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CA  Philippine Court may assume jurisdiction over the

case if it chooses to do so; provided, that the following
120135 March 31, 2003
requisites are met:
Lessons Applicable: forum non conveniens (conflicts
 (1) that the Philippine Court is one to
of laws)
which the parties may conveniently resort to; - present
 (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the
 Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua facts; and, - present
(Litonjuas) were engaged in the shipping business  (3) that the Philippine Court has or is likely
owning 2 vessels: Don Aurelio and El Champion to have power to enforce its decision - present
 Because their business where doing well, Bank of  This Court further ruled that while it is within the
America (BA) offered them to take a loan for them to discretion of the trial court to abstain from assuming
increase their ships. jurisdiction on this ground, it should do so only after
 BA acquired through them as borrowers four more vital facts are established, to determine whether
ships: (a) El Carrier; (b) El General; (c) El Challenger; special circumstances require the court's desistance;
and (d) El Conqueror. The registration, operation, and that the propriety of dismissing a case based on
income, funds, possession of the vessel belonged to this principle of forum non conveniens requires a
the corporation. factual determination, hence it is more properly
 May 10, 1993: Litonjuas filed a complaint to the considered a matter of defense
RTC Pasig claming that during its operations and the 2. NO.
foreclosure sale, BA as trutees failed to fully render an  litis pendentia to be a ground for the dismissal of
account of the income. They lost all their 6 vessels an action there must be:
and 10% of their personal funds and they still have an  (a) identity of the parties or at least such
unpaid balance of their loans. as to represent the same interest in both actions
 BA NT&SA, and BA international filed a Motion to -present
Dismiss on grounds of forum non conveniens and lack  (b) identity of rights asserted and relief
of cause of action against them prayed for, the relief being founded on the same acts -
 RTC and CA: Dismissed not shown
 (c) the identity in the two cases should be
ISSUE: such that the judgment which may be rendered in one
1. W/N there is grounds of forum non conveniens would, regardless of which party is successful, amount
2. W/N there is litis pendentia to res judicata in the other - not shown
 It merely mentioned that civil cases were filed in
HELD: Denied Hongkong and England

1. NO.
Philippine Export and Foreign Loan Guarantee
 The doctrine of forum non-conveniens, literally
Corporation v V.P. Eusebio Construction Inc.
meaning 'the forum is inconvenient', emerged in
private international law to deter the practice of global
forum shopping
 Under this doctrine, a court, in conflicts of law
1. The State Organization of Buildings (SOB), Ministry of
cases, may refuse impositions on its jurisdiction where
Housing and Construction, Baghdad, Iraq awarded the
it is not the most "convenient" or available forum and
construction of the Institute of Physical Therapy-Medical
the parties are not precluded from seeking remedies
Rehabilitation Center in Iraq to Ayjal Trading and
Contracting Company for a total contract price of about
 Whether a suit should be entertained or dismissed
on the basis of said doctrine depends largely upon the
facts of the particular case and is addressed to the
2. Spouses Santos, in behalf of 3-Plex International, Inc., a
sound discretion of the trial court.
Page 1 of 12
local contractor engaged in construction business, entered that it already paid to Rafidain Bank. The Central Bank
into a joint venture agreement with Ayjal wherein the authorized the remittance to Al Ahli Bank representing the
former undertook the execution of the entire a project, full payment of the performance counter-guarantee for
while the latter would be entitled to a commission of 4%. VPECI's project in Iraq.

3. 3-Plex not accredited by the Philippine Overseas 10. Philguarantee sent letters to respondents demanding
Construction Board (POCB) assigned and transferred all the full payment of the surety bond. Respondents failed to
its rights and interests to VPECI. pay so petitioner filed a civil case for collection of sum of
4. The SOB required the contractors to submit a
performance bond representing 5% of the total contract 11. Trial Court ruling: Dismissed. Philguarantee had no
price, an advance payment bond representing 10% of the valid cause of action against the respondents. The joint
advance payment to be released upon signing of the venture incurred no delay in the execution of the project
contract. To comply with these requirements 3-Plex and considering that SOB's violations of the contract rendered
VPECI applied for a guarantee with Philguarantee, a impossible the performance of its undertaking.
government financial institution empowered to issue
guarantees for qualified Filipino contractors. 12. CA: Affirmed.

