CONFLICT OF LAWS CASES
G.R. No. 124110 April 20, 2001
UNITED AIRLINES, INC., Petitioner vs. COURT OF APPEALS, ANICETO
FONTANILLA, in his personal capacity and in behalf of his minor son MYCHAL
ANDREW FONTANILLA, Respondents.
1. Civil Procedure; Evidence; The general rule in civil cases is that the party having the
burden of proof of an essential fact must produce a preponderance of evidence thereon;
Although plaintiffs evidence is stronger than that presented by the defendant a judgment
cannot be entered in favor of the former if his evidence is not sufficient to sustain his cause
of action.-
It must be remembered that the general rule in civil cases is that the party having the
burden of proof of an essential fact must produce a preponderance of evidence thereon.
Although the evidence adduced by the plaintiff is stronger than that presented by the
defendant, a judgment cannot be entered in favor of the former, if his evidence is not
sufficient to sustain his cause of action. The plaintiff must rely on the strength of his own
evidence and not upon the weakness of the defendant’s.
2. Civil Procedure; Evidence; Appeals; Appellate courts should not, unless for strong and
cogent reasons, reverse the findings of facts of trial courts.-
Time and again, the Court has pronounced that appellate courts should not, unless for
strong and cogent reasons, reverse the findings of facts of trial courts. This is so because
trial judges are in a better position to examine real evidence and at a vantage point to
observe the actuation and the demeanor of the witnesses. While not the sole indicator of
the credibility of a witness, it is of such weight that it has been said to be the touchstone of
credibility.
3. Civil Law; Private International Law; Doctrine of lex loci contractus; According to the
doctrine, as a general rule, the law of the place where a contract is made or entered into
governs with respect to its nature and validity, obligation and interpretation.-
In the case of Zalamea vs. Court of Appeals, this Court applied the doctrine of lex loci
contractus. According to the doctrine, as a general rule, the law of the place where a
contract is made or entered into governs with respect to its nature and validity, obligation
and interpretation. This has been said to be the rule even though the place where the
contract was made is different from the place where it is to be performed, and particularly
so, if the place of the making and the place of performance are the same. Hence, the court
should apply the law of the place where the airline ticket was issued, when the passengers
are residents and nationals of the forum and the ticket is issued in such State by the
defendant airline.
4. Civil Law; Damages; For the plaintiff to be entitled to an award of moral damages arising
from a breach of contract of carriage, the carrier must have acted with fraud or bad faith.-
As to the award of moral and exemplary damages, we find error in the award of such by
the Court of Appeals. For the plaintiff to be entitled to an award of moral damages arising
from a breach of contract of carriage, the carrier must have acted with fraud or bad faith.
On March 1, 1989, private respondent Aniceto Fontanilla purchased from petitioner United
Airlines, through the Philippine Travel Bureau in Manila three (3) "Visit the U.S.A." tickets
for himself, his wife and his minor son Mychal for the following routes:
a. San Francisco to Washinton (15 April 1989);
b. Washington to Chicago (25 April 1989);
c. Chicago to Los Angeles (29 April 1989);
d. Los Angeles to San Francisco (01 may 1989 for petitioner’s wife and 05 May
1989 for petitioner and his son). 1
All flights had been confirmed previously by United Airlines. 2
The Fontanillas proceeded to the United States as planned, where they used the first
coupon from San Francisco to Washington. On April 24, 1989, Aniceto Fontanilla bought
two (2) additional coupons each for himself, his wife and his son from petitioner at its office
in Washington Dulles Airport. After paying the penalty for rewriting their tickets, the
Fontanillas were issued tickets with corresponding boarding passes with the words
"CHECK-IN REQUIRED," for United Airlines Flight No. 1108, set to leave from Los
Angeles to San Francisco at 10:30 a.m. on May 5, 1989.3
The cause of the non-boarding of the Fontanillas on United Airlines Flight No. 1108 makes
up the bone of contention of this controversy.
1âwphi1.nêt
Private respondents’ version is as follows:
Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at the
los Angeles Airport for their flight, they proceeded to united Airlines counter where they
were attended by an employee wearing a nameplate bearing the name "LINDA." Linda
examined their tickets, punched something into her computer and then told them that
boarding would be in fifteen minutes.4
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When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the
stewardess at the gate did not allow them to board the plane, as they had no assigned
seat numbers. They were then directed to go back to the "check-in" counter where Linda
subsequently informed them that the flight had been overbooked and asked them to wait.5
The Fontanillas tried to explain to Linda the special circumstances of their visit. However,
Linda told them in arrogant manner, "So what, I can not do anything about it."6
Subsequently, three other passengers with Caucasian features were graciously allowed
to baord, after the Fontanillas were told that the flight had been overbooked.7
The plane then took off with the Fontanillas’ baggage in tow, leaving them behind.8
The Fontanillas then complained to Linda, who in turn gave them an ugly stare and rudely
uttered, "it’s not my fault. It’s the fault of the company. Just sit down and wait."9 When Mr.
Fontanilla reminded Linda of the inconvenience being caused to them, she bluntly retorted,
"Who do you think you are? You lousy Flips are good for nothing beggars. You always ask
for American aid." After which she remarked "Don’t worry about your baggage. Anyway
there is nothing in there. What are you doing here anyway? I will report you to immigration.
You Filipinos should go home."10 Such rude statements were made in front of other people
in the airport causing the Fontanillas to suffer shame, humiliation and embarrassment. The
chastening situation even caused the younger Fontanilla to break into tears.11
After some time, Linda, without any explanation, offered the Fontanillas $50.00 each. She
simply said "Take it or leave it." This, the Fontanillas declined.12
The Fontanillas then proceeded to the United Airlines customer service counter to plead
their case. The male employee at the counter reacted by shouting that he was ready for it
and left without saying anything.13
The Fontanillas were not booked on the next flight, which departed for San Francisco at
11:00 a.m. It was only at 12:00 noon that they were able to leave Los Angeles on United
Airlines Flight No. 803.
Petitioner United Airlines has a different version of what occurred at the Los Angeles
Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not initially go to the check-in counter to
get their seat assignments for UA Flight 1108. They instead proceeded to join the queue
boarding the aircraft without first securing their seat assignments as required in their ticket
and boarding passes. Having no seat assignments, the stewardess at the door of the plane
instructed them to go to the check-in counter. When the Fontanillas proceeded to the
CONFLICT OF LAWS CASES
check-in counter, Linda Allen, the United Airlines Customer Representative at the counter
informed them that the flight was overbooked. She booked them on the next available flight
and offered them denied boarding compensation. Allen vehemently denies uttering the
derogatory and racist words attributed to her by the Fontanillas.14
The incident prompted the Fontanillas to file Civil Case No. 89-4268 for damages before
the Regional Trial Court of Makati. After trial on the merits, the trial court rendered a
decision, the dispositive portion of which reads as follows:
WHEREFORE, judgment is rendered dismissing the complaint. The
counterclaim is likewise dismissed as it appears that plaintiffs were not
actuated by legal malice when they filed the instant complaint.15
On appeal, the Court of Appeals ruled in favor of the Fontanillas. The appellate court found
that there was an admission on the part of United Airlines that the Fontanillas did in fact
observe the check-in requirement. It ruled further that even assuming there was a failure
to observe the check-in requirement, United Airlines failed to comply with the procedure
laid down in cases where a passenger is denied boarding. The appellate court likewise
gave credence to the claim of Aniceto Fontanilla that the employees of United Airlines
were discourteous and arbitrary and, worse, discriminatory. In light of such treatment, the
Fontanillas were entitled to moral damages. The dispositive portion of the decision of the
respondent Court of Appeals dated 29 September 1995, states as follows:
WHEREFORE, in view of the foregoing, judgment appealed herefrom is
hereby REVERSED and SET ASIDE, and a new judgment is entered
ordering defendant-appellee to pay plaintiff-appellant the following:
a. P200,000.00 as moral damages;
b. P200,000.00 as exemplary damages;
c. P50,000.00 as attorney’s fees;
No pronouncement as to costs.
SO ORDERED.16
Petitioner United Airlines now comes to this Court raising the following assignments of
errors;
2

