner would not pay the ITF rate. When private respondents
used ITF as threat to secure increase in salary, they violated the manning contract. Moreover, in the case at bar, petitioner terminated the
manning contract only after the NSB authorized it to do so, after it found the grounds therefor to be valid. On the other hand, the
termination of the manning contract in the Wallem case was without prior authorization from the NSB.
It will be noted that private respondents sent a cable to petitioner demanding an increase of 50% of their basic salary as the only solution
to the ITF problem at a time when the vessel M/T JANNU was enroute to Australia, an ITF port. The fact that private respondents
mentioned ITF in their cable clearly shows that if petitioner would not accede to their demands, they would denounce petitioner to ITF.
Thus, Chief Mate Jacobo Catabay in his report dated April 23, 1979 (Exh. 10-A) stated:
On our departure at Keelung, we did not have destination until three days later that Harman cabled us to proceed to Senipah, Indonesia
to load fun cargo to be discharged at Kwinana, Australia. Captain told everyone that if only we stayed so long with the ship, he will report
to ITF personally in order to get back wages. In view that we only worked for three months so the back wages is so small and does not
worth. From that time on, Chief Engr. and Captain have a nightly closed door conference until they arrived at the conclusion to ask for
50% salary increase and they have modified a certain platforms. They certainly believe that Vir-jen have no choice because the vessel is
going to ITF port so they called a general meeting conducted at the bridge during my duty hours in the afternoon. All engines and deck
personnel were present in that meeting. (Emphasis supplied)
Reporting the wage scheme to the ITF would mean that the vessel would be interdicted and detained in Australia unless petitioner pay the
ITF rates, which represent more than 100% of what is stipulated in the manning contract. Petitioner was thus forced to grant private
respondents an increase of 25% in their basic salary. That such grant of a 25% increase was not voluntary is shown by the fact that
petitioner immediately denounced the seamen's conduct to NSB and subsequently asked said agency authority to terminate the manning
contract. (Pp. 10-12, Manifestation & Comment of Solicitor General)
Summarizing, We are convinced that since the NSB, considering its official role in matters like those now before Us, is the fact-finding
body, and there is no sufficient cogency in the NLRC's finding that there was no threat employed by respondents on petitioner, and, it
appearing further that the well prepared Manifestation and Comment of the Solicitor General supports the decision of the NSB, which
body, to Our mind, was in a better position than the NLRC to appraise the relevant nuances of the actuations of both parties, We are of
the considered view that the decision of the NLRC under question constitutes grave abuse of discretion and should be set aside in favor
of the NSB's decision. 30
In El Hogar Filipino Mutual Building and Loan Association vs. Building Employees Inc., 107 Phil. 473, citing San Miguel Brewery vs.
National Labor Union, 97 Phil. 378, We emphasized:
Much as we should expand beyond economic orthodoxy, we hold that an employer cannot be legally compelled to continue with the employment of a
person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently
inimical to his interest. The law in protecting the rights of the laborer, authorizes neither the oppression nor self-destruction of the employer . (Page 3,
Record) (Emphasis supplied)

It is timely to add here in closing that situations wherein employers are practically laid in ambush or placed in a position not unlike those in a highjack
whether in the air, land or midsea must be considered to be what they really are: acts of coercion, threat and intimidation against which the victim has
generally no recourse but to yield at the peril of irreparable loss. And when such happenings affect the national economy, as pointed out by the Solicitor
General, they must be treated to be in the nature of economic sabotage. They should not be tolerated. This Court has to be careful not to sanction them.
WHEREFORE, the petition herein is granted and the decision of the NLRC complained of hereby set aside; the decision of the NSB should stand.
No costs.
VirJen Shipping and Marine Services vs. NLRC
125 SCRA 577 (1983)
Facts:
Certain seamen entered into a contract of employment for a 12-month period. Some three months after the commencement of their
employment, the seamen demanded a 50% increase of their salaries and benefits. The seamen demanded this increase while their
vessel was on route to a port in Australia controlled by the International Transport Federation (ITP) where the ITF could detain the vessels
unless it paid its season ITF rates.The agent of the owner of the vessel agreed to a 25% increase, but when the vessel arrived in Japan
shortly afterwards, the seamen were repatriated to Manila and their contract terminated.Two motions for reconsideration filed with Second
Division were denied by said Division. Another motion for reconsideration was filed with the Supreme Court en banc which gave its due
course, after finding that there was a need to reconcile the decision of the Second Division with that of the First Division with the Wallen
Decision. In that decision, the First Division had ruled that the termination of the seamen was illegal.
Issue:
Whether or not the termination of the seamen was illegal.
Held:
The termination of the contract of the seamen was illegal. A manning contract involves the interests not only of the signatories thereto,
such as the local Filipino recruiting agent, the foreign owner of vessel and the Filipino seamen in general as well as the country itself.
Conformably to the power vested in the NSB, the law requires that all manning contracts shall be approved by said agency. The stringent
rules governing Filipino seamen abroad foreign ships are dictated by national interest.
31

Suzara vs Benipayo (1989)
Facts:
1. Suzara et al entered into employment contracts with Magsaysay lines to work aboard vessels owned/operated/manned by the
latter for a period of 12 calendar months and with different rating/position, salary, overtime pay and allowance. The contracts were
approved by the National Seamen Board.
2. Upon arrival at the port of Vancouver, Canada, demands for increase in wages were made through the help of the International
Transport Workers Federation (ITF), a militant worldwide especially in Canada, Australia, Scandinavia, and various European
countries, interdicting foreign vessels and demanding wage increases for third world seamen.
3. Wages were increased but complaints were filed by Magsaysay before the NSB. NSB ordered the return of the additional wages
paid for being obtained thru violent means and for lacking NSB approval. NLRC affirmed the order.
4. Meanwhile, Magsaysay filed estafa charges against the seamen.
5. In this petition, the seamen seeks for the reversal of the NLRC decision and the quashal of the complaints for estafa.
Issue:
Whether the increase in wages needed the approval of the NSB to be legal (NO)
Ratio:
1. There is nothing in the record supporting the finding that the workers resorted to violent means to obtain an increase in their
wages.
2. It is impractical for the NSB to require the petitioners, caught in the middle of a labor struggle between the ITF and owners of
ocean going vessels halfway around the world in Vancouver, British Columbia to first secure the approval of the NSB in Manila
before signing an agreement which the employer was willing to sign
3. Accdg to the case of Vir-Jen: The form contracts approved by the National Seamen Board are designed to protect Filipino
seamen not foreign shipowners who can take care of themselves. The standard forms embody the basic minimums which must
be incorporated as parts of the employment contract. (Section 15, Rule V, Rules and Regulations Implementing the Labor
Code).lwph1.t They are not collective bargaining agreements or immutable contracts which the parties cannot improve upon
or modify in the course of the agreed period of time
4. The NSB, the Department of Labor and Employment and all its agencies exist primarily for the workingman's interest and the
nation's as a whole.
32

FIRST DIVISION
[G.R. No. 80918. August 16, 1989.]
JOSEFINA M. PRINCIPE, Petitioner, v. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. and CHUAN HUP AGENCIES, PTE.
LTD., NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, Respondents.
R.C. Carrera Law Firm for Petitioner.
Eladio B. Samson for Private Respondent.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; COMPROMISE AGREEMENT; ONCE APPROVED BY THE COURT HAS THE EFFECT OF RES
JUDICATA. It is true that a compromise agreement once approved by the count has the effect of res judicata between the parties and
should not be disturbed except for vices of consent and forgery.
2. LABOR AND SOCIAL LEGISLATION; LABOR CODE; NATIONAL LABOR RELATIONS COMMISSION; MAY DISREGARD
TECHNICAL RULES OF PROCEDURE. That the NLRC may disregard technical rules of procedure in order to give life to the
constitutional mandate affording protection to labor and to conform to the need of protecting the working class whose inferiority against
the employer has always been earmarked by disadvantage.
3. ID.; ID.; OVERSEAS; SEAMAN; DEATH CLAIM; QUITCLAIM, VOIDED IF CONSIDERATION THEREOF WAS VERY MUCH LESS
THAN THE AMOUNT CLAIMED. Even assuming for the sake of argument that the quitclaim had foreclosed petitioners right over the
death benefits of her husband, the fact that the consideration given in exchange thereof was very much less than the amount petitioner is
claiming renders the quitclaim null and void for being contrary to public policy. The State must be firm in affording protection to labor. The
quitclaim wherein the consideration is scandalously low and inequitable cannot be an obstacle to petitioners pursuing her legitimate
claim. Equity dictates that the compromise agreement should be voided in this instance.
4. ID.; ID.; ID.; ID.; ID.; THREE-YEAR PRESCRIPTIVE PERIOD NOT BARRED WHERE THE DELAY IN FILING CLAIM WAS DUE TO
EMPLOYER. Lastly, it must be noted that the first complaint of petitioner was merely an action against PSTSI whereas in the second
complaint Chuan Hup was already included. The POEA ruled that the second complaint was merely an afterthought, and that it was a
product of a pre-conceived mind considering the interval of time from the issuance of the order of dismissal in the previous case and the
institution of the second complaint. We do not think so. On the contrary, the Court holds that the delay was due to PSTSIs failure to make
good its. promise to assist the petitioner in recovering the death benefits of her husband. We see no other reason thereby. Hence, even if
the second action was filed beyond the three (3) year reglementary period as provided by law for such claims, We cannot buy PSTSIs
argument that the claim is already barred. The blame for the delay, if any, can only be attributed to PSTSI.
5. CIVIL LAW; OBLIGATIONS AND CONTRACTS; AGENCY; AGENT, SOLIDARILY LIABLE WITH PRINCIPAL. PSTSI claims that it
cannot be held responsible as it has no privity of contract with those personnel recruited in Singapore. The argument is untenable. This is
the first time PSTSI raised this defense when it had all the chance to do so below. Moreover, if PSTSI honestly believed it had no private
of contract with Principe who was directly recruited by Chuan Hup, then there is no reason why it entered into a compromise agreement
with herein petitioner. From the very start, it should have asked for the dismissal of the case against it on the ground of lack of cause of
action, but it did not do so. What is obvious is that Principe was actually recruited by PSTSI and that he signed the employment contract
with the principal Chuan Hup. Thus, private respondents stand jointly and severally liable for the claim of petitioner.
6. REMEDIAL LAW; JURISDICTION; NOT SUBJECT TO STIPULATION OF PARTIES. An agreement to deprive a court of jurisdiction
conferred on it by law is void and of no legal effect.
33
7. LABOR AND SOCIAL LEGISLATION; LABOR CODE; OVERSEAS EMPLOYMENT; SEAMEN; CLAIMS GOVERNED BY
STIPULATION OF PARTIES; CASE AT BAR. With respect to petitioners monetary claim, since the parties agreed that the laws of
Singapore shall govern their relationship and that any dispute arising from the contract shall be resolved by the law of that country, then
the petitioner is entitled to death benefits equivalent to 36 months salary of her husband. As the wage of deceased Abelardo Principe was
S$2,800.00 a month, then petitioner is entitled to a total of S$100,800.00.
GANCAYCO, J.:
Once again this Tribunal is faced with the issue of the validity of the quitclaim executed by the employee's heir in favor of the employer.

Petitioner is the widow of the late Abelardo Principe who was then the Chief Engineer of M/V OSAM Falcon, a commercial vessel of
Singaporean registry owned by Chuan Hup Agencies, Pte. Ltd. (Chuan Hup for brevity), one of the private respondents herein, who is the
principal of Philippine-Singapore Transport Services, Inc. (PSTSI), also a private respondent herein. The contract of employment of the
deceased with private respondent Chua Hup provides, among others, that Principe would receive Singapore $2,800.00 a month to
commence on September 7, 1982, medical benefits and insurance coverage through group hospitalization and surgical insurance and
group and personal accident insurance for a capital sum of US$75,000.00. It also provides that the laws of Singapore shall apply in cases
of disputes arising out of the said appointment and that said disputes are to be resolved by the courts of the Republic of Singapore. 1
On September 15,1982, while Principe was on duty in Malintoc Field, Palawan, Philippines, he suddenly contracted a serious illness
which eventually resulted to his death. 2
On July 5, 1983, petitioner filed a complaint 3 against PSTSI with the Workers Assistance and Adjudication Office of the Philippine
Overseas Employment Administration (POEA), seeking the payment of death compensation benefits and other benefits accruing to her
deceased husband. While the aforesaid case was pending, the parties entered into a compromise agreement. On December 22, 1983,
petitioner executed a release and quitclaim in favor of PSTSI in consideration of the sum of Seven Thousand Pesos (P7,000.00) together
with hospital, burial and other incidental expenses previously disbursed by PSTSI in favor of petitioner's deceased
husband. 4 Consequently, Atty. Wellington Lachica, counsel for petitioner, with the latter's conformity, filed a motion to dismiss the case
with prejudice against PSTSI and without prejudice as against Chuan Hup 5
On the basis of the compromise agreement and the motion to dismiss dated November 23, 1983, the POEA issued an order dated
December 27, 1983, dismissing petitioner's complaint with prejudice against PSTSI.
On April 21, 1986, petitioner filed with the POEA another claim for death benefits against PSTSI, this time including Chuan Hup. The new
case was docketed as POEA Case No. (L) 86-04-328. In the decision dated January 27, 1987, the POEA dismissed the complaint on the
ground that there exist identity of parties, subject matter and cause of action between the previous case, POEA Case No. L-635-83 and
the new case, and that the present case is barred by prior judgment based on a compromise agreement in the previous case. 6
Petitioner appealed to the National Labor Relations Commission (NLRC).lwph1.t In a resolution dated September 25, 1987, the
NLRC dismissed the appeal for lack of merit. 7
Hence, the present petition.
It is the position of the petitioner that the release and quitclaim that she signed in favor of private respondent PSTSI is null and void on the
ground that the consideration given in exchange thereof in the amount of P7,000.00 is extremely low and unconscionable. Petitioner
added that she was merely misled to sign the quitclaim due to the assurance given by PSTSI that it will help her recover the death
compensation and insurance proceeds due her deceased husband. She argued that even on the assumption that the quitclaim is valid,
the release should benefit PSTSI alone and should not include Chua Hup as the quitclaim was executed only in favor of PSTSI. Further
she contended that notwithstanding the quitclaim executed in favor of PSTSI, the latter may still be held liable since it is an agent of
Chuan Hup here in the Philippines. 8
The Solicitor General supports petitioner's view stating that the principle of res judicata is inapplicable to the case at bar since petitioner
and PSTSI agreed that the dismissal of the suit against the latter is without prejudice insofar as the principal Chuan Hup is concerned;
that the quitclaim is null and void as the consideration given is unconscionably low as it is not even equal to one percent (1%) of
petitioner's claim; and that the quitclaim is inequitable and incongrous to the declared policy of the State to afford protection to labor, citing
Section 3, Article XIII of the 1987 Constitution. 9
We rule for the petitioner.
The release and quitclaim in question reads as follows:

34
JOSEFINA M. PRINCIPLE, of legal age,
widow, and resident at 1287-E, G. Tuazon
St., Sampaloc, Manila
in favor of

PHILIPPINE-SINGAPORE TRANS-
PORT SERVICES, INC., a domestic corpo-
ration domiciled and having its principal
place of business at 205 Martinez Bldg.,
Dasmarinas, Manila.
WITNESSETH, that:
WHEREAS, on July 5, 1983, Josefina M. Principe fled a complaint for death benefits against Philippine-Singapore Transport Services,
Inc. as a shipping agency of Chuan Hup Agencies Pte. Ltd. of the Republic of Singapore for the death of her husband, Engr. Abelardo D.
Principe, on September 15, 1982 in Matinloc Field, Offshore Palawan, Philippines while in the course of as employment as Chief Engineer
of OSAM Falcon' in POEA Case No. (L) 635-83 of the Philippine Overseas Employment Administration, entitled Josefina M. Principe vs.
Philippine-Singapore Transport Services, Inc.;'
WHEREAS, the parties have agreed to settle the above- entitled case amicably.
NOW, THEREFORE, for and in consideration of the sum of SEVEN THOUSAND PESOS (P7,000.00), Philippine currency and of the
hospital, burial and other incidental expenses previously disbursed by Philippine-Singapore Transport Services, Inc., receipt of which in
full is hereby acknowledged to her full and complete satisfaction, JOSEFINA M. PRINCIPLE have (sic) released and discharged, as she
hereby releases and discharges, Philippine-Singapore Transport Services, Inc., its directors, officers, employees, principals and agents
from any and all claims, actions obligations and liabilities which she have or might have against Philippine-Singapore Transport Services,
Inc. in connection with the death of her husband Abelardo D. Principe on September 15, 1982 in Matintoc Field, Offshore Palawan under
the circumstances narrated in the aforementioned case.
That she hereby represents and warrants to Philippine-Singapore Transport Services, Inc. that she is the surviving spouse legally entitled
to claim for damages/support which may arise from the death of said Abelardo D. Principe, and further, that she hereby manifests that any
and all rights or claims which she, as a surviving forced heir of the late Abelardo D. Principe might have against Philippine-Singapore
Transport Services, Inc., its directors, employees, principals and agents arising out of or by reason of the death of said Abelardo D.
Principe are hereby deemed waived and discharged and she have (sic) Philippine-Singapore Transport Services, Inc., its directors,
officers, employees, principals and agents and whoever may be held liable, completely free and harmless from any claim and/or liabilities
that may arise from the death of said Abelardo D. Principe (sic).
That in the event that any other person/persons, as surviving spouse of the deceased Abelardo D. Principe should claim against
Philippine-Singapore Transport Services, Inc. for such damages/support arising from the death of Abelardo D. Principe, and the claim is
held valid, then Josefina M. Principe hereby undertakes and agrees to reimburse to Philippine-Singapore Transport Services, Inc. the
amounts hereunder received, plus legal interest therein.
That she further states that the foregoing consideration is voluntarily accepted by her as a full and final compromise, adjustment and
settlement of any and all claims that she may have against Philippine-Singapore Transport Services, Inc., its directors, officers,
employees, principals and agents; and she hereby irrevocably affirm (sic) that Philippine-Singapore Transport Services, Inc. has made
this settlement solely to buy peace, avoid litigation and on human consideration, and she acknowledges that the payment of said
consideration is not and shall never be construed as an admission of liability or obligation by Philippine-Singapore Transport Services,
Inc., its officers, directors, employees, principals and agents. 10
It is true that a compromise agreement once approved by the court has the effect of res judicata between the parties and should not be
disturbed except for vices of consent and forgery. However,
35 settled is the rule that the NLRC may disregard technical rules of procedure in
order to give life to the constitutional mandate affording protection to labor and to conform to the need of protecting the working class
whose inferiority against the employer has always been earmarked by disadvantage. 11
The Court finds that the compromise agreement entered into by the petitioner in favor of PSTSI was not intended to totally foreclose her
right over the death benefits of her husband. First, the motion to dismiss, filed by petitioner through Atty. Lachica before the POEA, which
cited the compromise agreement entered into by the parties, clearly and unequivocally reflects the undertaking that the release is without
prejudice as regards private respondent Chuan Hup. This fact was acknowledged in the decision of POEA Administrator Tomas D.
Achacoso in POEA Case No. (L) 86-04-328. It is surprising why both the POEA and the NLRC failed to consider this aspect in the
resolution of the second complaint filed by the petitioner against PSTSI and Chuan Hup.

The second complaint was filed by petitioner to enforce the joint and several liability of PSTSI and Chuan Hup per joint affidavit of
responsibility executed by said parties in entering into a principal agent relationship after PSTSI failed to live up to its commitment to
assist petitioner in the recovery of death compensation. 12 This observation is supported by the provisions of the release signed by the
petitioner wherein the parties referred to therein were only the petitioner and PSTSI. The release is from any claim against PSTSI. Chuan
Hup is not a party thereto. He cannot be considered covered by the release.
Moreover, the Court sees no reason why petitioner, with the assistance of a counsel would ever agree to foreclose her right against
Chuan Hup over the death benefits of her husband in exchange for a very measly sum of Seven Thousand Pesos (P7,000.00). They must
have been aware that should she pursue her case, she was assured of getting at least One Hundred Thousand Eight Hundred Singapore
dollars (US$100,800.00). This Court has laid down the rule in similar cases that applying the Singapore Maritime Laws in case of a
seaman's death, the heirs of the seaman should receive the equivalent of 36 months wages of the deceased seaman. 13
The fact that petitioner received the sum of P7,000.00 only should not be taken to mean as a waiver of her right. The circumstances she
was confronted with during that time left her with no other alternative but to accept the same as she was in dire need of money due to the
sudden death of her husband. PSTSI contends that it was precisely because of her need for cash that petitioner thereby totally waived her
right over the death benefits of her husband. We do not think so. What is plausible is the protestation of petitioner that PSTSI took
advantage of her financial distress and led her to signing the release and quitclaim without explaining the consequences to her. While it
may be true that her counsel assisted her in the process, said counsel must have been persuaded by the assurance of PSTSI that it shall
help obtain for her the corresponding benefits from Chuan Hup.
Even assuming for the sake of argument that the quitclaim had foreclosed petitioner's right over the death benefits of her husband, the
fact that the consideration given in exchange thereof was very much less than the amount petitioner is claiming renders the quitclaim null
and void for being contrary to public policy. 14 The State must be firm in affording protection to labor. The quitclaim wherein the
consideration is scandalously low and inequitable cannot be an obstacle to petitioner's pursuing her legitimate claim. 15 Equity dictates
that the compromise agreement should be voided in this instance.
Lastly, it must be noted that the first complaint of petitioner was merely an action against PSTSI whereas in the second complaint Chuan
Hup was already included. The POEA ruled that the second complaint was merely an afterthought, and that it was a product of a pre-
conceived mind considering the interval of time from the issuance of the order of dismissal in the previous case and the institution of the
second complaint. We do not think so. On the contrary, the Court holds that the delay was due to PSTSI's failure to make good its promise
to assist the petitioner in recovering the death benefits of her husband. We see no other reason thereby. Hence, even if the second action
was filed beyond the three (3) year reglementary period as provided by law for such claims, We cannot buy PSTSI's argument that the
claim is already barred. The blame for the delay, if any, can only be attributed to PSTSI.
On the other hand, PSTSI argues that it cannot be held responsible on the ground that the aforesaid affidavit of undertaking with Chua
Hup is applicable only to those members of the crew recruited by PSTSI in the Philippines for and in behalf of its principal Chuan Hup and
that since Principe was directly hired by Chuan Hup, PSTSI cannot be held responsible as it has no privity of contract with those
personnel recruited in Singapore.
The argument is untenable. This is the first time PSTSI raised this defense when it had all the chance to do so below. Moreover, if PSTSI
honestly believed it had no privity of contract with Principe who was directly recruited by Chuan Hup, then there is no reason why it
entered into a compromise agreement with herein petitioner. From the very start, it should have asked for the dismissal of the case
against it on the ground of lack of cause of action, but it did not do so. What is obvious is that Principe was actually recruited by PSTSI
and that he signed the employment contract with the principal Chuan Hup. Thus, private respondents stand jointly and severally liable for
the claim of petitioner.
Anent the argument that the Philippine courts are without jurisdiction over the subject matter as jurisdiction was, by agreement of the
parties, vested in the courts of the Republic of Singapore, it is well-settled that an agreement to deprive a court of jurisdiction conferred on
it by law is void and of no legal effect. 16 In this jurisdiction labor cases, are within the competence of the National Labor Relations
Commission.
36
With respect to petitioner's monetary claim, since the parties agreed that the laws of Singapore shall govern their relationship and that any
dispute arising from the contract shall be resolved by the law of that country, then the petitioner is entitled to death benefits equivalent to
36 months salary of her husband. 17 As the wage of deceased Abelardo Principe was S$2,800.00 a month, then petitioner is entitled to a
total of S$100,800.00.
WHEREFORE, premises considered, the petition is granted. The resolution of the NLRC dated September 25,1987 is hereby set aside
and another decision is hereby rendered ordering private respondents PSTSI and Chuan Hup Agencies, Pte. Ltd. to jointly and severally
pay petitioner the sum of S$100,800. 00 in its equivalent in Philippine pesos. This decision is immediately executory.

SO ORDERED.
37
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-104776 December 5, 1994

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of 1,767 NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL
MUNDO, petitioners,
vs.
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION'S ADMINISTRATOR, NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA
INTERNATIONAL BUILDERS CORPORATION, respondents.
G.R. Nos. 104911-14 December 5, 1994
BIENVENIDO M. CADALIN, ET AL., petitioners,

vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, BROWN & ROOT INTERNATIONAL, INC. and/or ASIA INTERNATIONAL BUILDERS CORPORATION, respondents.
G.R. Nos. 105029-32 December 5, 1994
ASIA INTERNATIONAL BUILDER CORPORATION and BROWN & ROOT INTERNATIONAL, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, ROMEO PATAG, RIZALINO REYES, IGNACIO DE VERA, SOLOMON B.
REYES, JOSE M. ABAN, EMIGDIO N. ABARQUEZ, ANTONIO ACUPAN, ROMEO ACUPAN, BENJAMIN ALEJANDRE, WILFREDO D. ALIGADO, MARTIN AMISTAD, JR., ROLANDO B. AMUL, AMORSOLO
ANADING, ANTONIO T. ANGLO, VICENTE ARLITA, HERBERT AYO, SILVERIO BALATAZO, ALFREDO BALOBO, FALCONERO BANAAG, RAMON BARBOSA, FELIX BARCENA, FERNANDO BAS,
MARIO BATACLAN, ROBERTO S. BATICA, ENRICO BELEN, ARISTEO BICOL, LARRY C. BICOL, PETRONILLO BISCOCHO, FELIX M. BOBIER, DIONISIO BOBONGO, BAYANI S. BRACAMANTE,
PABLITO BUSTILLO, GUILLERMO CABEZAS, BIENVENIDO CADALIN, RODOLFO CAGATAN, AMANTE CAILAO, IRENEO CANDOR, JOSE CASTILLO, MANUEL CASTILLO, REMAR CASTROJERES,
REYNALDO CAYAS, ROMEO CECILIO, TEODULO CREUS, BAYANI DAYRIT, RICARDO DAYRIT, ERNESTO T. DELA CRUZ, FRANCISCO DE GUZMAN, ONOFRE DE RAMA, IGNACIO DE VERA,
MODESTO DIZON, REYNALDO DIZON, ANTONIO S. DOMINGUEZ, GILBERT EBRADA, RICARDO EBRADA, ANTONIO EJERCITO, JR., EDUARTE ERIDAO, ELADIO ESCOTOTO, JOHN ESGUERRA,
EDUARDO ESPIRITU, ERNESTO ESPIRITU, RODOLFO ESPIRITU, NESTOR M. ESTEVA, BENJAMIN ESTRADA, VALERIO EVANGELISTA, OLIGARIO FRANCISCO, JESUS GABAWAN, ROLANDO
GARCIA, ANGEL GUDA, PACITO HERNANDEZ, ANTONIO HILARIO, HENRY L. JACOB, HONESTO JARDINIANO, ANTONIO JOCSON, GERARDO LACSAMANA, EFREN U. LIRIO LORETO LONTOC,
ISRAEL LORENZO, ALEJANDRO LORINO, JOSE MABALAY, HERMIE MARANAN, LEOVIGILDO MARCIAL, NOEL MARTINEZ, DANTE MATREO, LUCIANO MELENDEZ, RENATO MELO, FRANCIS
MEDIODIA, JOSE C. MILANES, RAYMUNDO C. MILAY, CRESENCIANO MIRANDA, ILDEFONSO C. MOLINA, ARMANDO B. MONDEJAR RESURRECCION D. NAZARENO, JUAN OLINDO, FRANCISCO R.
OLIVARES, PEDRO ORBISTA, JR., RICARDO ORDONEZ, ERNIE PANCHO, JOSE PANCHO, GORGONIO P. PARALA, MODESTO PINPIN, JUANITO PAREA, ROMEO I. PATAG, FRANCISCO PINPIN,
LEONARDO POBLETE, JAIME POLLOS, DOMINGO PONDALIS, EUGENIO RAMIREZ, LUCIEN M. RESPALL, GAUDENCIO RETANAN, JR., TOMAS B. RETENER, ALVIN C. REYES, RIZALINO REYES,
SOLOMON B. REYES, VIRGILIO G. RICAZA, RODELIO RIETA, JR., BENITO RIVERA, JR., BERNARDO J. ROBILLOS, PABLO A. ROBLES, JOSE ROBLEZA, QUIRINO RONQUILLO, AVELINO M.
ROQUE, MENANDRO L. SABINO, PEDRO SALGATAR, EDGARDO SALONGA, NUMERIANO SAN MATEO, FELIZARDO DE LOS SANTOS, JR., GABRIEL SANTOS, JUANITO SANTOS, PAQUITO
SOLANTE, CONRADO A. SOLIS, JR., RODOLFO SULTAN, ISAIAS TALACTAC, WILLIAM TARUC, MENANDRO TEMPROSA, BIENVENIDO S. TOLENTINO, BENEDICTO TORRES, MAXIMIANO TORRES,
FRANCISCO G. TRIAS, SERGIO A. URSOLINO, ROGELIO VALDEZ, LEGORIO E. VERGARA, DELFIN VICTORIA, GILBERT VICTORIA, HERNANE VICTORIANO, FRANCISCO VILLAFLORES, DOMINGO
VILLAHERMOSA, ROLANDO VILLALOBOS, ANTONIO VILLAUZ, DANILO VILLANUEVA, ROGELIO VILLANUEVA, ANGEL VILLARBA, JUANITO VILLARINO, FRANCISCO ZARA, ROGELIO AALAGOS,
NICANOR B. ABAD, ANDRES ABANES, REYNALDO ABANES, EDUARDO ABANTE, JOSE ABARRO, JOSEFINO ABARRO, CELSO S. ABELANIO, HERMINIO ABELLA, MIGUEL ABESTANO, RODRIGO
G. ABUBO, JOSE B. ABUSTAN, DANTE ACERES, REYNALDO S. ACOJIDO, LEOWILIN ACTA, EUGENIO C. ACUEZA, EDUARDO ACUPAN, REYNALDO ACUPAN, SOLANO ACUPAN, MANUEL P.
ADANA, FLORENTINO R. AGNE, QUITERIO R. AGUDO, MANUEL P. AGUINALDO, DANTE AGUIRRE, HERMINIO AGUIRRE, GONZALO ALBERTO, JR., CONRADO ALCANTARA, LAMBERTO Q.
ALCANTARA, MARIANITO J. ALCANTARA, BENCIO ALDOVER, EULALIO V. ALEJANDRO, BENJAMIN ALEJANDRO, EDUARDO L. ALEJANDRO, MAXIMINO ALEJANDRO, ALBERTO ALMENAR,
ARNALDO ALONZO, AMADO ALORIA, CAMILO ALVAREZ, MANUEL C. ALVAREZ, BENJAMIN R. AMBROCIO, CARLOS AMORES, BERNARD P. ANCHETA, TIMOTEO O. ANCHETA, JEOFREY ANI,
ELINO P. ANTILLON, ARMANDRO B. ANTIPONO, LARRY T. ANTONIO, ANTONIO APILADO, ARTURO P. APILADO, FRANCISCO APOLINARIO, BARTOLOME M. AQUINO, ISIDRO AQUINO, PASTOR
AQUINO, ROSENDO M. AQUINO, ROBERTO ARANGORIN, BENJAMIN O. ARATEA, ARTURO V. ARAULLO, PRUDENCIO ARAULLO, ALEXANDER ARCAIRA, FRANCISCO ARCIAGA, JOSE AREVALO,
JUANTO AREVALO, RAMON AREVALO, RODOLFO AREVALO, EULALIO ARGUELLES, WILFREDO P. ARICA, JOSE M. ADESILLO, ANTONIO ASUNCION, ARTEMIO M. ASUNCION, EDGARDO
ASUNCION, REXY M. ASUNCION, VICENTE AURELIO, ANGEL AUSTRIA, RICARDO P. AVERILLA, JR., VIRGILIO AVILA, BARTOLOME AXALAN, ALFREDO BABILONIA, FELIMON BACAL, JOSE L.
BACANI, ROMULO R. BALBIERAN, VICENTE BALBIERAN, RODOLFO BALITBIT, TEODORO Y. BALOBO, DANILO O. BARBA, BERNARDO BARRO, JUAN A. BASILAN, CEFERINO BATITIS, VIVENCIO
C. BAUAN, GAUDENCIO S. BAUTISTA, LEONARDO BAUTISTA, JOSE D. BAUTISTA, ROSTICO BAUTISTA, RUPERTO B. BAUTISTA, TEODORO S. BAUTISTA, VIRGILIO BAUTISTA, JESUS R. BAYA,
WINIEFREDO BAYACAL, WINIEFREDO BEBIT, BEN G. BELIR, ERIC B. BELTRAN, EMELIANO BENALES, JR., RAUL BENITEZ, PERFECTO BENSAN, IRENEO BERGONIO, ISABELO BERMUDEZ,
ROLANDO I. BERMUDEZ, DANILO BERON, BENJAMIN BERSAMIN, ANGELITO BICOL, ANSELMO BICOL, CELESTINO BICOL, JR., FRANCISCO BICOL, ROGELIO BICOL, ROMULO L. BICOL,
ROGELIO BILLIONES, TEOFILO N. BITO, FERNANDO BLANCO, AUGUSTO BONDOC, DOMINGO BONDOC, PEPE S. BOOC, JAMES R. BORJA, WILFREDO BRACEROS, ANGELES C. BRECINO,
EURECLYDON G. BRIONES, AMADO BRUGE, PABLITO BUDILLO, ARCHIMEDES BUENAVENTURA, BASILIO BUENAVENTURA, GUILLERMO BUENCONSEJO, ALEXANDER BUSTAMANTE, VIRGILIO
BUTIONG, JR., HONESTO P. CABALLA, DELFIN CABALLERO, BENEDICTO CABANIGAN, MOISES CABATAY, HERMANELI CABRERA, PEDRO CAGATAN, JOVEN C. CAGAYAT, ROGELIO L.
CALAGOS, REYNALDO V. CALDEJON, OSCAR C. CALDERON, NESTOR D. CALLEJA, RENATO R. CALMA, NELSON T. CAMACHO, SANTOS T. CAMACHO, ROBERTO CAMANA, FLORANTE C.
CAMANAG EDGARDO M. CANDA, SEVERINO CANTOS, EPIFANIO A. CAPONPON, ELIAS D. CARILLO, JR., ARMANDO CARREON, MENANDRO M. CASTAEDA, BENIGNO A. CASTILLO, CORNELIO
L. CASTILLO, JOSEPH B. CASTILLO, ANSELMO CASTILLO, JOAQUIN CASTILLO, PABLO L. CASTILLO, ROMEO P. CASTILLO, SESINANDO CATIBOG, DANILO CASTRO, PRUDENCIO A. CASTRO,
RAMO CASTRO, JR., ROMEO A. DE CASTRO, JAIME B. CATLI, DURANA D. CEFERINO, RODOLFO B. CELIS, HERMINIGILDO CEREZO, VICTORIANO CELESTINO, BENJAMIN CHAN, ANTONIO C.
CHUA, VIVENCIO B. CIABAL, RODRIGO CLARETE, AUGUSTO COLOMA, TURIANO CONCEPCION, TERESITO CONSTANTINO, ARMANDO CORALES, RENATO C. CORCUERA, APOLINAR
CORONADO, ABELARDO CORONEL, FELIX CORONEL, JR., LEONARDO CORPUZ, JESUS M. CORRALES, CESAR CORTEMPRATO, FRANCISCO O. CORVERA, FRANCISCO COSTALES, SR.,
CELEDONIO CREDITO, ALBERTO A. CREUS, ANACLETO V. CRUZ, DOMINGO DELA CRUZ, AMELIANO DELA CRUZ, JR., PANCHITO CRUZ, REYNALDO B. DELA CRUZ, ROBERTO P. CRUZ,
TEODORO S. CRUZ, ZOSIMO DELA CRUZ, DIONISIO A. CUARESMA, FELIMON CUIZON, FERMIN DAGONDON, RICHARD DAGUINSIN, CRISANTO A. DATAY, NICASIO DANTINGUINOO, JOSE
DATOON, EDUARDO DAVID, ENRICO T. DAVID, FAVIO DAVID, VICTORIANO S. DAVID, EDGARDO N. DAYACAP, JOSELITO T. DELOSO, CELERINO DE GUZMAN, ROMULO DE GUZMAN, LIBERATO DE
GUZMAN, JOSE DE LEON, JOSELITO L. DE LUMBAN, NAPOLEON S. DE LUNA, RICARDO DE RAMA, GENEROSO DEL ROSARIO, ALBERTO DELA CRUZ, JOSE DELA CRUZ, LEONARDO DELOS
REYES, ERNESTO F. DIATA, EDUARDO A. DIAZ, FELIX DIAZ, MELCHOR DIAZ, NICANOR S. DIAZ, GERARDO C. DIGA, CLEMENTE DIMATULAC, ROLANDO DIONISIO, PHILIPP G. DISMAYA,
BENJAMIN DOCTOLERO, ALBERTO STO. DOMINGO, BENJAMIN E. DOZA, BENJAMIN DUPA, DANILO C. DURAN, GREGORIO D. DURAN, RENATO A. EDUARTE, GODOFREDO E. EISMA, ARDON B.
ELLO, UBED B. ELLO, JOSEFINO ENANO, REYNALDO ENCARNACION, EDGARDO ENGUANCIO, ELIAS EQUIPANO, FELIZARDO ESCARMOSA, MIGUEL ESCARMOSA, ARMANDO ESCOBAR,
ROMEO T. ESCUYOS, ANGELITO ESPIRITU, EDUARDO S. ESPIRITU, REYNALDO ESPIRITU, ROLANDO ESPIRITU, JULIAN ESPREGANTE, IGMIDIO ESTANISLAO, ERNESTO M. ESTEBAN, MELANIO
R. ESTRO, ERNESTO M. ESTEVA, CONRADO ESTUAR, CLYDE ESTUYE, ELISEO FAJARDO, PORFIRIO FALQUEZA, WILFREDO P. FAUSTINO, EMILIO E. FERNANDEZ, ARTEMIO FERRER, MISAEL M.
FIGURACION, ARMANDO F. FLORES, BENJAMIN FLORES, EDGARDO C. FLORES, BUENAVENTURA FRANCISCO, MANUEL S. FRANCISCO, ROLANDO FRANCISCO, VALERIANO FRANCISCO,
RODOLFO GABAWAN, ESMERALDO GAHUTAN, CESAR C. GALANG, SANTIAGO N. GALOSO, GABRIEL GAMBOA, BERNARDO GANDAMON, JUAN GANZON, ANDRES GARCIA, JR., ARMANDO M.
GARCIA, EUGENIO GARCIA, MARCELO L. GARCIA, PATRICIO L. GARCIA, JR., PONCIANO G. GARCIA, PONCIANO G. GARCIA, JR., RAFAEL P. GARCIA, ROBERTO S. GARCIA, OSIAS G. GAROFIL,
RAYMUNDO C. GARON, ROLANDO G. GATELA, AVELINO GAYETA, RAYMUNDO GERON, PLACIDO GONZALES, RUPERTO H. GONZALES, ROGELIO D. GUANIO, MARTIN V. GUERRERO, JR., ALEXIS
GUNO, RICARDO L. GUNO, FRANCISCO GUPIT, DENNIS J. GUTIERREZ, IGNACIO B. GUTIERREZ, ANGELITO DE GUZMAN, JR., CESAR H. HABANA, RAUL G. HERNANDEZ, REYNALDO
HERNANDEZ, JOVENIANO D. HILADO, JUSTO HILAPO, ROSTITO HINAHON, FELICISIMO HINGADA, EDUARDO HIPOLITO, RAUL L. IGNACIO, MANUEL L. ILAGAN, RENATO L. ILAGAN, CONRADO
A. INSIONG, GRACIANO G. ISLA, ARNEL L. JACOB, OSCAR J. JAPITENGA, CIRILO HICBAN, MAXIMIANO HONRADES, GENEROSO IGNACIO, FELIPE ILAGAN, EXPEDITO N. JACOB, MARIO
JASMIN, BIENVENIDO JAVIER, ROMEO M. JAVIER, PRIMO DE JESUS, REYNALDO DE JESUS, CARLOS A. JIMENEZ, DANILO E. JIMENEZ, PEDRO C. JOAQUIN, FELIPE W. JOCSON, FELINO M.
JOCSON, PEDRO N. JOCSON, VALENTINO S. JOCSON, PEDRO B. JOLOYA, ESTEBAN P. JOSE, JR., RAUL JOSE, RICARDO SAN JOSE, GERTRUDO KABIGTING, EDUARDO S. KOLIMLIM, SR.,
LAURO J. LABAY, EMMANUEL C. LABELLA, EDGARDO B. LACERONA, JOSE B. LACSON, MARIO J. LADINES, RUFINO LAGAC, RODRIGO LAGANAPAN, EFREN M. LAMADRID, GUADENCIO
LATANAN, VIRGILIO LATAYAN, EMILIANO LATOJA, WENCESLAO LAUREL, 38ALFREDO LAXAMANA, DANIEL R. LAZARO, ANTONIO C. LEANO, ARTURO S. LEGASPI, BENITO DE LEMOS, JR., PEDRO
G. DE LEON, MANOLITO C. LILOC, GERARDO LIMUACO, ERNESTO S. LISING, RENATO LISING, WILFREDO S. LISING, CRISPULO LONTOC, PEDRO M. LOPERA, ROGELIO LOPERA, CARLITO M.
LOPEZ, CLODY LOPEZ, GARLITO LOPEZ, GEORGE F. LOPEZ, VIRGILIO M. LOPEZ, BERNARDITO G. LOREJA, DOMINGO B. LORICO, DOMINGO LOYOLA, DANTE LUAGE, ANTONIO M. LUALHATI,
EMMANUEL LUALHATI, JR., LEONIDEZ C. LUALHATI, SEBASTIAN LUALHATI, FRANCISCO LUBAT, ARMANDO LUCERO, JOSELITO L. DE LUMBAN, THOMAS VICENTE O. LUNA, NOLI
MACALADLAD, ALFREDO MACALINO, RICARDO MACALINO, ARTURO V. MACARAIG, ERNESTO V. MACARAIG, RODOLFO V. MACARAIG, BENJAMIN MACATANGAY, HERMOGENES MACATANGAY,
RODEL MACATANGAY, ROMULO MACATANGAY, OSIAS Q. MADLANGBAYAN, NICOLAS P. MADRID, EDELBERTO G. MAGAT, EFREN C. MAGBANUA, BENJAMIN MAGBUHAT, ALFREDO C.
MAGCALENG, ANTONIO MAGNAYE, ALFONSO MAGPANTAY, RICARDO C. MAGPANTAY, SIMEON M. MAGPANTAY, ARMANDO M. MAGSINO, MACARIO S. MAGSINO, ANTONIO MAGTIBAY, VICTOR V.
MAGTIBAY, GERONIMO MAHILUM, MANUEL MALONZO, RICARDO MAMADIS, RODOLFO MANA, BERNARDO A. MANALILI, MANUEL MANALILI, ANGELO MANALO, AGUILES L. MANALO,
LEOPOLDO MANGAHAS, BAYANI MANIGBAS, ROLANDO C. MANIMTIM, DANIEL MANONSON, ERNESTO F. MANUEL, EDUARDO MANZANO, RICARDO N. MAPA, RAMON MAPILE, ROBERTO C.
MARANA, NEMESIO MARASIGAN, WENCESLAO MARASIGAN, LEONARDO MARCELO, HENRY F. MARIANO, JOEL MARIDABLE, SANTOS E. MARINO, NARCISO A. MARQUEZ, RICARDO MARTINEZ,
DIEGO MASICAMPO, AURELIO MATABERDE, RENATO MATILLA, VICTORIANO MATILLA, VIRGILIO MEDEL, LOLITO M. MELECIO, BENIGNO MELENDEZ, RENER J. MEMIJE, REYNALDO F. MEMIJE,
RODEL MEMIJE, AVELINO MENDOZA, JR., CLARO MENDOZA, TIMOTEO MENDOZA, GREGORIO MERCADO, ERNANI DELA MERCED, RICARDO MERCENA, NEMESIO METRELLO, RODEL MEMIJE,
GASPAR MINIMO, BENJAMIN MIRANDA, FELIXBERTO D. MISA, CLAUDIO A. MODESTO, JR., OSCAR MONDEDO, GENEROSO MONTON, RENATO MORADA, RICARDO MORADA, RODOLFO
MORADA, ROLANDO M. MORALES, FEDERICO M. MORENO, VICTORINO A. MORTEL, JR., ESPIRITU A. MUNOZ, IGNACIO MUNOZ, ILDEFONSO MUNOZ, ROGELIO MUNOZ, ERNESTO NAPALAN,
MARCELO A. NARCIZO, REYNALDO NATALIA, FERNANDO C. NAVARETTE, PACIFICO D. NAVARRO, FLORANTE NAZARENO, RIZAL B. NAZARIO, JOSUE NEGRITE, ALFREDO NEPUMUCENO,