5. But what SOB required was a guarantee from the Issue:

Rafidain Bank of Baghdad so Rafidain Bank issued a What law should be applied in determining whether or not
performance bond in favor of SOB on the condition that contractor (joint venture) has defaulted?
another foreign bank (not Phil Guarantee) would issue the
counter-guarantee. Hence, Al Ahli Bank of Kuwait was Held:
chosen to provide the counter guarantee. The question of whether there is a breach of the
agreement which includes default pertains to the
6.Afterwards, SOB and the joint venture of VPECI and INTRINSIC validity of the contract.
Ayjal executed the service contract. Under the contract,
the joint venture would supply manpower and materials, No conflicts rule on essential validity of contracts is
SOB would refund 25% of the project cost in Iraqi Dinar expressly provided for in our laws. The rule followed by
and 75% in US dollars at an exchange rate of 1 Dinar to most legal systems is that the intrinsic validity of a contract
$3.37. must be governed by lex contractus (proper law of the
contract). This may be the law voluntarily agreed upon by
7.The project was not completed. Upon seeing the the parties (lex loci voluntatis) or the law intended by them
impossibility of meeting the deadline, the joint venture either expressly or implicitly (lex loci intentionis). The law
worked for the renewal or extension (12x) of the selected may be implied from factors such as substantial
performance bond up to December 1986. connection with the transaction, or the nationality or
domicile of the parties. Philippine courts adopt this: to allow
8. In October 1986, Al Ahli Bank sent a telex call the parties to select the law applicable to their contract,
demanding full payment of its performance bond SUBJECT to the limitation that it is not against the law,
counter-guarantee. Upon receipt, VPECI requested Iraq morals, public policy of the forum and that the chosen law
Trade and Economic Development Minister Fadhi Hussein must bear a substantive relationship to the transaction.
to recall the telex for being in contravention of its mutual
agreement that the penalty will be held in abeyance until In the case, the service contract between SOB and VPECI
completion of the project. It also wrote SOB protesting the contains no express choice of law. The laws of Iraq bear
telex since the Iraqi government lacks foreign exchange to substantial connection to the transaction and one of the
pay VPECI and the non-compliance with the 75% billings parties is the Iraqi government. The place of performance
in US dollars. is also in Iraq. Hence, the issue of whether VPECI
defaulted may be determined by the laws of Iraq.
9. Philguarantee received another telex from Al Ahli stating
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BUT! Since foreign law was not properly pleaded or proved,  August 28, 1980: C.F. received from Deputy
processual presumption will apply. Sheriff Rolando Balingit the writ of summons but failed
to appear at the scheduled hearing.
According to Art 1169 of the Civil Code: In reciprocal  January 29, 1981: Tokyo Court rendered judgment
obligations, neither party incurs in delay if the other party ordering the C.F. to pay 83,158,195 Yen and damages
does not comply or is not ready to comply in a proper for delay at the rate of 6% per annum from August 28,
manner what is incumbent upon him. 1980 up to and until payment is completed
 March 24, 1981: C.F. received from Deputy Sheriff
As found by the lower courts: the delay or non-completion Balingit copy of the judgment. C.F. did not appeal so it
of the project was caused by factors not imputable to the became final and executory
Joint Venture, it was rather due to the persistent violations  May 20, 1983: Northwest filed a suit for
of SOB, particularly it's failure to pay 75% of the enforcement of the judgment a RTC
accomplished work in US dollars. Hence, the joint venture  July 16, 1983: C.F. averred that the Japanese
does not incur in delay if the other party(SOB) fails to Court sought to be enforced is null and void and
perform the obligation incumbent upon him. unenforceable in this jurisdiction having been
rendered without due and proper notice and/or with
collusion or fraud and/or upon a clear mistake of law
NORTHWEST AIRLINES VS CA and fact. The foreign judgment in the Japanese Court
sought in this action is null and void for want of
jurisdiction over the person of the defendant
FACTS: considering that this is an action in personam. The
 Northwest Airlines (Northwest) and C.F. Sharp & process of the Court in Japan sent to the Philippines
Company (C.F.), through its Japan branch, entered which is outside Japanese jurisdiction cannot confer
into an International Passenger Sales Agency jurisdiction over the defendant in the case before the
Agreement, whereby the Northwest authorized the C.F. Japanese Court of the case at bar
to sell its air transportation tickets  CA sustained RTC: Court agrees that if the C.F. in
 March 25, 1980: Unable to remit the proceeds of a foreign court is a resident in the court of that foreign
the ticket sales, Northwest sued C.F. in Tokyo, Japan, court such court could acquire jurisdiction over the
for collection of the unremitted proceeds of the ticket person of C.F. but it must be served in the territorial
sales, with claim for damages jurisdiction of the foreign court
 April 11, 1980: writ of summons was issued by the
36th Civil Department, Tokyo District Court of Japan ISSUE: W/N the Japanese Court has jurisdiction over C.F.
 The attempt to serve the summons was
unsuccessful because Mr. Dinozo was in Manila and HELD: YES. instant petition is partly GRANTED, and the
would be back on April 24, 1980 challenged decision is AFFIRMED insofar as it denied
 April 24, 1980: Mr. Dinozo returned to C.F. NORTHWEST's claims for attorneys fees, litigation
Office to serve the summons but he refused to receive expenses, and exemplary damages
claiming that he no longer an employee  Consequently, the party attacking (C.F.) a foreign
 After the 2 attempts of service were judgment has the burden of overcoming the
unsuccessful, Supreme Court of Japan sent the presumption of its validity
summons together with the other legal documents to  Accordingly, the presumption of validity and
the Ministry of Foreign Affairs of Japan> Japanese regularity of the service of summons and the decision
Embassy in Manila>Ministry (now Department) of thereafter rendered by the Japanese court must stand.
Foreign Affairs of the Philippines>Executive Judge of  Applying it, the Japanese law on the matter is
the Court of First Instance (now Regional Trial Court) presumed to be similar with the Philippine law on
of Manila who ordered Deputy Sheriff Rolando service of summons on a private foreign corporation
Balingit>C.F. Main Office doing business in the Philippines. Section 14, Rule 14
of the Rules of Court provides that if the defendant is a

Page 3 of 12
foreign corporation doing business in the Philippines, SHARP may be deemed a resident of Japan, and, as
service may be made: such, was amenable to the jurisdiction of the courts
 (1) on its resident agent designated in therein and may be deemed to have assented to the
accordance with law for that purpose, or, said courts' lawful methods of serving process.
 (2) if there is no such resident agent, on  Accordingly, the extraterritorial service of
the government official designated by law to that effect; summons on it by the Japanese Court was valid not
or only under the processual presumption but also
 (3) on any of its officers or agents within because of the presumption of regularity of
the Philippines. performance of official duty.