I the plaintiffs-appellants indeed observed the "check-in" requirement at the
RESPONDENT COURT OF APPEALS GRVAELY ERRED IN RULING THAT THE
TRIAL COURT WAS WRONG IN FAILING TO CONSIDER THE ALLEGED
ADMISSION THAT PRIVATE RESPONDENT OBSERVED THE CHECK-IN
REQUIREMENT.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PRIVATE RESPONDENT’S FAILURE TO CHECK-IN WILL NOT DEFEAT HIS
CLAIMS BECAUSE THE DENIED BOARDING RULES WERE NOT COMPLIED
WITH.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PRIVATE RESPONDENT IS ENTITLED TO MORAL DAMAGES OF P200,000.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PRIVATE RESPONDENT IS ENTITLED TO EXEMPLARY DAMAGES OF
P200,000.
V While there was no specific denial as to the fact of compliance with the "check-in"
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PRIVATE RESPONDENT IS ENTITLED TO ATTORNEY’S FEES OF P50,000.17
On the first issue raised by the petitioner, the respondent Court of Appeals ruled that when
Rule 9, Section 1 of the Rules of Court,18 there was an implied admission in petitioner’s
answer in the allegations in the complaint that private respondent and his son observed
the "check-in requirement at the Los Angeles Airport." Thus:
A perusal of the above pleadings filed before the trial court disclosed that
there exist a blatant admission on the part of the defendant-appellee that
CONFLICT OF LAWS CASES
Los Angeles Airport on May 5, 1989. In view of defendant-appellee’s
admission of plaintiffs-appellants’ material averment in the complaint. We
find no reason why the trial court should rule against such admission.19
We disagree with the above conclusion reached by respondent Court of Appeals.
Paragraph 7 of private respondents’ complaint states:
7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at
defendant’s designated counter at the airport in Los Angeles for their
scheduled flight to San Francisco on defendant’s Flight No. 1108.20
Responding to the above allegations, petitioner averred in paragraph 4 of its answer, thus:
4. Admits the allegation set forth in paragraph 7 of the complaint except to
deny that plaintiff and his son checked in at 9:45 a.m., for lack of knowledge
or information at this point in time as to the truth thereof.21
The rule authorizing an answer that the defendant has no knowledge or information
sufficient to form a belief as to the truth of an averment giving such answer is asserted is
so plainly and necessarily within the defendant’s knowledge that his averment of ignorance
must be palpably untrue.22 Whether or not private respondents checked in at petitioner’s
designated counter at the airport at 9:45 a.m. on May 5, 1989 must necessarily be within
petitioner’s knowledge.
requirement by private respondents, petitioner presented evidence to support its
contention that there indeed was no compliance.
Private respondents then are said to have waived the rule on admission. It not only
presented evidence to support its contention that there was compliance with the check-in
requirement, it even allowed petitioner to present rebutal evidence. In the case of Yu
Chuck vs. "Kong Li Po," we ruled that:
The object of the rule is to relieve a party of the trouble and expense in
proving in the first instance an alleged fact, the existence or non-existence
of which is necessarily within the knowledge of the adverse party, and of
the necessity (to his opponent’s case) of establishing which such adverse
party is notified by his opponent’s pleadings.
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The plaintiff may, of course, waive the rule and that is what must be
considered to have done (sic) by introducing evidence as to the execution
of the document and failing to object to the defendant’s evidence in
refutation; all this evidence is now competent and the case must be
decided thereupon.23
The determination of the other issues raised is dependent on whether or not there was a
breach of contract in bad faith on the part of the petitioner in not allowing the Fontanillas
to board United Airlines Flight 1108.
It must be remembered that the general rule in civil cases is that the party having the
burden of proof of an essential fact must produce a preponderance of evidence
thereon.24 Although the evidence adduced by the plaintiff is stronger than that presented by
the defendant, a judgment cannot be entered in favor of the former, if his evidence is not
sufficient to sustain his cause of action. The plaintiff must rely on the strength of his own
evidence and not upon the weakness of the defendant’s.25 Proceeding from this, and
considering the contradictory findings of facts by the Regional Trial Court and the Court of
Appeals, the question before this Court is whether or not private respondents were able to
prove with adequate evidence his allegations of breach of contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts should not, unless for
strong and cogent reasons, reverse the findings of facts of trial courts. This is so because
trial judges are in better position to examine real evidence and at a vantage point to
observe the actuation and the demeanor of the witnesses.26 While not the sole indicator of
the credibility of a witness, it is of such weight that it has been said to be the touchstone of
credibility.27
Aniceto Fontanilla’s assertion that upon arrival at the airport at 9:45 a.m., he immediately
proceeded to the check-in counter, and that Linda Allen punched in something into the
computer is specious and not supported by the evidence on record. In support of their
allegations, private respondents submitted a copy of the boarding pass. Explicitly printed
on the boarding pass are the words "Check-In Required." Curiously, the said pass did not
indicate any seat number. If indeed the Fontanillas checked in at the designated time as
they claimed, why then were they not assigned seat numbers? Absent any showing that
Linda was so motivated, we do not buy into private respondents’ claim that Linda
intentionally deceived him, and made him the laughing stock among the
passengers.28Hence, as correctly observed by the trial court:
Plaintiffs fail to realize that their failure to check in, as expressly required
in their boarding passes, is they very reason why they were not given their
respective seat numbers, which resulted in their being denied boarding.29
CONFLICT OF LAWS CASES
Neither do we agree with the conclusion reached by the appellate court that private
respondents’ failure to comply with the check-in requirement will not defeat his claim as
the denied boarding rules were not complied with. Notably, the appellate court relied on
the Code of Federal Regulation Part on Oversales which states:
250.6 Exceptions to eligibility for denied boarding compensation.
A passenger denied board involuntarily from an oversold flight shall not be
eligible for denied board compensation if:
a. The passenger does not comply with the carrier’s contract
of carriage or tariff provisions regarding ticketing,
reconfirmation, check-in, and acceptability for
transformation.
The appellate court, however, erred in applying the laws of the United States as, in the
case at bar, Philippine law is the applicable law. Although, the contract of carriage was to
be performed in the United States, the tickets were purchased through petitioner’s agent
in Manila. It is true that the tickets were "rewritten" in Washington, D.C. however, such fact
did not change the nature of the original contract of carriage entered into by the parties in
Manila.
In the case of Zalanea vs. Court of Appeals,30 this Court applied the doctrine of lex loci
contractus. According to the doctrine, as a general rule, the law of the place where a
contract is made or entered into governs with respect to its nature and validity, obligation
and interpretation. This has been said to be the rule even though the place where the
contract was made is different from the place where it is to be performed, and particularly
so, if the place of the making and the place of performance are the same. Hence, the court
should apply the law of the place where the airline ticket was issued, when the passengers
are residents and nationals of the forum and the ticket is issued in such State by the
defendant airline.
The law of the forum on the subject matter is Economic Regulations No. 7 as amended by
Boarding Priority and Denied Board Compensation of the Civil Aeronautics Board which
provides that the check-in requirement be complied with before a passenger may claim
against a carrier for being denied boarding:
Sec. 5. Amount of Denied Boarding Compensation Subject to the
exceptions provided hereinafter under Section 6, carriers shall pay to
passengers holding confirmed reserved space and who have presented
4