HERBERT G. NG, FLORENCIO NICOLAS, ERNESTO C. NINON, AVELINO NUQUI, NEMESIO D. OBA, DANILO OCAMPO, EDGARDO OCAMPO, RODRIGO E. OCAMPO, ANTONIO B. OCCIANO,
REYNALDO P. OCSON, BENJAMIN ODESA, ANGEL OLASO, FRANCISCO OLIGARIO, ZOSIMO OLIMBO, BENJAMIN V. ORALLO, ROMEO S. ORIGINES, DANILO R. ORTANEZ, WILFREDO OSIAS,
VIRGILIO PA-A, DAVID PAALAN, JESUS N. PACHECO, ALFONSO L. PADILLA, DANILO PAGSANJAN, NUMERIANO PAGSISIHAN, RICARDO T. PAGUIO, EMILIO PAKINGAN, LEANDRO PALABRICA,
QUINCIANO PALO, JOSE PAMATIAN, GONZALO PAN, PORFIRIO PAN, BIENVENIDO PANGAN, ERNESTO PANGAN, FRANCISCO V. PASIA, EDILBERTO PASIMIO, JR., JOSE V. PASION, ANGELITO M.
PENA, DIONISIO PENDRAS, HERMINIO PERALTA, REYNALDO M. PERALTA, ANTONIO PEREZ, ANTOLIANO E. PEREZ, JUAN PEREZ, LEON PEREZ, ROMEO E. PEREZ, ROMULO PEREZ, WILLIAM
PEREZ, FERNANDO G. PERINO, FLORENTINO DEL PILAR, DELMAR F. PINEDA, SALVADOR PINEDA, ELIZALDE PINPIN, WILFREDO PINPIN, ARTURO POBLETE, DOMINADOR R. PRIELA,
BUENAVENTURA PRUDENTE, CARMELITO PRUDENTE, DANTE PUEYO, REYNALDO Q. PUEYO, RODOLFO O. PULIDO, ALEJANDRO PUNIO, FEDERICO QUIMAN, ALFREDO L. QUINTO, ROMEO
QUINTOS, EDUARDO W. RACABO, RICARDO C. DE RAMA, RICARDO L. DE RAMA, ROLANDO DE RAMA, FERNANDO A. RAMIREZ, LITO S. RAMIREZ, RICARDO G. RAMIREZ, RODOLFO V.
RAMIREZ, ALBERTO RAMOS, ANSELMO C. RAMOS, TOBIAS RAMOS, WILLARFREDO RAYMUNDO, REYNALDO RAQUEDAN, MANUEL F. RAVELAS, WILFREDO D. RAYMUNDO, ERNESTO E.
RECOLASO, ALBERTO REDAZA, ARTHUR REJUSO, TORIBIO M. RELLAMA, JAIME RELLOSA, EUGENIO A. REMOQUILLO, GERARDO RENTOZA, REDENTOR C. REY, ALFREDO S. REYES, AMABLE
S. REYES, BENEDICTO R. REYES, GREGORIO B. REYES, JOSE A. REYES, JOSE C. REYES, ROMULO M. REYES, SERGIO REYES, ERNESTO F. RICO, FERNANDO M. RICO, EMMANUEL RIETA,
RICARDO RIETA, LEO B. ROBLES, RUBEN ROBLES, RODOLFO ROBLEZA, RODRIGO ROBLEZA, EDUARDO ROCABO, ANTONIO R. RODRIGUEZ, BERNARDO RODRIGUEZ, ELIGIO RODRIGUEZ,
ALMONTE ROMEO, ELIAS RONQUILLO, ELISE RONQUILLO, LUIS VAL B. RONQUILLO, REYNOSO P. RONQUILLO, RODOLFO RONQUILLO, ANGEL ROSALES, RAMON ROSALES, ALBERTO DEL
ROSARIO, GENEROSO DEL ROSARIO, TEODORICO DEL ROSARIO, VIRGILIO L. ROSARIO, CARLITO SALVADOR, JOSE SAMPARADA, ERNESTO SAN PEDRO, ADRIANO V. SANCHA, GERONIMO M.
SANCHA, ARTEMIO B. SANCHEZ, NICASIO SANCHEZ, APOLONIO P. SANTIAGO, JOSELITO S. SANTIAGO, SERGIO SANTIAGO, EDILBERTO C. SANTOS, EFREN S. SANTOS, RENATO D. SANTOS,
MIGUEL SAPUYOT, ALEX S. SERQUINA, DOMINADOR P. SERRA, ROMEO SIDRO, AMADO M. SILANG, FAUSTINO D. SILANG, RODOLFO B. DE SILOS, ANICETO G. SILVA, EDGARDO M. SILVA,
ROLANDO C. SILVERTO, ARTHUR B. SIMBAHON, DOMINGO SOLANO, JOSELITO C. SOLANTE, CARLITO SOLIS, CONRADO SOLIS, III, EDGARDO SOLIS, ERNESTO SOLIS, ISAGANI M. SOLIS,
EDUARDO L. SOTTO, ERNESTO G. STA. MARIA, VICENTE G. STELLA, FELIMON SUPANG, PETER TANGUINOO, MAXIMINO TALIBSAO, FELICISMO P. TALUSIK, FERMIN TARUC, JR., LEVY S.
TEMPLO, RODOLFO S. TIAMSON, LEONILO TIPOSO, ARNEL TOLENTINO, MARIO M. TOLENTINO, FELIPE TORRALBA, JOVITO V. TORRES, LEONARDO DE TORRES, GAVINO U. TUAZON,
AUGUSTO B. TUNGUIA, FRANCISCO UMALI, SIMPLICIO UNIDA, WILFREDO V. UNTALAN, ANTONIO VALDERAMA, RAMON VALDERAMA, NILO VALENCIANO, EDGARDO C. VASQUEZ, ELPIDIO
VELASQUEZ, NESTOR DE VERA, WILFREDO D. VERA, BIENVENIDO VERGARA, ALFREDO VERGARA, RAMON R. VERZOSA, FELICITO P. VICMUNDO, ALFREDO VICTORIANO, TEOFILO P.
VIDALLO, SABINO N. VIERNEZ, JESUS J. VILLA, JOVEN VILLABLANCO, EDGARDO G. VILLAFLORES, CEFERINO VILLAGERA, ALEX VILLAHERMOZA, DANILO A. VILLANUEVA, ELITO
VILLANUEVA, LEONARDO M. VILLANUEVA, MANUEL R. VILLANUEVA, NEPTHALI VILLAR, JOSE V. VILLAREAL, FELICISIMO VILLARINO, RAFAEL VILLAROMAN, CARLOS VILLENA, FERDINAND
VIVO, ROBERTO YABUT, VICENTE YNGENTE, AND ORO C. ZUNIGA, respondents.
Gerardo A. Del Mundo and Associates for petitioners.
Romulo, Mabanta, Sayoc, Buenaventura, De los Angeles Law Offices for BRII/AIBC.
Florante M. De Castro for private respondents in 105029-32.
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine Overseas Employment Administration's
Administrator, et. al.," was filed under Rule 65 of the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the National Labor Relations Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to render a new decision: (i) declaring private respondents as in default; (ii)
declaring the said labor cases as a class suit; (iii) ordering Asia International Builders Corporation (AIBC) and Brown and Root
International Inc. (BRII) to pay the claims of the 1,767 claimants in said labor cases; (iv) declaring Atty. Florante M. de Castro guilty of
forum-shopping; and (v) dismissing POEA Case No. L-86-05-460; and
(3) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon. National Labor Relations Commission, et. al.," was
filed under Rule 65 of the Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period under the Labor Code of the Philippines instead of the ten-year
prescriptive period under the Civil Code of the Philippines; and (ii) denied the
"three-hour daily average" formula in the computation of petitioners' overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et. al., v. National Labor Relations Commission, et.
al." was filed under Rule 65 of the Revised Rules of Court:
39
(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it denied the motions for reconsideration of AIBC and BRII ( Rollo,
pp. 2-59; 61-230).

The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA in four labor cases: (1) awarded monetary
benefits only to 149 claimants and (2) directed Labor Arbiter Fatima J. Franco to conduct hearings and to receive evidence on the claims
dismissed by the POEA for lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R. Nos. 104911-14 were raffled to the Second
Division. In the Resolution dated July 26, 1993, the Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos.
104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the motion filed in G.R. Nos. 104911-14 for the consolidation of
said cases with G.R. Nos. 104776 and 105029-32, which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp. 986-1,107;
G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated October 27, 1993, the First Division granted the motion to
consolidate G.R. Nos. 104911-14 with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-32, Rollo, p. 1562).
On June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista, in their own behalf and on behalf of 728 other
overseas contract workers (OCWs) instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas Employment
Administration (POEA) for money claims arising from their recruitment by AIBC and employment by BRII (POEA Case No. L-84-06-555).
The claimants were represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction; while AIBC is a domestic corporation
licensed as a service contractor to recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign
principals.
The amended complaint principally sought the payment of the unexpired portion of the employment contracts, which was terminated
prematurely, and secondarily, the payment of the interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits; refund of SSS and premium not remitted to the SSS; refund of withholding
tax not remitted to the BIR; penalties for committing prohibited practices; as well as the suspension of the license of AIBC and the
accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was given, together with BRII, up to July 5, 1984 to file
its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the claimants to file a bill of particulars within ten days from
receipt of the order and the movants to file their answers within ten days from receipt of the bill of particulars. The POEA Administrator
also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July 23, 1984, AIBC filed a "Motion to Strike Out of
the Records", the "Complaint" and the "Compliance and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder and
Comments," averring, among other matters, the failure of AIBC and BRII to file their answers and to attend the pre-trial conference on July
25, 1984. The claimants alleged that AIBC and BRII had waived their right to present evidence and had defaulted by failing to file their
answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the Records" filed by AIBC but required the claimants to
correct the deficiencies in the complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with the Order of October 2, 1984 and filed an "Urgent
Manifestation," praying that the POEA Administrator direct
40 the parties to submit simultaneously their position papers, after which the case
should be deemed submitted for decision. On the same day, Atty. Florante de Castro filed another complaint for the same money claims
and benefits in behalf of several claimants, some of whom were also claimants in POEA Case No. L-84-06-555 (POEA Case No. 85-10-
779).
On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2, 1984 and an "Urgent Manifestation," praying that
the POEA direct the parties to submit simultaneously their position papers after which the case would be deemed submitted for decision.
On the same day, AIBC asked for time to file its comment on the "Compliance" and "Urgent Manifestation" of claimants. On November 6,
1984, it filed a second motion for extension of time to file the comment.