 If the foreign corporation has designated

an agent to receive summons, the designation is
Saudi Arabian Airlines vs Court of Appeals
exclusive, and service of summons is without force
and gives the court no jurisdiction unless made upon
him. 297 SCRA 469 – Conflict of Laws – Private
 Where the corporation has no such agent, International Law – Situs – Locus Actus
service shall be made on the government official
designated by law, to wit:
 (a) the Insurance Commissioner
in the case of a foreign insurance company
 (b) the Superintendent of Banks,
in the case of a foreign banking corporation Milagros Morada was working as a stewardess for Saudia
 (c) the Securities and Exchange Arabian Airlines. In 1990, while she and some co-workers
Commission, in the case of other foreign corporations were in a lay-over in Jakarta, Indonesia, an Arab co-worker
duly licensed to do business in the Philippines. tried to rape her in a hotel room. Fortunately, a roomboy
Whenever service of process is so made, the heard her cry for help and two of her Arab co-workers were
government office or official served shall transmit by arrested and detained in Indonesia. Later, Saudia Airlines
mail a copy of the summons or other legal proccess to re-assigned her to work in their Manila office. While
the corporation at its home or principal office. The working in Manila, Saudia Airlines advised her to meet with
sending of such copy is a necessary part of the a Saudia Airlines officer in Saudi. She did but to her
service. surprise, she was brought to a Saudi court where she was
 The service on the proper government official interrogated and eventually sentenced to 5 months
under Section 14, Rule 14 of the Rules of Court, in imprisonment and 289 lashes; she allegedly violated
relation to Section 128 of the Corporation Code Muslim customs by partying with males. The Prince of
 Our laws and jurisprudence indicate a purpose to Makkah got wind of her conviction and the Prince
assimilate foreign corporations, duly licensed to do determined that she was wrongfully convicted hence the
business here, to the status of domestic corporations Prince absolved her and sent her back to the Philippines.
 We think it would be entirely out of line with this Saudia Airlines later on dismissed Morada. Morada then
policy should we make a discrimination against a sued Saudia Airlines for damages under Article 19 and 21
foreign corporation, like the petitioner, and subject its of the Civil Code. Saudia Airlines filed a motion to dismiss
property to the harsh writ of seizure by attachment on the ground that the RTC has no jurisdiction over the
when it has complied not only with every requirement case because the applicable law should be the law of
of law made specially of foreign corporations, but in Saudi Arabia. Saudia Airlines also prayed for other reliefs
addition with every requirement of law made of under the premises.
domestic corporations
 In as much as SHARP was admittedly doing
business in Japan through its four duly registered ISSUE: Whether or not Saudia Airlines’ contention is
branches at the time the collection suit against it was correct.
filed, then in the light of the processual presumption,

Page 4 of 12
HELD: No. Firstly, the RTC has acquired jurisdiction over This is a consolidation of 3 cases of SPECIAL CIVIL
Saudia Airlines when the latter filed a motion to dismiss ACTIONS in the Supreme Court for Certiorari.
with petition for other reliefs. The asking for other reliefs
effectively asked the court to make a determination of On June 6, 1984, Cadalin, Amul and Evangelista, in their
Saudia Airlines’s rights hence a submission to the court’s own behalf and on behalf of 728 other OCWs instituted a
jurisdiction. class suit by filing an “Amended Complaint” with the POEA

Secondly, the RTC has acquired jurisdiction over the case for money claims arising from their recruitment by ASIA

because as alleged in the complaint of Morada, she is INTERNATIONAL BUILDERS CORPORATION (AIBC)
and employment by BROWN & ROOT INTERNATIONAL,
bringing the suit for damages under the provisions of our
Civil Law and not of the Arabian Law. Morada then has the INC (BRI) which is a foreign corporation with headquarters

right to file it in the QC RTC because under the Rules of in Houston, Texas, and is engaged in construction; while

Court, a plaintiff may elect whether to file an action in AIBC is a domestic corporation licensed as a service
contractor to recruit, mobilize and deploy Filipino workers
personam (case at bar) in the place where she resides or
where the defendant resides. Obviously, it is well within her for overseas employment on behalf of its foreign principals.

right to file the case here because if she’ll file it in Saudi

Arabia, it will be very disadvantageous for her (and of The amended complaint sought the payment of the
course, again, Philippine Civil Law is the law invoked). unexpired portion of the employment contracts, which was
terminated prematurely, and secondarily, the payment of
Thirdly, one important test factor to determine where to file
the interest of the earnings of the Travel and Reserved
a case, if there is a foreign element involved, is the so
Fund; interest on all the unpaid benefits; area wage and
called “locus actus” or where an act has been done. In the
salary differential pay; fringe benefits; reimbursement of
case at bar, Morada was already working in Manila when
SSS and premium not remitted to the SSS; refund of
she was summoned by her superior to go to Saudi Arabia
withholding tax not remitted to the BIR; penalties for
to meet with a Saudia Airlines officer. She was not
committing prohibited practices; as well as the suspension
informed that she was going to appear in a court trial.
of the license of AIBC and the accreditation of BRII
Clearly, she was defrauded into appearing before a court
trial which led to her wrongful conviction. The act of
On October 2, 1984, the POEA Administrator denied the
defrauding, which is tortuous, was committed in Manila
“Motion to Strike Out of the Records” filed by AIBC but
and this led to her humiliation, misery, and suffering. And
required the claimants to correct the deficiencies in the
applying the torts principle in a conflicts case, the SC finds
complaint pointed out.
that the Philippines could be said as a situs of the tort (the
place where the alleged tortious conduct took place).
AIB and BRII kept on filing Motion for Extension of Time to
file their answer. The POEA kept on granting such