themselves at the proper place and time and fully complied with the
carrier’s check-in and reconfirmation procedures and who are acceptable
for carriage under the Carrier’s tariff but who have been denied boarding
for lack of space, a compensation at the rate of: xxx
Private respondents’ narration that they were subjected to harsh and derogatory remarks
seems incredulous. However, this Court will not attempt to surmise what really happened,
suffice to say, private respondent was not able to prove his cause of action, for as the trial
court correctly observed:
xxx plaintiffs claim to have been discriminated against and insulted in the
presence of several people. Unfortunately, plaintiffs limited their evidence
to the testimony of Aniceto Fontanilla, without any corroboration by the
people who saw or heard the discriminatory remarks and insults; while
such limited testimony could possibly be true, it does not enable the Court
to reach the conclusion that plaintiffs have, by a preponderance of
evidence, proven that they are entitled to P1,650,000.00 damages from
defendant.31
As to the award of moral and exemplary damages, we find error in the award of such by
the Court of Appeals. For the plaintiff to be entitled to an award of moral damages arising
from a breach of contract of carriage, the carrier must have acted with fraud or bad faith.
The appellate court predicated its award on our pronouncement in the case of Zalanea vs.
Court of Appeals, supra, where we stated:
Existing jurisprudence explicitly states that overbooking amounts to bad
faith, entitling passengers concerned to an award of moral damages.
In Alitalia Airways vs. Court of Appeals, where passengers with confirmed
booking were refused carriage on the last minute, this Court held that when
an airline issues a ticket to a passenger confirmed on a particular flight, on
a certain date, a contract of carriage arises, and the passenger has every
right to except that he would fly on that flight and on that date. If he does
not, then the carrier opens itself to a suit for breach of contract of carriage.
Where an airline had deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of them would show up
for check in. For the indignity and inconvenience of being refused a
confirmed seat on the last minute, said passenger is entitled to moral
damages. (Emphasis supplied).
However, the Court’s ruling in said case should be read in consonance with existing laws,
particularly, Economic Regulations No. 7, as amended, of the Civil Aeronautics Board:
CONFLICT OF LAWS CASES
Sec. 3. Scope. – This regulation shall apply to every Philippine and foreign
air carrier with respect to its operation of flights or portions of flights
originating from or terminating at, or serving a point within the territory of
the Republic of the Philippines insofar as it denies boarding to a passenger
on a flight, or portion of a flight inside or outside the Philippines, for which
he holds confirmed reserved space. Furthermore, this Regulation is
designed to cover only honest mistakes on the part of the carriers and
excludes deliberate and willful acts of non-accommodation. Provided,
however, that overbooking not exceeding 10% of the seating capacity of
the aircraft shall not be considered as a deliberate and willful act of non-
accommodation.
What this Court considers as bad faith is the willful and deliberate overbooking on the part
of the airline carrier. The above-mentioned law clearly states that when the overbooking
does not exceed ten percent (10%), it is not considered as deliberate and therefore does
not amount to bad faith. While there may have been overbooking in this case, private
respondents were not able to prove that the overbooking on United Airlines Flight 1108
exceeded ten percent.
As earlier stated, the Court is of the opinion that the private respondents were not able to
prove that they were subjected to coarse and harsh treatment by the ground crew of united
Airlines. Neither were they able to show that there was bad faith on part of the carrier
airline. Hence, the award of moral and exemplary damages by the Court of Appeals is
improper. Corollarily, the award of attorney’s fees is, likewise, denied for lack of any legal
and factual basis.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R.
CV No. 37044 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial
Court of Makati City in Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
SO ORDERED.
5