On November 8, 1984, the POEA Administrator informed AIBC that its motion for extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked that AIBC and BRII be declared in
default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs, that claimants should be ordered to amend their
complaint.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their answers within ten days from receipt
of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said order of the POEA Administrator. Claimants
opposed the appeal, claiming that it was dilatory and praying that AIBC and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position Paper" dated March 24, 1985, adding new demands:
namely, the payment of overtime pay, extra night work pay, annual leave differential pay, leave indemnity pay, retirement and savings
benefits and their share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On April 15, 1985, the POEA Administrator directed AIBC to file
its answer to the amended complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the same day, the POEA issued an order directing AIBC
and BRII to file their answers to the "Amended Complaint," otherwise, they would be deemed to have waived their right to present
evidence and the case would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and Motion for Bill of Particulars Re: Amended
Complaint dated March 24, 1985." Claimants opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII to file their answers in POEA Case No. L-84-06-
555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a petition for the issuance of a writ of injunction. On
September 19, 1985, NLRC enjoined the POEA Administrator from hearing the labor cases and suspended the period for the filing of the
answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional claimants in the case and to investigate alleged
wrongdoings of BRII, AIBC and their respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case No. L-85-10-777) against AIBC and BRII with the
POEA, demanding monetary claims similar to those subject of POEA Case No. L-84-06-555. In the same month, Solomon Reyes also
filed his own complaint (POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the substitution of the original counsel of record and
the cancellation of the special powers of attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-05-460) in behalf of 11 claimants including
Bienvenido Cadalin, a claimant in POEA Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985 and September 18, 1985 by AIBC and BRII.
41
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 42
within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
WHEREFORE, premises considered, the Decision of the POEA in these consolidated cases is modified to the extent and in accordance
with the following dispositions:
1. The claims of the 94 complainants identified and listed in Annex "A" hereof are dismissed for having prescribed;

2. Respondents AIBC and Brown & Root are hereby ordered, jointly and severally, to pay the 149 complainants, identified and listed in
Annex "B" hereof, the peso equivalent, at the time of payment, of the total amount in US dollars indicated opposite their respective names;
3. The awards given by the POEA to the 19 complainants classified and listed in Annex "C" hereof, who appear to have worked elsewhere
than in Bahrain are hereby set aside.
4. All claims other than those indicated in Annex "B", including those for overtime work and favorably granted by the POEA, are hereby
dismissed for lack of substantial evidence in support thereof or are beyond the competence of this Commission to pass upon.
In addition, this Commission, in the exercise of its powers and authority under Article 218(c) of the Labor Code, as amended by R.A.
6715, hereby directs Labor Arbiter Fatima J. Franco of this Commission to summon parties, conduct hearings and receive evidence, as
expeditiously as possible, and thereafter submit a written report to this Commission (First Division) of the proceedings taken, regarding
the claims of the following:
(a) complainants identified and listed in Annex "D" attached and made an integral part of this Resolution, whose claims were dismissed by
the POEA for lack of proof of employment in Bahrain (these complainants numbering 683, are listed in pages 13 to 23 of the decision of
POEA, subject of the appeals) and,
(b) complainants identified and listed in Annex "E" attached and made an integral part of this Resolution, whose awards decreed by the
POEA, to Our mind, are not supported by substantial evidence" (G.R. No. 104776; Rollo, pp. 113-115; G.R. Nos. 104911-14, pp. 85-87;
G.R. Nos. 105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12

co-claimants, who were former clients of Atty. Del Mundo, filed a petition for certiorari with the Supreme Court (G.R. Nos. 120741-44). The
petition was dismissed in a resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were filed. The first, by the claimants represented by
Atty. Del Mundo; the second, by the claimants represented by Atty. De Castro; and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del Mundo (G.R. No. 104776), the claimants represented by Atty. De
Castro (G.R. Nos. 104911-14) and by AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have submitted, from time to time, compromise
agreements for our approval and jointly moved for the dismissal of their respective petitions insofar as the claimants-parties to the
compromise agreements were concerned (See Annex A for list of claimants who signed quitclaims).
Thus the following manifestations that the parties had arrived at a compromise agreement and the corresponding motions for the approval
of the agreements were filed by the parties and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio Abarquez and 47 co-claimants dated September 2, 1992 (G.R. Nos. 104911-
14, Rollo, pp. 263-406; G.R. Nos. 105029-32, Rollo, pp.
470-615);
43 Bienvenido Cadalin and 82 co-petitioners dated September 3, 1992 (G.R. No.

2) Joint Manifestation and Motion involving petitioner
104776, Rollo, pp. 364-507);
3) Joint Manifestation and Motion involving claimant Jose

M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos. 105029-32, Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-626;
G.R. Nos. 104911-14, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving claimant Antonio T. Anglo and 17 co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713; G.R. Nos. 104911-14, Rollo, pp. 530-590);

5) Joint Manifestation and Motion involving claimant Dionisio Bobongo and 6 co-claimants dated January 15, 1993 (G.R. No.
104776, Rollo, pp. 813-836; G.R. Nos. 104911-14, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista and 4 co-claimants dated March 10, 1993 (G.R. Nos. 104911-
14, Rollo, pp. 731-746; G.R. No. 104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri Banaag and 5 co-claimants dated March 17, 1993 (G.R. No.
104776, Rollo, pp. 1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio and 15 other co-claimants dated May 4, 1993 (G.R. Nos.
105029-32, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No. 104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp.
1815-1829);
10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo and 36 co-claimants dated June 14, 1993 (G.R. Nos. 105029-
32, Rollo, pp. 974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864; G.R. No. 104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo and 19 co-claimants dated July 22, 1993 (G.R. No. 104776, Rollo,
pp. 1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos. 104911-14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit and 2 co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C. Aceres and 37 co-claimants dated September 8, 1993 (G.R. No.
104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co-claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo,
Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano and six co-claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R.
No. 104776; G.R. Nos. 104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more than fifty volumes now comprising the records of these cases. From the records, it
appears that the complainants-appellants allege that they were recruited by respondent-appellant AIBC for its accredited foreign principal,
Brown & Root, on various dates from 1975 to 1983. They were all deployed at various projects undertaken by Brown & Root in several
countries in the Middle East, such as Saudi Arabia, Libya, United Arab Emirates and Bahrain, as well as in Southeast Asia, in Indonesia
and Malaysia.
Having been officially processed as overseas contract workers by the Philippine Government, all the individual complainants signed
standard overseas employment contracts (Records, Vols. 25-32. Hereafter, reference to the records would be sparingly made,
considering their chaotic arrangement) with AIBC before their departure from the Philippines. These overseas employment contracts
invariably contained the following relevant terms and conditions.
PART B
44
(1) Employment Position Classification :

(Code) :
(2) Company Employment Status :

(3) Date of Employment to Commence on :
(4) Basic Working Hours Per Week :
(5) Basic Working Hours Per Month :
(6) Basic Hourly Rate :

(7) Overtime Rate Per Hour :
(8) Projected Period of Service
(Subject to C(1) of this [sic]) :
Months and/or
Job Completion
xxx xxx xxx
3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and overtime rate as set out in Part B of this Document.
b) The hours of work shall be those set forth by the Employer, and Employer may, at his sole option, change or adjust such hours as
maybe deemed necessary from time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this agreement, the Employer may, at his sole discretion, terminate employee's
service with cause, under this agreement at any time. If the Employer terminates the services of the Employee under this Agreement
because of the completion or termination, or suspension of the work on which the Employee's services were being utilized, or because of
a reduction in force due to a decrease in scope of such work, or by change in the type of construction of such work. The Employer will be
responsible for his return transportation to his country of origin. Normally on the most expeditious air route, economy class
accommodation.
xxx xxx xxx
10. VACATION/SICK LEAVE BENEFITS
a) After one (1) year of continuous service and/or satisfactory completion of contract, employee shall be entitled to 12-days vacation leave
with pay. This shall be computed at the basic wage rate. Fractions of a year's service will be computed on a pro-rata basis.
b) Sick leave of 15-days shall be granted to the employee for every year of service for non-work connected injuries or illness. If the
employee failed to avail of such leave benefits, the same shall be forfeited at the end of the year in which said sick leave is granted.
11. BONUS
A bonus of 20% (for offshore work) of gross income will be accrued and payable only upon satisfactory completion of this contract.
12. OFFDAY PAY
The seventh day of the week shall be observed as a day of rest with 8 hours regular pay. If work is performed on this day, all hours work
shall be paid at the premium rate. However, this offday pay provision is applicable only when the laws of the Host Country require
payments for rest day.
In the State of Bahrain, where some of the individual complainants were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of Bahrain,
issued his Amiri Decree No. 23 on June 16, 1976, otherwise known as the Labour Law for the Private Sector (Records, Vol. 18). This
decree took effect on August 16, 1976. Some of the provisions of Amiri Decree No. 23 that are relevant to the claims of the complainants-
appellants are as follows (italics supplied only for emphasis):
45
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 averages46and formula presented by the complainants-appellants are supported by substantial
evidence;
(f) Whether or not the POEA awarded sums beyond what the complainants-appellants prayed for; and, if so, whether or not these awards
are valid.
Fifth: Whether or not the POEA erred in holding respondents AIBC and Brown & Root jointly are severally liable for the judgment
awards despite the alleged finding that the former was the employer of the complainants;

(a) Whether or not the POEA has acquired jurisdiction over Brown & Root;
(b) Whether or not the undisputed fact that AIBC was a licensed construction contractor precludes a finding that Brown & Root is liable for
complainants claims.
Sixth: Whether or not the POEA Administrator's failure to hold respondents in default constitutes a reversible error.
Seventh: Whether or not the POEA Administrator erred in dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
c. Retirement and Savings Plan benefits;
d. War Zone bonus or premium pay of at least 100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to SSS;
j. Refund of withholding tax not remitted to BIR;
k. Fringe benefits under B & R's "A Summary of Employee Benefits" (Annex "Q" of Amended Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent of the judgment award;
n. Other reliefs, like suspending and/or cancelling the license to recruit of AIBC and the accreditation of B & R issued by POEA;
o. Penalty for violations of Article 34 (prohibited practices), not excluding reportorial requirements thereof.
Eighth: Whether or not the POEA Administrator erred in not dismissing POEA Case No. (L) 86-65-460 on the ground of multiplicity of
suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence governing the pleading and proof of a
foreign law and admitted in evidence a simple copy of the Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector).
NLRC invoked Article 221 of the Labor Code of the Philippines, vesting on the Commission ample discretion to use every and all
reasonable means to ascertain the facts in each case without regard to the technicalities of law or procedure. NLRC agreed with the
POEA Administrator that the Amiri Decree No. 23, being more favorable and beneficial to the workers, should form part of the overseas
employment contract of the complainants.
47
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.
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,
48
1987) after the filing of the original complaint (on April 2, 1985) and NLRC, in total disregard of its own rules, affirmed the action of the
POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in default and should have rendered summary judgment
on the basis of the pleadings and evidence submitted by claimants;
(3) the NLRC and POEA Administrator erred in not holding that the labor cases filed by AIBC and BRII cannot be considered a class suit;
(4) that the prescriptive period for the filing of the claims is ten years; and

(5) that NLRC and the POEA Administrator should have dismissed POEA Case No. L-86-05-460, the case filed by Atty. Florante de Castro
(Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of the labor cases, considering the great difficulty of getting all the
records of the more than 1,500 claimants, the piece-meal filing of the complaints and the addition of hundreds of new claimants by
petitioners;
(2) that considering the number of complaints and claimants, it was impossible to prepare the answers within the ten-day period provided
in the NLRC Rules, that when the motion to declare AIBC in default was filed on July 19, 1987, said party had already filed its answer, and
that considering the staggering amount of the claims (more than US$50,000,000.00) and the complicated issues raised by the parties, the
ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that

there was no common or general interest in the subject matter of the controversy which was the applicability of the Amiri Decree No.
23. Likewise, the nature of the claims varied, some being based on salaries pertaining to the unexpired portion of the contracts while
others being for pure money claims. Each claimant demanded separate claims peculiar only to himself and depending upon the particular
circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that prescribed by Article 291 of the Labor Code of the Philippines (three years) and
not the one prescribed by Article 1144 of the Civil Code of the Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA Case No. L-86-05-460 should be dismissed, this being a private quarrel
between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint manifestations and motions of AIBC and BRII dated
September 2 and 11, 1992, claiming that all the claimants who entered into the compromise agreements subject of said manifestations
and motions were his clients and that Atty. Florante M. de Castro had no right to represent them in said agreements. He also claimed that
the claimants were paid less than the award given them by NLRC; that Atty. De Castro collected additional attorney's fees on top of the
25% which he was entitled to receive; and that the consent of the claimants to the compromise agreements and quitclaims were procured
by fraud (G.R. No. 104776, Rollo, pp. 838-810). In the Resolution dated November 23, 1992, the Court denied the motion to strike out the
Joint Manifestations and Motions dated September 2 and 11, 1992 (G.R. Nos. 104911-14, Rollo, pp. 608-609).
On December 14, 1992, Atty. Del Mundo filed a "Notice and Claim to Enforce Attorney's Lien," alleging that the claimants who entered into
compromise agreements with AIBC and BRII with the assistance of Atty. De Castro, had all signed a retainer agreement with his law firm
(G.R. No. 104776, Rollo, pp. 623-624; 838-1535).
Contempt of Court
On February 18, 1993, an omnibus motion was filed by Atty. Del Mundo to cite Atty. De Castro and Atty. Katz Tierra for contempt of court
and for violation of Canons 1, 15 and 16 of the Code of Professional Responsibility. The said lawyers allegedly misled this Court, by
making it appear that the claimants who entered into the compromise agreements were represented by Atty. De Castro, when in fact they
were represented by Atty. Del Mundo (G.R. No. 104776, Rollo, pp. 1560-1614).
On September 23, 1994, Atty. Del Mundo reiterated his charges against Atty. De Castro for unethical practices and moved for the voiding
of the quitclaims submitted by some of the claimants.
49
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:
50
(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).
51
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri Decree No. 23 of 1976, argue that there is in force
in the Philippines a "borrowing law," which is Section 48 of the Code of Civil Procedure and that where such kind of law exists, it takes
precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-46).
First to be determined is whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine
law on prescription that shall be the governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the date of the expiry of the
contract. (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process, joinder of
actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is based upon
a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive,
depending on the characterization given such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the statute of limitations of New York, instead of the
Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be substantive. Being
considered merely a procedural law even in Panama, it has to give way to the law of the forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has a
"borrowing statute." Said statute has the practical effect of treating the foreign statute of limitation as one of substance (Goodrich, Conflict
of Laws 152-153 [1938]). A "borrowing statute" directs the state of the forum to apply the foreign statute of limitations to the pending
claims based on a foreign law (Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes," one form provides that
an action barred by the laws of the place where it accrued, will not be enforced in the forum even though the local statute has not run
against it (Goodrich and Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind. Said Section
provides:
If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270 of said Code repealed only those
provisions of the Code of Civil Procedures as to which were inconsistent with it. There is no provision in the Civil Code of the Philippines,
which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy (Canadian Northern Railway Co. v.
Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976
as regards the claims in question would contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:
The state shall promote social justice in all phases of national development. (Sec. 10).
The state affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
Having determined that the applicable law on prescription is the Philippine law, the next question is whether the prescriptive period
governing the filing of the claims is three years, as provided by the Labor Code or ten years, as provided by the Civil Code of the
Philippines.
52
The claimants are of the view that the applicable provision is Article 1144 of the Civil Code of the Philippines, which provides:
The following actions must be brought within ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;