MARCH 28, 2013 ~ VBDIAZ

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.
DONATO B. EVANGELISTA, and the rest of 1,767
NAMED-COMPLAINANTS, thru and by their
On December 27, 1984, the POEA Administrator issued an
Attorney-in-fact, Atty. GERARDO A. DEL MUNDOvs.
order directing AIBC and BRII to file their answers within
ten days from receipt of the order.
INTERNATIONAL BUILDERS CORPORATION (at madami pang motions ang na-file, new complainants
GRN 104776, December 5,1994. joined the case, ang daming inavail na remedies ng both
On June 19, 1987, AIBC finally submitted its answer to the
complaint. At the same hearing, the parties were given a
Page 5 of 12
period of 15 days from said date within which to submit A worker shall be entitled to such leave upon a quantum
their respective position papers. On February 24, 1988, meruit in respect of the proportion of his service in that
AIBC and BRII submitted position paper. On October 27, year.”
1988, AIBC and BRII filed a “Consolidated Reply,” POEA
Adminitartor rendered his decision which awarded the Art. 107: A contract of employment made for a period of
amount of $824, 652.44 in favor of only 324 complainants. indefinite duration may be terminated by either party
Claimants submitted their “Appeal Memorandum For thereto after giving the other party prior notice before such
Partial Appeal” from the decision of the POEA. AIBC also termination, in writing, in respect of monthly paid workers
filed its MR and/or appeal in addition to the “Notice of and fifteen days’ notice in respect of other workers. The
Appeal” filed earlier. party terminating a contract without the required notice
shall pay to the other party compensation equivalent to the
NLRC promulgated its Resolution, modifying the decision amount of wages payable to the worker for the period of
of the POEA. The resolution removed some of the benefits such notice or the unexpired portion thereof.”
awarded in favor of the claimants. NLRC denied all the
MRs. Hence, these petitions filed by the claimants and by Art. Ill: x x x the employer concerned shall pay to such
AlBC and BRII. worker, upon termination of employment, a leaving
indemnity for the period of his employment calculated on
The case rooted from the Labor Law enacted by Bahrain the basis of fifteen days’ wages for each year of the first
where most of the complainants were deployed. His three years of service and of one month’s wages for each
Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain, issued year of service thereafter. Such worker shall be entitled to
his Amiri Decree No. 23 on June 16, 1176, otherwise payment of leaving indemnity upon a quantum meruit in
known re the Labour Law for the Private Sector. Some of proportion to the period of his service completed within a
the provision of Amiri Decree No. 23 that are relevant to year.”
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 1. WON the foreign law should govern or the contract of
a minimum of twenty-rive per centurn thereof for hours the parties.(WON the complainants who have worked in
worked during the day; and by a minimum off fifty per Bahrain are entitled to the above-mentioned benefits
centurn thereof for hours worked during the night which provided by Amiri Decree No. 23 of Bahrain).
shall be deemed to being from seven o’clock in the
evening until seven o’clock in the morning .”
2. WON the Bahrain Law should apply in the case.
(Assuming it is applicable WON complainants’ claim for the
Art. 80: Friday shall be deemed to be a weekly day of rest benefits provided therein have prescribed.)
on full pay.
If employee worked, 150% of his normal wage shall be
3. Whether or not the instant cases qualify as; a class suit
paid to him x x x.”
(siningit ko nalang)
(the rest of the issues in the full text of the case refer to
Art. 81; x x x When conditions of work require the worker to Labor Law)
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

1. NLRC set aside Section 1, Rule 129 of the 1989
continuous service with his employer shall be entitled to
Revised Rules on Evidence governing the pleading and
Laos on full pay for a period of not less than 21 days for
proof of a foreign law and admitted in evidence a simple
each year increased to a period not less than 28 days after
copy of the Bahrain’s Amiri Decree No. 23 of 1976 (Labour
five continuous years of service.”
Law for the Private Sector).