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.
1. Conflict of Laws; As a general rule, a foreign procedural law will not be applied in the
forum.-
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]).
2. Conflict of Laws; Prescription; A law on prescription of actions is sui generis in Conflict
of Laws.-
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.
3. Conflict of Laws; Prescription; Actions; Words and Phrases; “Borrowing Statute,”
Explained; One form of “borrowing statutes” 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.-
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
CONFLICT OF LAWS CASES
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 Philippine Islands.”
4. Conflict of Laws; Prescription; Actions; Section 48 of the Code of Civil Procedure has
not been repealed or amended by the Civil Code.-
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 Procedure 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.]).
5. Conflict of Laws; Prescription; Labor Law; The courts of the forum will not enforce any
foreign claim obnoxious to the forum’s public policy.-
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.
6. Labor Law; Overseas Contract Workers; Prescription; Article 291 of the Labor Code
applies to money claims arising from employer-employee relations, including those arising
from application of foreign laws providing for greater employee benefits.-
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. No. 104911-14 that said Article refers only to claims “arising from the
employer’s violation of the employee’s right,” as provided by the Labor Code supported by
the facial reading of the provision.
6

7. Labor Law; Overseas Contract Workers; Right to Speedy Disposition of Cases; “Speedy
disposition of cases” is a relative term, a flexible concept consistent with delays and
depends upon the circumstances of each case.-
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.
8. Labor Law; Overseas Contract Workers; Right to Speedy Disposition of Cases; Even if
the cases took seven years to be disposed of in the administrative level there is no violation
of the constitutional right to speedy disposition of cases where the cases are not of the
run-of-the-mill variety, involve a total of 1,767 claimants hired on various dates, with claims
totalling more than US$65 million.-
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 totalled more than US$65 million.
9. Labor Law; Overseas Contract Workers; Actions; Class Suits; Where the claims are for
benefits granted under the Bahrain law, only the claimants who worked in Bahrain shall be
entitled to file their claims in a class suit, excluding those who worked elsewhere.-
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.
CONFLICT OF LAWS CASES
10. Labor Law; Overseas Contract Workers; Actions; Class Suits; 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, such that if it appears that each claimant is only
interested in collecting his own claims and has no concern in protecting the interests of the
others, the most that can be accorded to them is to be allowed to join as plaintiffs in one
complaint.-
It appears that each claimant is only interested in collecting his own claims. 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
compro-mise 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).
11. Labor Law; Overseas Contract Workers; Actions; Class Suits; The Supreme 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.-
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.
12. Actions; Forum Shopping; Before Administrative Circular No. 04-94, the Anti-Forum
Shopping Rule (Revised Circular No. 28-91) applied only to petitions filed with the
Supreme Court and the Court of Appeals.-
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 and 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
7

to the lower courts and administrative agencies, said circular took effect only on April 1,
1994.
13. Jurisdiction; Legal Ethics; Attorneys; The NLRC and the POEA have no jurisdiction to
investigate charges of unethical conduct of lawyers.-
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.
14. Jurisdiction; Legal Ethics; Attorneys; Complaints for violation of the Code of
Professional Responsibility should be filed in a separate and appropriate proceeding.-
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.
15. Jurisdiction; Attorney’s Liens; A statement of a claim for a charging lien should be filed
with the court or administrative agency which renders and executes the money judgment.-
A statement of a claim for a charging lien shall be filed with the court or administrative
agency which renders and executes the money judgment secured by the lawyer for his
clients. The lawyer shall cause written notice thereof to be delivered to his clients and to
the adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the claim
for the charging lien of Atty. Del Mundo should have been filed with the administrative
agency that rendered and executed the judgment.
16. Evidence; Conflict of Laws; Administrative Law; An official document from a foreign
government can be admitted in evidence in proceedings before an administrative body
even without observing the rule provided in Section 24, Rule 132 of the 1989 Revised
Rules on Evidence.-
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16,
1983. 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.
17. Evidence; Offer to Compromise; In civil cases, an offer to settle a claim is not an
admission that anything is due and is not admissible in evidence against the offeror.-
CONFLICT OF LAWS CASES
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 amicably before these ripen into litigation. Every effort
must be taken to encourage them to arrive at a settlement. The submission of offers and
counter-offers in the negotiation table is a step in the right direction. But to bind a party to
his offers, as what claimants would make this Court do, would defeat the salutary purpose
of the Rule.
18. Contracts; Overseas Contract Workers; Any ambiguity in the overseas-employment
contracts should be interpreted against the parties who drafted them.-
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]).
19. Contracts; Conflict of Laws; Parties to a contract may select the law by which it is to
be governed, and 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.”-
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.]).
8
 CONFLICT OF LAWS CASES
20. Contracts; Conflict of Laws; The choice of law must, however, bear some relationship These cardinal rules are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635
to the parties or their transaction.- (1940).