(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor Code of the Philippines, which in pertinent part
provides:
Money claims-all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within
three (3) years from the time the cause of action accrued, otherwise they shall be forever barred.
xxx xxx xxx
The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70 SCRA 244 (1976) invoked by the claimants in G.R.
Nos. 104911-14 is inapplicable to the cases at bench (Rollo, p. 21). The said case involved the correct computation of overtime pay as
provided in the collective bargaining agreements and not the Eight-Hour Labor Law.
As noted by the Court: "That is precisely why petitioners did not make any reference as to the computation for overtime work under the
Eight-Hour Labor Law (Secs. 3 and 4, CA No. 494) and instead insisted that work computation provided in the collective bargaining
agreements between the parties be observed. Since the claim for pay differentials is primarily anchored on the written contracts between
the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933) provides:
Any action to enforce any cause of action under this Act shall be commenced within three years after the cause of action accrued
otherwise such action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA No. 444 as amended) will apply, if the claim for differentials for
overtime work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the instant case, the
claim for overtime compensation is not so much because of Commonwealth Act No. 444, as amended but because the claim is
demandable right of the employees, by reason of the above-mentioned collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing "actions to enforce any cause of action under said law."
On the other hand, Article 291 of the Labor Code of the Philippines provides the prescriptive period for filing "money claims arising from
employer-employee relations." The claims in the cases at bench all arose from the employer-employee relations, which is broader in
scope than claims arising from a specific law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period under Article 291 of the Labor Code of the Philippines
applies only to money claims specifically recoverable under said Code, does not find support in the plain language of the provision.
Neither is the contention of the claimants in G.R. Nos. 104911-14 that said Article refers only to claims "arising from the employer's
violation of the employee's right," as provided by the Labor Code supported by the facial reading of the provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that while their complaints were filed on June 6, 1984
with POEA, the case was decided only on January 30, 1989, a clear denial of their right to a speedy disposition of the case; and (2) that
NLRC and the POEA Administrator should have declared AIBC and BRII in default (Rollo, pp.
31-35).
53
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;

54
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 Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA Case No. L-86-05-460). NLRC, in exasperation,
noted that the exact number of claimants had never been completely established (Resolution, Sept. 2, 1991, G.R. No. 104776, Rollo, p.
57). All the three new cases were consolidated with POEA Case No. L-84-06-555.
NLRC blamed the parties and their lawyers for the delay in terminating the proceedings, thus:
These cases could have been spared the long and arduous route towards resolution had the parties and their counsel been more
interested in pursuing the truth and the merits of the claims rather than exhibiting a fanatical reliance on technicalities. Parties and counsel
have made these cases a litigation of emotion. The intransigence of parties and counsel is remarkable. As late as last month, this
Commission made a last and final attempt to bring the counsel of all the parties (this Commission issued a special order directing
respondent Brown & Root's resident agent/s to appear) to come to a more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of the cases, to the lament of NLRC, which
complained:
It is very evident from the records that the protagonists in these consolidated cases appear to be not only the individual complainants, on
the one hand, and AIBC and Brown & Root, on the other hand. The two lawyers for the complainants, Atty. Gerardo Del Mundo and Atty.
Florante De Castro, have yet to settle the right of representation, each one persistently claiming to appear in behalf of most of the
complainants. As a result, there are two appeals by the complainants. Attempts by this Commission to resolve counsels' conflicting claims
of their respective authority to represent the complainants prove futile. The bickerings by these two counsels are reflected in their
pleadings. In the charges and countercharges of falsification of documents and signatures, and in the disbarment proceedings by one
against the other. All these have, to a large extent, abetted in confounding the issues raised in these cases, jumble the presentation of
evidence, and even derailed the prospects of an amicable settlement. It would not be far-fetched to imagine that both counsel, unwittingly,
perhaps, painted a rainbow for the complainants, with the proverbial pot of gold at its end containing more than US$100 million, the
aggregate of the claims in these cases. It is, likewise, not improbable that their misplaced zeal and exuberance caused them to throw all
caution to the wind in the matter of elementary rules of procedure and evidence (Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the complainants in both petitions filed by the two
lawyers. As noted by NLRC, "the problem created by this situation is that if one of the two petitions is dismissed, then the parties and the
public respondents would not know which claim of which
55 petitioner was dismissed and which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class suit" because "all the named complainants have similar
money claims and similar rights sought irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi, Libya or in
any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of common or general interest to many and the parties are so
numerous that it is impracticable to bring them all before the court (Revised Rules of Court, Rule 3, Sec. 12).

While all the claims are for benefits granted under the Bahrain Law, many of the claimants worked outside Bahrain. Some of the claimants
were deployed in Indonesia and Malaysia under different terms and conditions of employment.
NLRC and the POEA Administrator are correct in their stance that inasmuch as the first requirement of a class suit is not present
(common or general interest based on the Amiri Decree of the State of Bahrain), it is only logical that only those who worked in Bahrain
shall be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for employee's benefits), there is no
common question of law or fact. While some claims are based on the Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is interested only in his own demand and not in the claims of the other
employees of defendants. The named claimants have a special or particular interest in specific benefits completely different from the
benefits in which the other named claimants and those included as members of a "class" are claiming (Berses v. Villanueva, 25 Phil. 473
[1913]). It appears that each claimant is only interested in collecting his own claims. A claimants has no concern in protecting the interests
of the other claimants as shown by the fact, that hundreds of them have abandoned their co-claimants and have entered into separate
compromise settlements of their respective claims. A principle basic to the concept of "class suit" is that plaintiffs brought on the record
must fairly represent and protect the interests of the others (Dimayuga v. Court of Industrial Relations, 101 Phil. 590 [1957]). For this
matter, the claimants who worked in Bahrain can not be allowed to sue in a class suit in a judicial proceeding. The most that can be
accorded to them under the Rules of Court is to be allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule 3, Sec. 6).
The Court is extra-cautious in allowing class suits because they are the exceptions to the condition sine qua non, requiring the joinder of
all indispensable parties.
In an improperly instituted class suit, there would be no problem if the decision secured is favorable to the plaintiffs. The problem arises
when the decision is adverse to them, in which case the others who were impleaded by their self-appointed representatives, would surely
claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC should have declared Atty. Florante De Castro
guilty of "forum shopping, ambulance chasing activities, falsification, duplicity and other unprofessional activities" and his appearances as
counsel for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to the practice of some parties of filing multiple
petitions and complaints involving the same issues, with the result that the courts or agencies have to resolve the same issues. Said Rule,
however, applies only to petitions filed with the Supreme Court and the Court of Appeals. It is entitled "Additional Requirements For
Petitions Filed with the Supreme Court and the Court of Appeals To Prevent Forum Shopping or Multiple Filing of Petitioners and
Complainants." The first sentence of the circular expressly states that said circular applies to an governs the filing of petitions in the
Supreme Court and the Court of Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum shopping rule to the lower courts and administrative
agencies, said circular took effect only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical conduct against Atty. De Castro because NLRC and POEA have
no jurisdiction to investigate charges of unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed by Atty. Gerardo A. Del Mundo to protect his claim
for attorney's fees for legal services rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or administrative agency which renders and executes the money
judgment secured by the lawyer for his clients. The56lawyer shall cause written notice thereof to be delivered to his clients and to the
adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the claim for the charging lien of Atty. Del Mundo should
have been filed with the administrative agency that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty. Katz Tierra for violation of the Code of Professional
Responsibility should be filed in a separate and appropriate proceeding.

G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting their formula of "Three Hours Average Daily Overtime" in
computing the overtime payments. They claim that it was BRII itself which proposed the formula during the negotiations for the settlement
of their claims in Bahrain and therefore it is in estoppel to disclaim said offer (Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16, 1983, which in pertinent part states:
After the perusal of the memorandum of the Vice President and the Area Manager, Middle East, of Brown & Root Co. and the Summary of
the compensation offered by the Company to the employees in respect of the difference of pay of the wages of the overtime and the
difference of vacation leave and the perusal of the documents attached thereto i.e., minutes of the meetings between the Representative
of the employees and the management of the Company, the complaint filed by the employees on 14/2/83 where they have claimed as
hereinabove stated, sample of the Service Contract executed between one of the employees and the company through its agent
in (sic) Philippines, Asia International Builders Corporation where it has been provided for 48 hours of work per week and an annual leave
of 12 days and an overtime wage of 1 & 1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35 months for the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in all public holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation for the difference of the wages of the overtime done for each
Philippino (sic) employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a subordinate official in the Bahrain Department of
Labor; (2) that there was no showing that the Bahrain Minister of Labor had approved said memorandum; and (3) that the offer was made
in the course of the negotiation for an amicable settlement of the claims and therefore it was not admissible in evidence to prove that
anything is due to the claimants.
While said document was presented to the POEA without observing the rule on presenting official documents of a foreign government as
provided in Section 24, Rule 132 of the 1989 Revised Rules on Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said memorandum, and they could easily verify its authenticity and
accuracy.
The admissibility of the offer of compromise made by BRII as contained in the memorandum is another matter. Under Section 27, Rule
130 of the 1989 Revised Rules on Evidence, an offer to settle a claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. In civil cases, an offer of compromise is not an admission of any liability, and is not admissible in
evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record with unwanted evidence but a statement of public policy.
There is great public interest in having the protagonists settle their differences amicable before these ripen into litigation. Every effort must
be taken to encourage them to arrive at a settlement.57The 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.]).
58
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 no59

authority under Article 218(c) to remand a case involving claims which had already
been dismissed because such provision contemplates only situations where there is still a question or controversy to be resolved ( Rollo,
pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of procedure and evidence do not apply to the proceedings
conducted by administrative agencies (First Asian Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld Publishing
House, Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article 221 of the Labor Code of the Philippines and is now the
bedrock of proceedings before NLRC.

Notwithstanding the non-applicability of technical rules of procedure and evidence in administrative proceedings, there are cardinal rules
which must be observed by the hearing officers in order to comply with the due process requirements of the Constitution. These cardinal
rules are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court on the grounds that NLRC had committed grave abuse of
discretion amounting to lack of jurisdiction in issuing the questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.
CADALIN ET AL VS. POEA ET AL

GRN 104776, December 5,1994.
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court for Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf of 728 other OCWs instituted a class suit by filing an
Amended Complaint with the POEA for money claims arising from their recruitment by ASIA INTERNATIONAL BUILDERS
CORPORATION (AIBC) and employment by BROWN & ROOT INTERNATIONAL, INC (BRI) which is a foreign corporation with
headquarters in Houston, Texas, and is engaged in construction; while AIBC is a domestic corporation licensed as a service contractor to
recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign principals.
The amended complaint sought the payment of the unexpired portion of the employment contracts, which was terminated prematurely,
and secondarily, the payment of the interest of the earnings of the Travel and Reserved Fund; interest on all the unpaid benefits; area
wage and salary differential pay; fringe benefits; reimbursement of SSS and premium not remitted to the SSS; refund of withholding tax
not remitted to the BIR; penalties for committing prohibited practices; as well as the suspension of the license of AIBC and the
accreditation of BRII
On October 2, 1984, the POEA Administrator denied the Motion to Strike Out of the Records filed by AIBC but required the claimants to
correct the deficiencies in the complaint pointed out.
AIB and BRII kept on filing Motion for Extension of Time to file their answer. The POEA kept on granting such motions.
On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked that AIBC and BRII declared in
default for failure to file their answers.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their answers within ten days from receipt
of the order.
(at madami pang motions ang na-file, new complainants joined the case, ang daming inavail na remedies ng both parties)
On June 19, 1987, AIBC finally submitted its answer to the complaint. At the same hearing, the parties were given a period of 15 days
from said date within which to submit their respective position papers. On February 24, 1988, AIBC and BRII submitted position paper. On
October 27, 1988, AIBC and BRII filed a Consolidated Reply, POEA Adminitartor rendered his decision which awarded the amount of
$824, 652.44 in favor of only 324 complainants. Claimants submitted their Appeal Memorandum For Partial Appeal from the decision of
the POEA. AIBC also filed its MR and/or appeal in addition
60 to the Notice of Appeal filed earlier.
NLRC promulgated its Resolution, modifying the decision of the POEA. The resolution removed some of the benefits awarded in favor of
the claimants. NLRC denied all the MRs. Hence, these petitions filed by the claimants and by AlBC and BRII.
The case rooted from the Labor Law enacted by Bahrain where most of the complainants were deployed. His Majesty Ise Bin Selman Al
Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on June 16, 1176, otherwise known re the Labour Law for the Private Sector. Some
of the provision of Amiri Decree No. 23 that are relevant to the claims of the complainants-appellants are as follows:

Art. 79: x x x A worker shall receive payment for each extra hour equivalent to his wage entitlement increased by a minimum of twenty-
rive per centurn thereof for hours worked during the day; and by a minimum off fifty per centurn thereof for hours worked during the night
which shall be deemed to being from seven oclock in the evening until seven oclock in the morning .
Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.
If employee worked, 150% of his normal wage shall be paid to him x x x.
Art. 81; x x x When conditions of work require the worker to work on any official holiday, he shall be paid an additional sum equivalent to
150% of his normal wage.
Art. 84: Every worker who has completed one years continuous service with his employer shall be entitled to Laos on full pay for a period
of not less than 21 days for each year increased to a period not less than 28 days after five continuous years of service.
A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his service in that year.
Art. 107: A contract of employment made for a period of indefinite duration may be terminated by either party thereto after giving the other
party prior notice before such termination, in writing, in respect of monthly paid workers and fifteen days notice in respect of other
workers. The party terminating a contract without the required notice shall pay to the other party compensation equivalent to the amount
of wages payable to the worker for the period of such notice or the unexpired portion thereof.
Art. Ill: x x x the employer concerned shall pay to such worker, upon termination of employment, a leaving indemnity for the period of his
employment calculated on the basis of fifteen days wages for each year of the first three years of service and of one months wages for
each year of service thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to the
period of his service completed within a year.
ISSUE:
1. WON the foreign law should govern or the contract of the parties.(WON the complainants who have worked in Bahrain are entitled to
the above-mentioned benefits provided by Amiri Decree No. 23 of Bahrain).
2. WON the Bahrain Law should apply in the case. (Assuming it is applicable WON complainants claim for the benefits provided therein
have prescribed.)
3. Whether or not the instant cases qualify as; a class suit (siningit ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)
RULING:
1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence governing the pleading and proof of a foreign law and
admitted in evidence a simple copy of the Bahrains Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector).
NLRC applied the Amiri Deere, No. 23 of 1976, which provides for greater benefits than those stipulated in the overseas-employment
contracts of the claimants. It was of the belief that where the laws of the host country are more favorable and beneficial to the workers,
then the laws of the host country shall form part of the overseas employment contract. It approved the observation of the POEA
Administrator that in labor proceedings, all doubts in the implementation of the provisions of the Labor Code and its implementing
regulations shall be resolved in favor of labor.
The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided that the laws of the host country
became applicable to said contracts if they offer terms and conditions more favorable than those stipulated therein. However there was a
part of the employment contract which provides that the compensation of the employee may be adjusted downward so that the total
computation plus the non-waivable benefits shall be equivalent to the compensation therein agree, another part of the same provision
categorically states that total remuneration and benefits
61 do not fall below that of the host country regulation and custom.
Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII, the parties that drafted it. Article 1377
of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing the stipulations of the
employment contract and the employees merely take it or leave it. The presumption is that there was an imposition by one party against
the other and that the employees signed the contracts out of necessity that reduced their bargaining power.