Page 6 of 12
NLRC applied the Amiri Deere, No. 23 of 1976, which observed by them, matters of performance, and so forth.
provides for greater benefits than those stipulated in the Instead of adopting the entire mass of the foreign law, the
overseas-employment contracts of the claimants. It was of parties may just agree that specific provisions of a foreign
the belief that where the laws of the host country are more statute shall be deemed incorporated into their contract “as
favorable and beneficial to the workers, then the laws of a set of terms.” By such reference to the provisions of the
the host country shall form part of the overseas foreign law, the contract does not become a foreign
employment contract. It approved the observation of the contract to be governed by the foreign law. The said law
POEA Administrator that in labor proceedings, all doubts in does not operate as a statute but as a set of contractual
the implementation of the provisions of the Labor Code terms deemed written in the contract.
and its implementing regulations shall be resolved in favor
of labor. A basic policy of contract is to protect the expectation of
the parties. Such party expectation is protected by giving
The overseas-employment contracts, which were prepared effect to the parties’ own choice of the applicable law. The
by AIBC and BRII themselves, provided that the laws of choice of law must, however, bear some relationship the
the host country became applicable to said contracts if parties or their transaction. There is no question that the
they offer terms and conditions more favorable than those contracts sought to be enforced by claimants have a direct
stipulated therein. However there was a part of the connection with the Bahrain law because the services
employment contract which provides that the were rendered in that country.
compensation of the employee may be “adjusted
downward so that the total computation plus the 2. NLRC ruled that the prescriptive period for the filing of
non-waivable benefits shall be equivalent to the the claims of the complainants was 3 years, as provided in
compensation” therein agree,’ another part of the same Article 291 of the Labor Code of the Philippines, and not
provision categorically states “that total remuneration and ten years as provided in Article 1144 of the Civil Code of
benefits do not fall below that of the host country regulation the Philippines nor one year as provided in the Amiri
and custom.” Decree No. 23 of 1976.

Any ambiguity in the overseas-employment contracts Article 156 of the Amiri Decree No. 23 of 1976 provides:
should be interpreted against AIBC and BRII, the parties “A claim arising out of a contract of employment shall not
that drafted it. Article 1377 of the Civil Code of the actionable after the lapse of one year from the date of the
Philippines provides: expiry of the Contract”.
‘The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the
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
Said rule of interpretation is applicable to contracts of requisites for appeal, and so forth, are governed by the
adhesion where there is already a prepared form laws of the forum. This is true even if the action is based
containing the stipulations of the employment contract and upon a foreign substantive law.
the employees merely “take it or leave it.” The presumption
is that there was an imposition by one party against the
A law on prescription of actions is sui generis in Conflict of
other and that the employees signed the contracts out of
Laws in the sense that it may be viewed either as
necessity that reduced their bargaining power.
procedural or substantive, depending on the
We read the overseas employment contracts in question
characterization given such a law. In Bournias v. Atlantic
as adopting the provisions of the Amiri Decree No. 23 of
Maritime Company (220 F. 2d. 152, 2d Cir. [1955]), where
1976 as part and parcel thereof. The parties to a contract
the issue was the applicability of the Panama Labor Code
may select the law by which it is to be governed. In such a
in a case filed in the State of New York for claims arising
case, the foreign law is adopted as a “system” to regulate
from said Code, the claims would have prescribed under
the relations of the parties, including questions of their
the Panamanian Law but not under the Statute of
capacity to enter into the contract, the formalities to be
Limitations of New York. The U.S. Circuit Court of Appeals
Page 7 of 12
held that the Panamanian Law was procedural as it was jurisdiction of Section 156 of the Amiri Decree No. 23 of
not “specifically intended to be substantive,” hence, the 1976.
prescriptive period provided in the law of the forum should
apply. The Court observed: “. . . we are dealing with a The courts of the forum (local Court) will not enforce any
statute of limitations of a foreign country, and it is not clear foreign claim obnoxious to the forum’s public policy. To
on the face of the statute that its purpose was to limit the enforce the one-year prescriptive period of the Amiri
enforceability, outside as well as within the foreign country Decree No. 23 of 1976 as regards the claims in question
concerned, of the substantive rights to which the statute would contravene the public policy on the protection to
pertains. We think that as a yardstick for determining labor.
whether that was the purpose, this test is the most
satisfactory one.
In the Declaration of Principles and State Policies, the
1987 Constitution emphasized that:“The state shall
The Court further noted: “Applying that test here it appears promote social justice in all phases of national
to us that the libellant is entitled to succeed, for the development” (Sec. 10).
respondents have failed to satisfy us that the Panamanian ‘The state affirms labor as a primary social economic force.
period of limitation in question was specifically aimed It shall protect the rights of workers and promote their
against the particular rights which the libellant seeks to welfare” (Sec. 18).
enforce. The Panama Labor Code is a statute having
broad objectives.” The American court applied the statute
In Article XIII on Social Justice and Human Rights, the
of limitations of New York, instead of the Panamanian law,
1987 Constitution provides:
after finding that there was no showing that the
“Sec. 3. The State shall afford full protection to labor, local
Panamanian law on prescription was intended to be
and overseas, organized and unorganized, and promote
substantive. Being considered merely a procedural law
full employment and equality of employment opportunities
even in Panama, it has to give way to the law of the forum
for all.”
(local Court) on prescription of actions.

Thus, the applicable law on prescription is the Philippine

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
The next question is whether the prescriptive period
statute has the practical effect of treating the foreign
governing the filing of the claims is 3 years, as provided by
statute of limitation as one of substance. A “borrowing
the Labor Code or 10 years, as provided by the Civil Code
statute” directs the state of the forum (local Court) to apply
of the Philippines.
the foreign statute of limitations to the pending claims
based on a foreign law. While there are several kinds of
Article 1144 of the Civil Code of the Philippines provides:
“borrowing statutes,” one form provides that an action
“The following actions must be brought within ten years
barred by the laws of the place where it accrued will not be
from the time the right of action accross:
enforced in the forum even though the local statute was
not run against it.
(1) Upon a written contract; (2) Upon an obligation created
by law; (3) Upon a judgment”
Section 48 of Code of Civil Procedure is of this kind. It
In this case, the claim for pay differentials is primarily
provides: “If by the laws of the state or country where the
anchored on the written contracts between the litigants, the
cause of action arose, the action is barred, it is also barred
ten-year prescriptive period provided by Art. 1144(l) of the
in the Philippine Islands.”
New Civil Code should govern.