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.
21. Administrative Law; Due Process; There is no denial of due process even if the
respondents had no opportunity to refute the evidence of the claimants before the POEA
where they had all the opportunity to rebut said evidence and to present their counter-
evidence before the NLRC.-
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

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.”
22. Administrative Law; Due Process; While technical rules of procedure and evidence do
not apply to the proceedings conducted by administrative agencies, there are cardinal
rules which must be observed by the hearing officers in order to comply with the due
process requirements of the Constitution.-
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.
(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:

9

(1) to reverse the Resolution dated September 2, 1991 of NLRC in POEA
Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar as it
denied the motions for reconsideration of AIBC and BRII (Rollo, pp. 2-59;
61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA
in four labor cases: (1) awarded monetary benefits only to 149 claimants and (2) directed
Labor Arbiter Fatima J. Franco to conduct hearings and to receive evidence on the claims
dismissed by the POEA for lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R.
Nos. 104911-14 were raffled to the Second Division. In the Resolution dated July 26, 1993,
the Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. Nos.
104911-14, Rollo, p. 895).
In the Resolution dated September 29, 1993, the Third Division granted the motion filed in
G.R. Nos. 104911-14 for the consolidation of said cases with G.R. Nos. 104776 and
105029-32, which were assigned to the First Division (G.R. Nos. 104911-14, Rollo, pp.
986-1,107; G.R. Nos. 105029-30, Rollo, pp. 369-377, 426-432). In the Resolution dated
October 27, 1993, the First Division granted the motion to consolidate G.R. Nos. 104911-
14 with G.R. No. 104776 (G.R. Nos. 104911-14, Rollo, p. 1109; G.R. Nos. 105029-
32, Rollo, p. 1562).
I On October 10, 1984, claimants asked for time within which to comply with the Order of
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.
CONFLICT OF LAWS CASES
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.
October 2, 1984 and filed an "Urgent Manifestation," praying that the POEA Administrator
direct the parties to submit simultaneously their position papers, after which the case
should be deemed submitted for decision. On the same day, Atty. Florante de Castro filed
another complaint for the same money claims and benefits in behalf of several claimants,
some of whom were also claimants in POEA Case No. L-84-06-555 (POEA Case No. 85-
10-779).
On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2,
1984 and an "Urgent Manifestation," praying that the POEA direct the parties to submit
simultaneously their position papers after which the case would be deemed submitted for
decision. On the same day, AIBC asked for time to file its comment on the "Compliance"
and "Urgent Manifestation" of claimants. On November 6, 1984, it filed a second motion
for extension of time to file the comment.
10

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.
CONFLICT OF LAWS CASES
On September 19, 1985, claimants asked the POEA Administrator to include additional
claimants in the case and to investigate alleged wrongdoings of BRII, AIBC and their
respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case
No. L-85-10-777) against AIBC and BRII with the POEA, demanding monetary claims
similar to those subject of POEA Case No. L-84-06-555. In the same month, Solomon
Reyes also filed his own complaint (POEA Case No. L-85-10-779) against AIBC and BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the
substitution of the original counsel of record and the cancellation of the special powers of
attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce
attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No. 86-
05-460) in behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA Case
No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985
and September 18, 1985 by AIBC and BRII.
In narrating the proceedings of the labor cases before the POEA Administrator, it is not
amiss to mention that two cases were filed in the Supreme Court by the claimants, namely
— G.R. No. 72132 on September 26, 1985 and Administrative Case No. 2858 on March
18, 1986. On May 13, 1987, the Supreme Court issued a resolution in Administrative Case
No. 2858 directing the POEA Administrator to resolve the issues raised in the motions and
oppositions filed in POEA Cases Nos. L-84-06-555 and L-86-05-460 and to decide the
labor cases with deliberate dispatch.
AIBC also filed a petition in the Supreme Court (G.R. No. 78489), questioning the Order
dated September 4, 1985 of the POEA Administrator. Said order required BRII and AIBC
to answer the amended complaint in POEA Case No. L-84-06-555. In a resolution dated
November 9, 1987, we dismissed the petition by informing AIBC that all its technical
objections may properly be resolved in the hearings before the POEA.
Complaints were also filed before the Ombudsman. The first was filed on September 22,
1988 by claimant Hermie Arguelles and 18 co-claimants against the POEA Administrator
and several NLRC Commissioners. The Ombudsman merely referred the complaint to the
Secretary of Labor and Employment with a request for the early disposition of POEA Case
No. L-84-06-555. The second was filed on April 28, 1989 by claimants Emigdio P. Bautista
11

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.
CONFLICT OF LAWS CASES
On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal
Memorandum," together with their "newly discovered evidence" consisting of payroll
records.
On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating among
other matters that there were only 728 named claimants. On April 20, 1989, the claimants
filed their "Counter-Manifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision dated
January 30, 1989 on the grounds that BRII had failed to appeal on time and AIBC had not
posted the supersedeas bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the
1,767 claimants be awarded their monetary claims for failure of private respondents to file
their answers within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
WHEREFORE, premises considered, the Decision of the POEA in these
consolidated cases is modified to the extent and in accordance with the
following dispositions:
1. The claims of the 94 complainants identified and listed
in Annex "A" hereof are dismissed for having prescribed;
2. Respondents AIBC and Brown & Root are hereby
ordered, jointly and severally, to pay the 149 complainants,
identified and listed in Annex "B" hereof, the peso
equivalent, at the time of payment, of the total amount in
US dollars indicated opposite their respective names;
3. The awards given by the POEA to the 19 complainants
classified and listed in Annex "C" hereof, who appear to
have worked elsewhere than in Bahrain are hereby set
aside.
4. All claims other than those indicated in Annex "B",
including those for overtime work and favorably granted by
the POEA, are hereby dismissed for lack of substantial
12