We read the overseas employment contracts in question as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel
thereof. The parties to a contract may select the law by which it is to be governed. In such a case, the foreign law is adopted as a
system to regulate the relations of the parties, including questions of their capacity to enter into the contract, the formalities to be
observed by them, matters of performance, and so forth. Instead of adopting the entire mass of the foreign law, the parties may just agree
that specific provisions of a foreign statute shall be deemed incorporated into their contract as a set of terms. By such reference to the
provisions of the foreign law, the contract does not become a foreign contract to be governed by the foreign law. The said law does not
operate as a statute but as a set of contractual terms deemed written in the contract.
A basic policy of contract is to protect the expectation of the parties. Such party expectation is protected by giving effect to the parties own
choice of the applicable law. The choice of law must, however, bear some relationship the parties or their transaction. There is no question
that the contracts sought to be enforced by claimants have a direct connection with the Bahrain law because the services were rendered
in that country.
2. NLRC ruled that the prescriptive period for the filing of the claims of the complainants was 3 years, as provided in Article 291 of the
Labor Code of the Philippines, and not ten years as provided in Article 1144 of the Civil Code of the Philippines nor one year as provided
in the Amiri Decree No. 23 of 1976.
Article 156 of the Amiri Decree No. 23 of 1976 provides:

A claim arising out of a contract of employment shall not actionable after the lapse of one year from the date of the expiry of the
Contract.
As a general rule, a foreign procedural law will not be applied in the forum (local court), Procedural matters, such as service of process,
joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is
based upon a foreign substantive law.
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive,
depending on the characterization given such a law. In Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955]), where the
issue was the applicability of the Panama Labor Code in a case filed in the State of New York for claims arising from said Code, the
claims would have prescribed under the Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit Court of
Appeals held that the Panamanian Law was procedural as it was not specifically intended to be substantive, hence, the prescriptive
period provided in the law of the forum should apply. The Court observed: . . . we are dealing with a statute of limitations of a foreign
country, and it is not clear on the face of the statute that its purpose was to limit the enforceability, outside as well as within the foreign
country concerned, of the substantive rights to which the statute pertains. We think that as a yardstick for determining whether that was
the purpose, this test is the most satisfactory one.
The Court further noted: Applying that test here it appears to us that the libellant is entitled to succeed, for the respondents have failed to
satisfy us that the Panamanian period of limitation in question was specifically aimed against the particular rights which the libellant seeks
to enforce. The Panama Labor Code is a statute having broad objectives. The American court applied the statute of limitations of New
York, instead of the Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be
substantive. Being considered merely a procedural law even in Panama, it has to give way to the law of the forum (local Court) on
prescription of actions.
However the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum (local
Court) has a borrowing statute. Said statute has the practical effect of treating the foreign statute of limitation as one of substance. A
borrowing statute directs the state of the forum (local Court) to apply the foreign statute of limitations to the pending claims based on a
foreign law. While there are several kinds of borrowing statutes, one form provides that an action barred by the laws of the place where it
accrued will not be enforced in the forum even though the local statute was not run against it.
Section 48 of Code of Civil Procedure is of this kind. It provides: If by the laws of the state or country where the cause of action arose, the
action is barred, it is also barred in the Philippine Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines. In the light of the 1987 Constitution, however, Section
48 cannot be enforced ex proprio vigore insofar as it62
ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23
of 1976.
The courts of the forum (local Court) will not enforce any foreign claim obnoxious to the forums public policy. To enforce the one-year
prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the
protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:The state shall promote social justice in all
phases of national development (Sec. 10).
The state affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare (Sec. 18).

In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
Thus, the applicable law on prescription is the Philippine law.
The next question is whether the prescriptive period governing the filing of the claims is 3 years, as provided by the Labor Code or 10
years, as provided by the Civil Code of the Philippines.
Article 1144 of the Civil Code of the Philippines provides:

The following actions must be brought within ten years from the time the right of action accross:
(1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment
In this case, the claim for pay differentials is primarily anchored on the written contracts between the litigants, the ten-year prescriptive
period provided by Art. 1144(l) of the New Civil Code should govern.
3. NO. A class suit is proper where the subject matter of the controversy is one of common or general interest to many and the parties are
so numerous that it is impracticable to bring them all before the court. When all the claims are for benefits granted under the Bahrain law
many of the claimants worked outside Bahrain. Some of the claimants were deployed in Indonesia under different terms and condition of
employment.
Inasmuch as the First requirement of a class suit is not present (common or general interest based on the Amiri Decree of the State of
Bahrain), it is only logical that only those who worked in Bahrain shall be entitled to rile their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for employees benefits), there is no
common question of law or fact. While some claims are based on the Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is interested only in his own demand and not in the claims of the other
employees of defendants. A claimant has no concern in protecting the interests of the other claimants as shown by the fact, that hundreds
of them have abandoned their co-claimants and have entered into separate compromise settlements of their respective claims. The
claimants who worked in Bahrain can not be allowed to sue in a class suit in a judicial proceeding.
WHEREFORE, all the three petitioners are DISMISSED
China Airlines vs. Chiok
G.R. No. 152122. July 30, 2003
Facts: Daniel Chiok purchased from China Airlines a passenger ticket for air transportation covering Manila-Taipei-Hong Kong-Manila.
The said ticket was exclusively endorsable to PAL.
Before Chiok his trip, the trips covered by the ticket were pre-scheduled and confirmed by the former. When petitioner arrived in Taipei, he
went to CAL to confirm his Hong Kong- Manila trip on board PAL. The CAL office attached a yellow sticker indicating the status was OK.
When Chiok reached Hong Kong, he then went to PAL 63 office to confirm his flight back to Manila. The PAL also confirmed the status of his
ticket and attached a ticket indicating a status OK. Chiok proceeded to Hong Kong airport for his trip to Manila. However, upon reaching
the PAL counter, he was told that the flight to Manila was cancelled due to typhoon. He was informed that all confirmed flight ticket holders
of PAL were automatically booked for the next flight the following day.
The next day, Chiok was not able to board the plane because his name did not appear on the computer as passenger for the said flight to
Manila.
Issue: Whether or not CAL is liable for damages?

Held: The contract of air transportation between the petitioner and respondent, with the former endorsing PAL the segment of Chioks
journey. Such contract of carriage has been treated in this jurisprudence as a single operation pursuant to Warsaw Convention, to which
the Philippines is a party.
In the instant case, PAL as the carrying agent of CAL, the latter cannot evade liability to respondent, Chiok, even though it may have been
only a ticket issuer for Hong Kong- Manila sector.
Cathay Pacific Airways vs. CA (1993)
Nature: Petition for review on certiorari of the decision of the Court of Appeals which affirmed with modification that of the trial
court by increasing the award of damages in favor of private respondent Tomas L. Alcantara.
Facts: On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger of petitioner Cathay Pacific Airways from Manila
to Hongkong and onward from Hongkong to Jakarta. The purpose of his trip was to attend the following day, October 20, 1975, a
conference with the Director General of Trade of Indonesia. He checked in his luggage which contained not only his clothing and articles
for personal use but also papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. Private respondent was told that his luggage was left
behind in Hongkong. For this, respondent Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal needs
until the luggage could be delivered to him. The respondent, as a result of the incident had to seek postponement of his pre-arranged
conference.
When his luggage finally reached Jakarta more than twenty four hours later, it was not delivered to him at his hotel but was required by
64 Embassy.
petitioner to be picked up by an official of the Philippine
Respondent filed a case for damages in the CFI of Lanao del Norte which ruled in his favour.
Both parties appealed to the Court of Appeals. Court of Appeals rendered its decision affirming the decision of the CFI but by modifying its
awards by increasing the damages.
Issue: Whether or not the Court of Appeals erred in not applying the Warsaw Convention to limit the liability of the respondent airline.
Ruling: No.

xxx although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the
Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for
breach of contract of carriage or as an absolute limit of the extent of that liability . The Warsaw Convention declares the carrier liable for
damages in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil
Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees is found or established,
which is clearly the case before Us. For, the Warsaw Convention itself provides in Art. 25 that
"(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is
caused by his wilfull misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted,
is considered to be equivalent to wilfull misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused under the same circumstances
by any agent of the carrier acting within the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed place and time, some
special species of injury must have been caused to him. For sure, the latter underwent profound distress and anxiety, and the fear of
losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate clothings for the occasion brought about by the delay
of the arrival of his luggage, to his embarrassment and consternation respondent Alcantara had to seek postponement of his pre-arranged
conference with the Director General of Trade of the host country.
In one case, his Court observed that a traveller would naturally suffer mental anguish, anxiety and shock when he finds that his luggage
did not travel with him and he finds himself in a foreign land without any article of clothing other than what he has on.
Thus, respondent is entitled to moral and exemplary damages. We however find the award by the Court of Appeals of P80,000.00 for
moral damages excessive, hence, We reduce the amount to P30,000.00. The exemplary damages of P20,000.00 being reasonable is
maintained, as well as the attorney's fees of P25,000.00 considering that petitioner's act or omission has compelled Alcantara to litigate
with third persons or to incur expenses to protect his interest.
65

Alitalia v. Intermediate Appellate Court (192 SCRA 9 )
Facts:
Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in Ispra, Italy. She was to read a paper
regarding foreign substances in food and the agriculture environment which she had specialized knowledge of. She booked a flight to Italy
with Alitalia airlines, petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive with her.
The airline informed her that her luggage was delayed because it was placed in one of the succeeding flights to Italy. She never got her
luggage.
When she got back to Manila she demanded that Alitalia compensate her for the damages that she suffered. Petitioner herein offered
free airline tickets in order to compensate for the alleged damages, however she rejected this offer and instead filed a case. Subsequently
it was found out that the luggages of Dr. Pablo were not placed in the succeeding flights. She received her luggage 11 months after and
after she had already instituted a case against Alitalia.
The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages. On appeal, the Court of Appeals affirmed
the decision and even increased the amount of damages to be awarded to Dr. Pablo. Hence this petition for certiorari.
Issue:
Whether or not Alitalia is liable for damages incurred by Dr. Pablo.
Held:
The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw Convention provides that an air carrier is made
liable for damages when: (1) the death, wounding or other bodily injury of a passenger if the accident causing it took place on board the
aircraft or in the course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to,
any registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3) delay in the transportation by
air of passengers, luggage or goods. However, the claim for damages may be brought subject to limitations provided in the said
convention.
In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper in Italy. This was due to the fact
thatAlitalia misplaced her luggage. There was no bad faith or malice on the part of Alitalia in the said delay in the arrival of her luggage.
Dr. Pablo received all her things which were returned to her in good condition although 11 months late. Therefore she shall receive
nominal damages for the special injury caused. 66
Alitalia v. IAC
Facts:
Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research grantee of the Philippine Atomic Energy
Agency, was invited to take part at a meeting of the Department of Research and Isotopes in Italy in view of her specialized knowledge in

foreign substances in food and the agriculture environment. She would be the second speaker on the first day of the meeting. Dr. Pablo
booked passage on petitioner Alitalia. She arrived in Milan on the day before the meeting, but was told that her luggage was delayed and
was in a succeeding flight from Rome to Milan. The luggage included her materials for the presentation. The succeeding flights did not
carry her luggage. Desperate, she went to Rome to try to locate the luggage herself, but to no avail. She returned to Manila without
attending the meeting. She demanded reparation for the damages. She rejected Alitalias offer of free airline tickets and commenced an
action for damages. As it turned out, the luggage was actually forwarded to Ispra, but only a day after the scheduled appearance. It was
returned to her after 11 months. The trial court ruled in favor of Dr. Pablo, and this was affirmed by the Court of Appeals.
Issues:
(1) Whether the Warsaw Convention should be applied to limit Alitalias liability
(2) Whether Dr. Pablo is entitled to nominal damages
Held:
(1) Under the Warsaw Convention, an air carrier is made liable for damages for:
a. The death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or I the course of its
operations of embarking or disembarking;
b. The destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it took place during the carriage by
air; and
c. Delay in the transportation by air of passengers, luggage or goods.
The convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his
wilful misconduct, or by such default on his part as is considered to be equivalent to wilful misconduct. The Convention does not thus
operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It should be
deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property
or delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper conduct
on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of
resulting injury.
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's
luggage was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some species
of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed -
a breach of its contract of carriage. Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be
restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage.
(2) She is not, of course, entitled to be compensated for loss or damage to her luggage. She is however entitled to nominal damages
which, as the law says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be
vindicated and recognized, and not for the purpose of indemnifying the plaintiff that for any loss suffered and this Court agrees that the
respondent Court of Appeals correctly set the amount thereof at Php 40,000.00.
The Court also agrees that respondent Court of Appeals correctly awarded attorneys fees to Dr. Pablo and the amount of Php 5,000.00
set by it is reasonable in the premises. The law authorizes recovery of attorneys fees inter alia where, as here, the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest or where the court deems it
just and equitable.
67

KOREAN AIRLINES CO., LTD., petitioner, vs. CA, THE HON. EDUARDO C. TUTAAN, Presiding Judge, CFI of Rizal, Branch V.
Quezon City, AZUCENA and JANUARIO TOMAS, respondents GR No L-61418 September 24, 1987.
FACTS:
Petitioner Korean Airlines issued to respondent Azucena Tomas a plane ticket to LA, California, US departing from the Manila International
Airport. Respondents arrived at the KAL check-in counter and presented her ticket to Torres, the personnel in charge. Torres refused to
check her in because the Immigration Office was already closed. Respondent Januario rushed to the said office which was in fact still
open and was told by the immigration officer on duty that his wife could still be cleared for departure.
Respondent Januario rushed back to Torres to convey this information and asked that his wife be checked in. Torres refused because her
seat had already been given to another passenger and that respondent Azucena had not checked in within forty minutes before departure
time.
No evidence in the record shows any rule requiring passengers to check in at least 40 minutes before departure time. Petitioner admits
that it has not been able to cite any statutory or administrative requirement to this effect. In fact, the alleged rule is not even a condition of
the plane ticket purchased by Azucena.
At the same time, petitioner invokes the memorandum-circular of February 24, 1975, issued by the Commission on Immigration and
Deportation which says that "all passengers authorized to leave for abroad shall be required to check in with the Immigration Departure
Control Officer at least 30 minutes before the scheduled departure." The record shows that respondent Azucena was ready to comply.
The lower court ruled in favour of the respondents.
ISSUE: Was KAL acting in bad faith when it refused to check-in the respondent?
HELD: YES
If, as Torres said, he gave Azucena's seat to a chance passenger thirty-eight minutes before departure time instead of waiting for
Azucena, then he was intentionally violating the said circular. Significantly, it was proved he was not telling the truth when he said the
Immigration Office was already closed although it was in fact still open at the time the private respondents arrived. Moreover, the
immigration officer on duty expressed his willingness to clear Azucena Tomas for departure, thus indicating that she was well within the
provisions of the memorandum-circular. Torres' refusal to check her in was clearly unjustified.
As it appeared later, the real reason why she could not be checked in was not her supposed tardiness but the circumstance that Torres
had prematurely given her seat to a chance passenger. That person certainly had less right to prior accommodation than the private
respondent herself.
68
FIRST DIVISION
[G.R. No. 78656. August 30, 1988.]