Section 48 has not been repealed or amended by the Civil

3. NO. A class suit is proper where the subject matter of
Code of the Philippines. In the light of the 1987
the controversy is one of common or general interest to
Constitution, however, Section 48 cannot be enforced ex
many and the parties are so numerous that it is
proprio vigore insofar as it ordains the application in this

Page 8 of 12
impracticable to bring them all before the court. When all 1. the court of the domicile of the carrier (NOA’s domicile
the claims are for benefits granted under the Bahrain law is in the USA);
many of the claimants worked outside Bahrain. Some of
2. the court of its principal place of business (which is San
the claimants were deployed in Indonesia under different
Francisco, USA);
terms and condition of employment.
3. the court where it has a place of business through
which the contract had been made (ticket was purchased
Inasmuch as the First requirement of a class suit is not
in San Francisco so that’s where the contract was made);
present (common or general interest based on the Amiri
Decree of the State of Bahrain), it is only logical that only 4. the court of the place of destination (Santos bought a
those who worked in Bahrain shall be entitled to rile their round trip ticket which final destination is San Francisco).
claims in a class suit. The lower court ruled in favor of NOA. Santos III averred
that Philippine courts have jurisdiction over the case and
While there are common defendants (AIBC and BRII) and he questioned the constitutionality of Article 28 (1) of the
the nature of the claims is the same (for employee’s Warsaw Convention.
benefits), there is no common question of law or fact.
ISSUE: Whether or not Philippine courts have jurisdiction
While some claims are based on the Amiri Law of Bahrain,
over the matter to conduct judicial review.
many of the claimants never worked in that country, but
were deployed elsewhere. Thus, each claimant is HELD: No. The Supreme Court ruled that they cannot rule

interested only in his own demand and not in the claims of over the matter for the SC is bound by the provisions of the

the other employees of defendants. A claimant has no Warsaw Convention which was ratified by the Senate. Until

concern in protecting the interests of the other claimants as & unless there would be amendment to the Warsaw

shown by the fact, that hundreds of them have abandoned Convention, the only remedy for Santos III is to sue in any

their co-claimants and have entered into separate of the place indicated in the Convention such as in San

compromise settlements of their respective claims. The Francisco, USA.

claimants who worked in Bahrain can not be allowed to The SC cannot rule upon the constitutionality of Article
sue in a class suit in a judicial proceeding. 28(1) of the Warsaw Convention. In the first place, it is a
treaty which was a joint act by the legislative and the
WHEREFORE, all the three petitioners are DISMISSED. 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
Augusto Santos III vs Northwest Orient Airlines
case, Santos was not able to offer any compelling
argument to overcome the presumption.

210 SCRA 256 – Political Law – Constitutional Law – The COMMUNICATION MATERIALS AND DESIGN, INC et
Judicial Department – Judicial Review – Constitutionality of al vs.CA et al.
a Treaty – Warsaw Convention G.R. No. 102223