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
CONFLICT OF LAWS CASES
Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have
submitted, from time to time, compromise agreements for our approval and jointly moved
for the dismissal of their respective petitions insofar as the claimants-parties to the
compromise agreements were concerned (See Annex A for list of claimants who signed
quitclaims).
Thus the following manifestations that the parties had arrived at a compromise agreement
and the corresponding motions for the approval of the agreements were filed by the parties
and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio Abarquez
and 47 co-claimants dated September 2, 1992 (G.R. Nos. 104911-
14, Rollo, pp. 263-406; G.R. Nos. 105029-32, Rollo, pp.
470-615);
2) Joint Manifestation and Motion involving petitioner Bienvenido Cadalin
and 82 co-petitioners dated September 3, 1992 (G.R. No. 104776, Rollo,
pp. 364-507);
3) Joint Manifestation and Motion involving claimant Jose
M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos.
105029-32, Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-626; G.R.
Nos. 104911-14, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving claimant Antonio T. Anglo and
17 co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713; G.R.
Nos. 104911-14, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant Dionisio Bobongo and
6 co-claimants dated January 15, 1993 (G.R. No. 104776, Rollo, pp. 813-
836; G.R. Nos. 104911-14, Rollo, pp. 629-652);
6) Joint Manifestation and Motion involving claimant Valerio A. Evangelista
and 4 co-claimants dated March 10, 1993 (G.R. Nos. 104911-14, Rollo,
pp. 731-746; G.R. No. 104776, Rollo, pp. 1815-1829);
7) Joint Manifestation and Motion involving claimants Palconeri Banaag
and 5 co-claimants dated March 17, 1993 (G.R. No. 104776, Rollo, pp.
1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655-675);
13
 CONFLICT OF LAWS CASES
8) Joint Manifestation and Motion involving claimant Benjamin Ambrosio respondent-appellant AIBC for its accredited foreign principal, Brown &
and 15 other co-claimants dated May 4, 1993 (G.R. Nos. 105029-32, Rollo, Root, on various dates from 1975 to 1983. They were all deployed at
pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-729; G.R. No. various projects undertaken by Brown & Root in several countries in the
104776, Rollo, pp. 1773-1814); Middle East, such as Saudi Arabia, Libya, United Arab Emirates and
Bahrain, as well as in Southeast Asia, in Indonesia and Malaysia.
9) Joint Manifestation and Motion involving Valerio Evangelista and 3 co-
claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp. 1815-1829); Having been officially processed as overseas contract workers by the
Philippine Government, all the individual complainants signed standard
10) Joint Manifestation and Motion involving petitioner Quiterio R. Agudo overseas employment contracts (Records, Vols. 25-32. Hereafter,
and 36 co-claimants dated June 14, 1993 (G.R. Nos. 105029-32, Rollo, reference to the records would be sparingly made, considering their
pp. 974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864; G.R. No. chaotic arrangement) with AIBC before their departure from the
104776, Rollo, pp. 1066-1183); Philippines. These overseas employment contracts invariably contained
the following relevant terms and conditions.
11) Joint Manifestation and Motion involving claimant Arnaldo J. Alonzo
and 19 co-claimants dated July 22, 1993 (G.R. No. 104776, Rollo, pp. PART B —
1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256; G.R. Nos.
104911-14, Rollo, pp. 896-959); (1) Employment Position Classification :—————————
(Code) :—————————
12) Joint Manifestation and Motion involving claimant Ricardo C. Dayrit
and 2 co-claimants dated September 7, 1993 (G.R. Nos. (2) Company Employment Status :—————————
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-1254; (3) Date of Employment to Commence on :—————————
G.R. Nos. 104911-14, Rollo, pp. 972-984); (4) Basic Working Hours Per Week :—————————
(5) Basic Working Hours Per Month :—————————
13) Joint Manifestation and Motion involving claimant Dante C. Aceres and (6) Basic Hourly Rate :—————————
37 co-claimants dated September 8, 1993 (G.R. No. 104776, Rollo, pp. (7) Overtime Rate Per Hour :—————————
1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-1105; G.R. Nos. 105029- (8) Projected Period of Service
32, Rollo, pp. 1280-1397); (Subject to C(1) of this [sic]) :—————————
Months and/or
14) Joint Manifestation and Motion involving Vivencio V. Abella and 27 co- Job Completion
claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo, Vol. II);
xxx xxx xxx
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. 3. HOURS OF WORK AND COMPENSATION
104776; G.R. Nos. 104911-14).
a) The Employee is employed at the hourly rate and overtime rate as set
III out in Part B of this Document.

The facts as found by the NLRC are as follows: 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
We have taken painstaking efforts to sift over the more than fifty volumes deemed necessary from time to time.
now comprising the records of these cases. From the records, it appears
that the complainants-appellants allege that they were recruited by 4. TERMINATION
14

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
CONFLICT OF LAWS CASES
relevant to the claims of the complainants-appellants are as follows (italics
supplied only for emphasis):
Art. 79: . . . A worker shall receive payment for each extra
hour equivalent to his wage entitlement increased by a
minimum of twenty-five per centum thereof for hours
worked during the day; and by a minimum of fifty per
centum thereof for hours worked during the night which
shall be deemed to being from seven o'clock in the evening
until seven o'clock in the morning. . . .
Art. 80: Friday shall be deemed to be a weekly day of rest
on full pay.
. . . an employer may require a worker, with his consent, to
work on his weekly day of restif 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
15