TRANS WORLD AIRLINES, Petitioner, v. COURT OF APPEALS and ROGELIO A. VINLUAN, Respondents.
Guerrero & Torres Law Offices for Petitioner.
Angara, Abello, Concepcion, Regala & Cruz for Private Respondent.
The Solicitor General for public Respondent.
SYLLABUS
1. CIVIL LAW; DAMAGES; MORAL AND EXEMPLARY DAMAGES; BASIS FOR THE AWARD THEREOF IN THE CASE AT BAR. The
discrimination is obvious and the humiliation to which private respondent was subjected is undeniable. Consequently, the award of moral
and exemplary damages by the respondent court is in order. At the time of this unfortunate incident, the private respondent was a
practicing lawyer, a senior partner of a big law firm in Manila. He was a director of several companies and was active in civic and social
organizations in the Philippines. Considering the circumstances of this case and the social standing of private respondent in the
community, he is entitled to the award of moral and exemplary damages. However, the moral damages should be reduced to
P300,000.00, and the exemplary damages should be reduced to P200,000.00. This award should be reasonably sufficient to indemnify
private respondent for the humiliation and embarrassment that he suffered and to serve as an example to discourage the repetition of
similar oppressive and discriminatory acts.
2. ID.; ID.; MORAL DAMAGES; PRESENCE OF BAD FAITH JUSTIFIES AWARD THEREOF. Petitioner sacrificed the comfort of its first
class passengers including private respondent Vinluan for the sake of economy. Such inattention and lack of care for the interest of its
passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the
passenger to the award of moral damages. More so in this case where instead of courteously informing private respondent of his being
downgraded under the circumstances, he was angrily rebuffed by an employee of petitioner.
Cathay Pacific Airways Ltd. Vs. Vasquez (399 SCRA 207)

69
[G.R. No. 150843. March 14, 2003]
FACTS:
In respondents return flight to Manila from Hongkong, they were deprived of their original seats in Business Class with their companions
because of overbooking. Since respondents were privileged members, their seats were upgraded to First Class. Respondents refused but
eventually persuaded to accept it. Upon return to Manila, they demanded that they be indemnified in the amount of P1million for the
humiliation and embarrassment caused by its employees. Petitioners Country Manager failed to respond. Respondents instituted action

for damages. The RTC ruled in favor of respondents. The Court of Appeals affirmed the RTC decision with modification in the award of
damages.
ISSUE:
Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud and (3) were liable for damages.
RULING:
(1) YES. Although respondents have the priority of upgrading their seats, such priority may be waived, as what respondents did. It should
have not been imposed on them over their vehement objection.
(2) NO. There was no evident bad faith or fraud in upgrade of seat neither on overbooking of flight as it is within 10% tolerance.
(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00. Moral damages (Art.2220, NCC) and attorneys
fees were set aside and deleted from the Court of Appeals ruling.
Cathay Pacific v. Sps. Vasquez
FACTS
Private respondents were passengers of petitioner booked on its Flight CX-905 with the route of Manila to Hongkong and back. They,
along with their maid and two friends, went to HK for pleasure and business. While the maids boarding pass was for the Economy
Class, the spouses and their two friends indicated that 70they were on the Business Class. However, while in Kai Tak Airport, after checking
in their luggage and presenting their boarding passes to the ground stewardess, they were informed by Ms. Chiu, a ground attendant, that
there was a seat change from Business to First Class for the spouses. It is to be noted that the Vasquezes are frequent flyers of the airline
and are Gold Card members of its Marco Polo Club. The Marco Polo Club is part of the marketing strategy of Cathay through which it
accords its frequent flyers several privileges, including priority for upgrading of booking without any extra charge whenever an opportunity
arises. Upon being informed of this change, Dr. Vasquez refused the same, saying that it would not look nice for them as hosts to travel in
First Class and their guests, in Business Class, not to mention that they also had to discuss business matters during the flight. He asked
Ms. Chiu to have other passengers transferred instead. Shocked by this unusual reaction to a seat upgrade, Ms. Chiu, after consulting
with her supervisor, informed them that if they would not avail of the privilege, they would not be allowed to take the flight. Eventually, after
talking with his friends, Dr. Vasquez agreed. He and his wife took the First Class Cabin. Back in Manila, after apparent inaction on the part

of Cathay, the Vasquezes filed a damage suit, asking for temperate, moral and exemplary damages, as well as attorneys fees. They
attributed discourteous and humiliating behavior to Ms. Chiu. Cathay answered that seat upgrading is a common practice among airlines.
The TC ruled for the spouses, awarding them nominal (P100,000 each), moral (P2M each), exemplary (P5M each) and attorneys fees
(P1M each). The CA affirmed, but deleted the award of exemplary damages and reduced the awards of moral and nominal damages and
attorneys fees.
ISSUE/s
1. WON Cathay breached its contract of carriage with the Vs when it upgraded their seat accommodation.
2. WON the upgrading was made in bad faith or with fraud.
3. WON the Vasquezes are entitled to damages.
RULING
1. YES. The Vazquezes never denied that they were members of Cathays Marco Polo Club. They knew that as members of the Club,
they had priority for upgrading of their seat accommodation at no extra cost when an opportunity arises. But, just like other privileges,
such priority could be waived. The Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege
or would consent to a change of seat accommodation before their seat assignments were given to other passengers. Normally, one would
appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever their reason was and however odd it might
be, the Vazquezes had every right to decline the upgrade and insist on the Business Class accommodation they had booked for and
which was designated in their boarding passes. They clearly waived their priority or preference when they asked that other passengers be
given the upgrade. It should not have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay
breached its contract of carriage with the Vazquezes.
2. NO. The Vazquezes were not induced to agree to the upgrading through insidious words or deceitful machination or through willful
concealment of material facts. Upon boarding, Ms. Chiu told the Vazquezes that their accommodations were upgraded to First Class in
view of their being Gold Card members of Cathays Marco Polo Club. She was honest in telling them that their seats were already
given to other passengers and the Business Class Section was fully booked. Ms. Chiu might have failed to consider the remedy of offering
the First Class seats to other passengers. But, we find no bad faith in her failure to do so, even if that amounted to an exercise of poor
judgment. Neither was the transfer of the Vazquezes effected for some evil or devious purpose. As testified to by Mr. Robson, the First
Class Section is better than the Business Class Section in terms of comfort, quality of food, and service from the cabin crew.
3. YES. Case law establishes the following requisites for the award of moral damages: (1) there must be an injury clearly sustained by the
claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful
act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is
predicated on any of the cases stated in Article 2219 of the Civil Code.
Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the carrier is guilty of fraud
or bad faith or where the mishap resulted in the death of a passenger. Where in breaching the contract of carriage the airline is not shown
to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the
obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability does not include moral and
exemplary damages. The breach of contract of carriage, which consisted in the involuntary upgrading of the Vazquez seat
accommodation, was not attended by fraud or bad faith. The Court of Appeals award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct. It is a requisite in the grant of exemplary damages
that the act of the offender must be accompanied by 71 bad faith or done in wanton, fraudulent or malevolent manner. Such requisite is
absent in this case. Moreover, to be entitled thereto the claimant must first establish his right to moral, temperate, or compensatory
damages. Since the Vazquezes are not entitled to any of these damages, the award for exemplary damages has no legal basis. And
where the awards for moral and exemplary damages are eliminated, so must the award for attorneys fees.
The most that can be adjudged in favor of the Vazquezes for Cathays breach of contract is an award for nominal damages under Article
2221 of the Civil Code, which reads as follows:
Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

Augusto Santos III vs Northwest Orient Airlines
210 SCRA 256 Political Law Constitutional Law The Judicial Department Judicial Review Constitutionality of a Treaty
Warsaw Convention
Augusto Benedicto Santos III is a minor represented by his dad. In October 1986, he bought a round trip ticket from Northwest Orient
Airlines (NOA) in San Francisco. His flight would be from San Francisco to Manila via Tokyo and back to San Francisco. His scheduled
flight was in December. A day before his departure he checked with NOA and NOA said he made no reservation and that he bought no
ticket. The next year, due to the incident, he sued NOA for damages. He sued NOA in Manila. NOA argued that Philippine courts have no
jurisdiction over the matter pursuant to Article 28(1) of the Warsaw Convention, which provides that complaints against international
carriers can only be instituted in:
1. the court of the domicile of the carrier (NOAs domicile is in the USA);
2. the court of its principal place of business (which is San Francisco, USA);
3. the court where it has a place of business through which the contract had been made (ticket was purchased in San Francisco so thats
where the contract was made);
4. the court of the place of destination (Santos bought a round trip ticket which final destination is San Francisco).
The lower court ruled in favor of NOA. Santos III averred that Philippine courts have jurisdiction over the case and he questioned the
constitutionality of Article 28 (1) of the Warsaw Convention.
72
ISSUE: Whether or not Philippine courts have jurisdiction over the matter to conduct judicial review.
HELD: No. The Supreme Court ruled that they cannot rule over the matter for the SC is bound by the provisions of the Warsaw
Convention which was ratified by the Senate. Until & unless there would be amendment to the Warsaw Convention, the only remedy for
Santos III is to sue in any of the place indicated in the Convention such as in San Francisco, USA.
The SC cannot rule upon the constitutionality of Article 28(1) of the Warsaw Convention. In the first place, it is a treaty which was a joint
act by the legislative and the executive. The presumption is that it was first carefully studied and determined to be constitutional before it

was adopted and given the force of law in this country. In this case, Santos was not able to offer any compelling argument to overcome
the presumption.
Augusto Santos III vs Northwest Orient Airlines
G.R. No. 101538, June 23, 1992
INTERNATIONAL LAW: Warsaw Convention is constitutional, a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.
INTERNATIONAL LAW: Warsaw Convention, when applicable: To all "international transportations of persons by aircraft for
hire." Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the
ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within
the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights
and liabilities of the airline and its passenger.
INTERNATIONAL LAW: Warsaw Convention, jurisdiction: Place of Destination vis-a-vis Agreed Stopping Place: The contract is a
single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in
this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of
departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of
destination."
FACTS:
Petitioner is a minor and a resident of the Philippines. Private respondent Nortwest Orient Airlines (NOA) is a foreign corporation with
principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines. The petitioner purchased
from NOA a round-trip ticket in San Francisco, U.S.A. In December 19, 1986, the petitioner checked in the at the NOA counter in the San
Francisco airport for his departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no
reservation for his flight for Tokyo to Manila. He therefore had to be wait-listed. On March 12, 1987, the petitioner sued NOA for damages
in RTC Makati. NOA moved to dismiss the complaint on the ground of lack of jurisdiction.
73
ISSUE:
Whether or not Article 28 (1) of the Warsaw Convention is in accordance with the constitution so as to deprive the Philippine
urts jurisdiction over the case
HELD:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either
before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the
contract has been made, or before the court at the place of destination.
Constitutionality of the Warsaw Convention
The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by
Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate,
through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on
October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our
formal adherence thereto. "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the
Republic of the Philippines and the citizens thereof."
The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of
law in this country.
Does the Warsaw Convention apply in this case?
By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire.
International transportation is defined in paragraph (2) of Article 1 as follows:
(2) For the purposes of this convention, the expression "international transportation" shall mean any transportation in which, according to
the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation
or a transshipment, are situated [either] within the territories of two High Contracting Parties . . .
Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket.
When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories
of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of
the airline and its passenger.
Since the flight involved in the case at bar is international, the same being from the United States to the Philippines and back to the United
States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action
for damages may be brought.
Does Article 28(1) refer to Jurisdiction or Venue?
...where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense
must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must
be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue
of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted.
Was the case properly filed in the Philippines, since the plaintiffs destination was Manila?
The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or,
specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate
destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates
that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed
stopping place and not the destination.
74
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed
stopping place" that controls for purposes of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the
singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of
departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of
destination."

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.
75

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CONTRACTUAL RELATIONS

Title II. - CONTRACTS

ESSENTIAL REQUISITES OF CONTRACTS

SECTION 4. - Common Carriers (n)

SUBSECTION 2. - Vigilance Over Goods

VOID AND VOIDABLE MARRIAGES

(5) Incestuous marriages mentioned in Article 81;

(1) Between ascendants and descendants of any degree;