Augusto Benedicto Santos III is a minor represented by his August 22, 1996

dad. In October 1986, he bought a round trip ticket from

Northwest Orient Airlines (NOA) in San Francisco. His FACTS: Petitioners COMMUNICATION MATERIALS AND
flight would be from San Francisco to Manila via Tokyo and DESIGN, INC., (CMDI) and ASPAC MULTI-TRADE INC.,
back to San Francisco. His scheduled flight was in (ASPAC) are both domestic corporations.. Private
December. A day before his departure he checked with Respondents ITEC, INC. and/or ITEC, INTERNATIONAL,
NOA and NOA said he made no reservation and that he INC. (ITEC) are corporations duly organized and existing
bought no ticket. The next year, due to the incident, he under the laws of the State of Alabama, USA. There is no
sued NOA for damages. He sued NOA in Manila. NOA dispute that ITEC is a foreign corporation not licensed to
argued that Philippine courts have no jurisdiction over the do business in the Philippines.
matter pursuant to Article 28(1) of the Warsaw Convention,
which provides that complaints against international ITEC entered into a contract with ASPAC referred to as
carriers can only be instituted in: “Representative Agreement”. Pursuant to the contract,
Page 9 of 12
ITEC engaged ASPAC as its “exclusive representative” in ITEC with its various business contacts in the country. Its
the Philippines for the sale of ITEC’s products, in arrangements, with these entities indicate convincingly that
consideration of which, ASPAC was paid a stipulated ITEC is actively engaging in business in the country.
commission. Through a “License Agreement” entered into
by the same parties later on, ASPAC was able to A foreign corporation doing business in the Philippines
incorporate and use the name “ITEC” in its own name. may sue in Philippine Courts although not authorized to do
Thus , ASPAC Multi-Trade, Inc. became legally and business here against a Philippine citizen or entity who had
publicly known as ASPAC-ITEC (Philippines). contracted with and benefited by said corporation. To put it
One year into the second term of the parties’ in another way, a party is estopped to challenge the
Representative Agreement, ITEC decided to terminate the personality of a corporation after having acknowledged the
same, because petitioner ASPAC allegedly violated its same by entering into a contract with it. And the doctrine of
contractual commitment as stipulated in their agreements. estoppel to deny corporate existence applies to a foreign
ITEC charges the petitioners and another Philippine as well as to domestic corporations. One who has dealt
Corporation, DIGITAL BASE COMMUNICATIONS, INC. with a corporation of foreign origin as a corporate entity is
(DIGITAL), the President of which is likewise petitioner estopped to deny its corporate existence and capacity.
Aguirre, of using knowledge and information of ITEC’s
products specifications to develop their own line of
In Antam Consolidated Inc. vs. CA et al. we expressed our
equipment and product support, which are similar, if not
chagrin over this commonly used scheme of defaulting
identical to ITEC’s own, and offering them to ITEC’s former
local companies which are being sued by unlicensed
foreign companies not engaged in business in the
Philippines to invoke the lack of capacity to sue of such
The complaint was filed with the RTC-Makati by ITEC, INC. foreign companies. Obviously, the same ploy is resorted to
Defendants filed a MTD the complaint on the following by ASPAC to prevent the injunctive action filed by ITEC to
grounds: (1) That plaintiff has no legal capacity to sue as it enjoin petitioner from using knowledge possibly acquired in
is a foreign corporation doing business in the Philippines violation of fiduciary arrangements between the parties.
without the required BOI authority and SEC license, and (2)
that plaintiff is simply engaged in forum shopping which
2. YES; Petitioner’s insistence on the dismissal of this
justifies the application against it of the principle of “forum
action due to the application, or non application, of the
non conveniens”. The MTD was denied.
private international law rule of forum non conveniens
defies well-settled rules of fair play. According to petitioner,
Petitioners elevated the case to the respondent CA on a the Philippine Court has no venue to apply its discretion
Petition for Certiorari and Prohibition under Rule 65 of the whether to give cognizance or not to the present action,
Revised ROC. It was dismissed as well. MR denied, hence because it has not acquired jurisdiction over the person of
this Petition for Review on Certiorari under Rule 45. the plaintiff in the case, the latter allegedly having no
personality to sue before Philippine Courts. This argument
ISSUE: is misplaced because the court has already acquired
1. Did the Philippine court acquire jurisdiction over the jurisdiction over the plaintiff in the suit, by virtue of his filing
person of the petitioner corp, despite allegations of lack of the original complaint. And as we have already observed,
capacity to sue because of non-registration? petitioner is not at liberty to question plaintiff’s standing to
2. Can the Philippine court give due course to the suit or sue, having already acceded to the same by virtue of its
dismiss it, on the principle of forum non convenience? entry into the Representative Agreement referred to

HELD: petition dismissed.

Thus, having acquired jurisdiction, it is now for the

1. YES; We are persuaded to conclude that ITEC had Philippine Court, based on the facts of the case, whether to

been “engaged in” or “doing business” in the Philippines for give due course to the suit or dismiss it, on the principle of

some time now. This is the inevitable result after a scrutiny forum non convenience. Hence, the Philippine Court may

of the different contracts and agreements entered into by refuse to assume jurisdiction in spite of its having acquired

Page 10 of 12
jurisdiction. Conversely, the court may assume jurisdiction
over the case if it chooses to do so; provided, that the
HELD: Yes. There is forum shopping because there is
following requisites are met:
identity of interest and parties between the first case and
the second case. There is identity of interest because both
1) That the Philippine Court is one to which the parties may cases sought to have the agreement, which involves the
conveniently resort to; same property, be declared unenforceable as against the
2) That the Philippine Court is in a position to make an Bank. There is identity of parties even though the first case
intelligent decision as to the law and the facts; and, is in the name of the bank as defendant, and the second
3) That the Philippine Court has or is likely to have power case is in the name of Henry Co as plaintiff. There is still
to enforce its decision. forum shopping here because Henry Co essentially
The aforesaid requirements having been met, and in view represents the bank. Both cases aim to have the bank
of the court’s disposition to give due course to the escape liability from the agreement it entered into with
questioned action, the matter of the present forum not Demetria et al.
being the “most convenient” as a ground for the suit’s
The Supreme Court also discussed that to combat forum
dismissal, deserves scant consideration.
shopping, which originated as a concept in international
law, the principle of forum non conveniens was developed.
The doctrine of forum non conveniens provides that a court,
252 SCRA 259 – Conflict of Laws – Private International in conflicts of law cases, may refuse impositions on its
Law – Origin of Forum Non Conveniens jurisdiction where it is not the most “convenient” or
available forum and the parties are not precluded from
Producers Bank (now called First Philippine International
seeking remedies elsewhere.
Bank), which has been under conservatorship since 1984,
is the owner of 6 parcels of land. The Bank had an
agreement with Demetrio Demetria and Jose Janolo for **Forum Shopping: “occurs when a party attempts to have
the two to purchase the parcels of land for a purchase his action tried in a particular court or jurisdiction where he
price of P5.5 million pesos. The said agreement was made feels he will receive the most favorable judgment or
by Demetria and Janolo with the Bank’s manager, verdict.”
Mercurio Rivera. Later however, the Bank, through its
conservator, Leonida Encarnacion, sought the repudiation First Philippine International Bank vs Court of Appeals
of the agreement as it alleged that Rivera was not 252 SCRA 259 [GR No. 115849 January 24, 1996]
authorized to enter into such an agreement, hence there
was no valid contract of sale. Subsequently, Demetria and Facts: In the course of its banking operations, the
Janolo sued Producers Bank. The regional trial court ruled defendant Producer Bank of the Philippines acquired 6
in favor of Demetria et al. The Bank filed an appeal with the parcels of land with a total area of 101 hectares located at
Court of Appeals. Don Jose, Sta. Rosa, Laguna and covered by TCT No.
T-106932 to T-106937. The property used to be owned by
Meanwhile, Henry Co, who holds 80% shares of stocks
BYME Investment and Development Corporation which hd
with the said Bank, filed a motion for intervention with the
them mortgaged with the bank as collateral for a loan. The
trial court. The trial court denied the motion since the trial
plaintiff originals, Demetrio Demetria and Jose Janolo
has been concluded already and the case is now pending
wanted to purchase the property and thus initiated
appeal. Subsequently, Co, assisted by ACCRA law office,
negotiations for that purpose. In the early part of August
filed a separate civil case against Carlos Ejercito as
1987 said plaintiffs, upon the suggestion of BYME
successor-in-interest (assignee) of Demetria and Janolo
investment’s legal counsel, Fajardo met with defendant
seeking to have the purported contract of sale be declared
Mercurio Rivera, manager of the property management
unenforceable against the Bank. Ejercito et al argued that
department of the defendant bank. The meeting was held
the second case constitutes forum shopping.
in pursuant to plaintiffs’ plan to buy the property. After the
meeting, plaintiff Janolo, following the advice of defendant