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;
CONFLICT OF LAWS CASES
(a) Whether or not the respondent-appellant was denied its
right to due process;
(b) Whether or not the admission of evidence by the POEA
after these cases were submitted for decision was valid;
(c) Whether or not the POEA acquired jurisdiction over
Brown & Root International, Inc.;
(d) Whether or not the judgment awards are supported by
substantial evidence;
(e) Whether or not the awards based on the averages and
formula presented by the complainants-appellants are
supported by substantial evidence;
(f) Whether or not the POEA awarded sums beyond what
the complainants-appellants prayed for; and, if so, whether
or not these awards are valid.
Fifth: — Whether or not the POEA erred in holding respondents AIBC and
Brown & Root jointly are severally liable for the judgment awards despite
the alleged finding that the former was the employer of the complainants;
(a) Whether or not the POEA has acquired jurisdiction over
Brown & Root;
(b) Whether or not the undisputed fact that AIBC was a
licensed construction contractor precludes a finding that
Brown & Root is liable for complainants claims.
Sixth: — Whether or not the POEA Administrator's failure to hold
respondents in default constitutes a reversible error.
Seventh: — Whether or not the POEA Administrator erred in dismissing
the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
16

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
CONFLICT OF LAWS CASES
in each case without regard to the technicalities of law or procedure. NLRC agreed with
the POEA Administrator that the Amiri Decree No. 23, being more favorable and beneficial
to the workers, should form part of the overseas employment contract of the complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who
worked in Bahrain, and set aside awards of the POEA Administrator in favor of the
claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing of the claims of
the complainants was three years, as provided in Article 291 of the Labor Code of the
Philippines, and not ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the labor cases cannot
be treated as a class suit for the simple reason that not all the complainants worked in
Bahrain and therefore, the subject matter of the action, the claims arising from the Bahrain
law, is not of common or general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal rules of
administrative due process: namely, (1) the failure of the POEA Administrator to consider
the evidence presented by AIBC and BRII; (2) some findings of fact were not supported
by substantial evidence; and (3) some of the evidence upon which the decision was based
were not disclosed to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and
AIBC are solidarily liable for the claims of the complainants and held that BRII was the
actual employer of the complainants, or at the very least, the indirect employer, with AIBC
as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator
through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in denying the
Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the Amiri Decree
No. 23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims for
refund of the SSS premiums and refund of withholding taxes and the
claimants should file their claims for said refund with the appropriate
government agencies;
17

(2) the claimants failed to establish that they are entitled to the claims which
are not based on the overseas employment contracts nor the Amiri Decree
No. 23 of 1976;
(3) that the POEA Administrator has no jurisdiction over claims for moral
and exemplary damages and nonetheless, the basis for granting said
damages was not established;
(4) that the claims for salaries corresponding to the unexpired portion of
their contract may be allowed if filed within the three-year prescriptive
period;
(5) that the allegation that complainants were prematurely repatriated prior
to the expiration of their overseas contract was not established; and
(6) that the POEA Administrator has no jurisdiction over the complaint for
the suspension or cancellation of the AIBC's recruitment license and the
cancellation of the accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460
should have been dismissed on the ground that the claimants in said case were also
claimants in POEA Case No. (L) 84-06-555. Instead of dismissing POEA Case No. (L) 86-
65-460, the POEA just resolved the corresponding claims in POEA Case No. (L) 84-06-
555. In other words, the POEA did not pass upon the same claims twice.
V there was no common or general interest in the subject matter of the
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to a
speedy disposition of their cases as guaranteed by Section 16, Article III
of the 1987 Constitution. The POEA Administrator allowed private
respondents to file their answers in two years (on June 19, 1987) after the
filing of the original complaint (on April 2, 1985) and NLRC, in total
disregard of its own rules, affirmed the action of the POEA Administrator;
(2) that NLRC and the POEA Administrator should have declared AIBC
and BRII in default and should have rendered summary judgment on the
basis of the pleadings and evidence submitted by claimants;
CONFLICT OF LAWS CASES
(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
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).
18

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.
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).
CONFLICT OF LAWS CASES
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.
19

The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to those
arising from the employer's violation of the employee's right as provided by
the Labor Code.
In the instant case, what the respondents violated are not the rights of the
workers as provided by the Labor Code, but the provisions of the Amiri
Decree No. 23 issued in Bahrain, which ipso facto amended the worker's
contracts of employment. Respondents consciously failed to conform to
these provisions which specifically provide for the increase of the worker's
rate. It was only after June 30, 1983, four months after the brown builders
brought a suit against B & R in Bahrain for this same claim, when
respondent AIBC's contracts have undergone amendments in Bahrain for
the new hires/renewals (Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to this
instant case is Article 1144 of the Civil Code of the Philippines, which
provides:
Art. 1144. The following actions may be brought within ten
years from the time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the respondents
shall prescribe in ten years from August 16, 1976. Inasmuch as all claims
were filed within the ten-year prescriptive period, no claim suffered the
infirmity of being prescribed (G.R. No. 104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period is three
years as provided in Article 291 of the Labor Code of the Philippines, the NLRC argued as
follows:
The Labor Code provides that "all money claims arising from employer-
employee relations . . . shall be filed within three years from the time the
cause of action accrued; otherwise they shall be forever barred" (Art. 291,
Labor Code, as amended). This three-year prescriptive period shall be the
one applied here and which should be reckoned from the date of
repatriation of each individual complainant, considering the fact that the
CONFLICT OF LAWS CASES
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
20

Code gives laborers various rights against their employers. Article 623
establishes the period of limitation for all such rights, except certain ones
which are enumerated in Article 621. And there is nothing in the record to
indicate that the Panamanian legislature gave special consideration to the
impact of Article 623 upon the particular rights sought to be enforced here,
as distinguished from the other rights to which that Article is also
applicable. Were we confronted with the question of whether the limitation
period of Article 621 (which carves out particular rights to be governed by
a shorter limitation period) is to be regarded as "substantive" or
"procedural" under the rule of "specifity" we might have a different case;
but here on the surface of things we appear to be dealing with a "broad,"
and not a "specific," statute of limitations (G.R. No. 104776, Rollo, pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of
the Philippines, which was applied by NLRC, refers only to claims "arising from the
employer's violation of the employee's right as provided by the Labor Code." They assert
that their claims are based on the violation of their employment contracts, as amended by
the Amiri Decree No. 23 of 1976 and therefore the claims may be brought within ten years
as provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos. 104911-
14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA
244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri
Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law,"
which is Section 48 of the Code of Civil Procedure and that where such kind of law exists,
it takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-
46).
First to be determined is whether it is the Bahrain law on prescription of action based on
the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the
governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be actionable after
the lapse of one year from the date of the expiry of the contract. (G.R. Nos.
105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal,
and so forth, are governed by the laws of the forum. This is true even if the action is based
CONFLICT OF LAWS CASES
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.
21