ISSUE: Whether or not there is forum shopping. Rivera made a formal purchase offer to the Bank through a
letter dated August 30,1987. Negotiations took place and
Page 11 of 12
an offer price was fixed at P5.5million. During the course of officially acted upon by the bank. The bank cannot turn
the negotiations, the defendant bank was placed under around and say, as it now does, that what Rivera states as
conservatorship and a new conservator was appointed to the bank’s action on the matter is not in fact so. It is a
which the name has been refused to recognize. A familiar doctrine, the doctrine of ostensible authority, that if
derivative suit has been filed against Rivera for the a corporation on knowingly permits one of its officers, or
damages suffered from the alleged perfect contract of sale any other agent, to do acts within the scope of apparent
involving the 6 parcels of land. authority, and thus holds him out to the public as
possessing power to do those acts, the corporation will, as
Issue: Whether or not a derivative suit may lie involving against any one who has in good faith dealt with the
the bank and its stockholders. corporation through such agent, he estopped from denying
his authority.
Held: No. An individual stockholder is permitted to institute
a derivative suit on behalf of the corporation wherein he A bank is liable for wrongful acts of its officers done in the
hold stock in order to protect or vindicate corporate rights, interest of the bank or in he course of dealings of the
whenever the officials of the corporation refuse to sue, or officers in their representative capacity but not for acts
are the ones, to be sued or hold the control of the outside the scope of their authority. A bank holding out its
corporation. In such actions, the suing stockholder is officers and agents as worthy of confidence will not be
regarded as a nominal party with the corporation as the permitted to profit by the frauds they my thus be enabled to
real party in interest. perpetrate in the apparent scope of their employment; nor
will it be permitted to shrink its responsibility for such fraud
In the face of the damaging admissions taken from the
even through no benefit may accrue to the bank therefrom.
complaint in the second case, petitioners, quite strangely,
Accordingly, a banking corporation is liable to innocent
sought to deny that the second case was a derivative suit,
third persons where the representation is made in the
reasoning that it was brought not by the minority
course of its business by an agent acting within the general
shareholders, but by Henry Co. etal. who not only hold or
scope of its authority even though, in the particular case,
control over 80% of the outstanding capital stock, but also
the agent is secretly abusing his authority and attempting
constitute the majority in the board of directors of
to perpetrate fraud upon his principal or some other person,
petitioners bank. That being so, then they really represent
for his own ultimate benefit.
the bank, so whether they sued derivatively or directly,
there is undeniably an identity of interest/entity Section 28-A of BP 68 merely gives the conservator power
represented. to revoke contracts that are, under existing law, deemed
not to be effective – i.e void, voidable, unenforceable or
In addition to the many cases, where the corporate fiction
rescissible. Hence, the conservator merely takes the place
has been regarded, we now add the instant case, and
of a bank’s board of directors. What the said board cannot
declare herewith that the corporate veil cannot be used to
do – such as repudiating a contract validly entered into
shield an otherwise blatant violation of the prohibition
under the doctrine of implied authority – the conservator
against forum shopping. Shareholders, whether suing as
cannot do either.
the majority in direct actions or as the minority in a
derivative suit, cannot be allowed to trifle with court
processes particularly where, as in this case, the
corporation itself has not been remiss in vigorously
prosecuting or defending corporate causes and in using
and applying remedies available to it. To rule otherwise
would be to encourage corporate litigants to use their
shareholders as fronts to circumvent the stringent rules
against forum shopping.

From the facts, the official bank price, at any rte, the bank
placed its official, Rivera is a position of authority to accept
offers to buy and negotiate the sale by having the offer
Page 12 of 12