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:
The state shall promote social justice in all phases of national
development. (Sec. 10).
The state affirms labor as a primary social economic force. It shall protect
the rights of workers and promote their welfare (Sec. 18).
In article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
Having determined that the applicable law on prescription is the Philippine law, the next
question is whether the prescriptive period governing the filing of the claims is three years,
as provided by the Labor Code or ten years, as provided by the Civil Code of the
Philippines.
The claimants are of the view that the applicable provision is Article 1144 of the Civil Code
of the Philippines, which provides:
The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
NLRC, on the other hand, believes that the applicable provision is Article 291 of the Labor
Code of the Philippines, which in pertinent part provides:
Money claims-all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued, otherwise they shall be
forever barred.
xxx xxx xxx
CONFLICT OF LAWS CASES
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.
22

VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that
while their complaints were filed on June 6, 1984 with POEA, the case was decided only
on January 30, 1989, a clear denial of their right to a speedy disposition of the case; and
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in default
(Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:
Sec. 16. All persons shall have the right to a speedy disposition of their
cases before all judicial, quasi-judicial, or administrative bodies.
It is true that the constitutional right to "a speedy disposition of cases" is not limited to the
accused in criminal proceedings but extends to all parties in all cases, including civil and
administrative cases, and in all proceedings, including judicial and quasi-judicial hearings.
Hence, under the Constitution, any party to a case may demand expeditious action on all
officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition
of cases" is a relative term. Just like the constitutional guarantee of "speedy trial" accorded
to the accused in all criminal proceedings, "speedy disposition of cases" is a flexible
concept. It is consistent with delays and depends upon the circumstances of each case.
What the Constitution prohibits are unreasonable, arbitrary and oppressive delays which
render rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining
whether or not the right to a "speedy disposition of cases" has been violated, thus:
In the determination of whether or not the right to a "speedy trial" has been
violated, certain factors may be considered and balanced against each
other. These are length of delay, reason for the delay, assertion of the right
or failure to assert it, and prejudice caused by the delay. The same factors
may also be considered in answering judicial inquiry whether or not a
person officially charged with the administration of justice has violated the
speedy disposition of cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
CONFLICT OF LAWS CASES
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;
23

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:
CONFLICT OF LAWS CASES
These cases could have been spared the long and arduous route towards
resolution had the parties and their counsel been more interested in
pursuing the truth and the merits of the claims rather than exhibiting a
fanatical reliance on technicalities. Parties and counsel have made these
cases a litigation of emotion. The intransigence of parties and counsel is
remarkable. As late as last month, this Commission made a last and final
attempt to bring the counsel of all the parties (this Commission issued a
special order directing respondent Brown & Root's resident agent/s to
appear) to come to a more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of
the cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these
consolidated cases appear to be not only the individual complainants, on
the one hand, and AIBC and Brown & Root, on the other hand. The two
lawyers for the complainants, Atty. Gerardo Del Mundo and Atty. Florante
De Castro, have yet to settle the right of representation, each one
persistently claiming to appear in behalf of most of the complainants. As a
result, there are two appeals by the complainants. Attempts by this
Commission to resolve counsels' conflicting claims of their respective
authority to represent the complainants prove futile. The bickerings by
these two counsels are reflected in their pleadings. In the charges and
countercharges of falsification of documents and signatures, and in the
disbarment proceedings by one against the other. All these have, to a large
extent, abetted in confounding the issues raised in these cases, jumble the
presentation of evidence, and even derailed the prospects of an amicable
settlement. It would not be far-fetched to imagine that both counsel,
unwittingly, perhaps, painted a rainbow for the complainants, with the
proverbial pot of gold at its end containing more than US$100 million, the
aggregate of the claims in these cases. It is, likewise, not improbable that
their misplaced zeal and exuberance caused them to throw all caution to
the wind in the matter of elementary rules of procedure and evidence
(Rollo, pp. 58-59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties and
the public respondents would not know which claim of which petitioner was dismissed and
which was not."
24

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.
CONFLICT OF LAWS CASES
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. The lawyer shall cause written notice thereof to be delivered to his clients and to
the adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the claim
for the charging lien of Atty. Del Mundo should have been filed with the administrative
agency that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty.
Katz Tierra for violation of the Code of Professional Responsibility should be filed in a
separate and appropriate proceeding.
G.R. No. 104911-14
25

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
CONFLICT OF LAWS CASES
the Bahrain Minister of Labor had approved said memorandum; and (3) that the offer was
made in the course of the negotiation for an amicable settlement of the claims and
therefore it was not admissible in evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing the rule on presenting
official documents of a foreign government as provided in Section 24, Rule 132 of the 1989
Revised Rules on Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said memorandum, and they
could easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as contained in the
memorandum is another matter. Under Section 27, Rule 130 of the 1989 Revised Rules
on Evidence, an offer to settle a claim is not an admission that anything is due.
Said Rule provides:
Offer of compromise not admissible. — In civil cases, an offer of
compromise is not an admission of any liability, and is not admissible in
evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record with unwanted
evidence but a statement of public policy. There is great public interest in having the
protagonists settle their differences amicable before these ripen into litigation. Every effort
must be taken to encourage them to arrive at a settlement. The submission of offers and
counter-offers in the negotiation table is a step in the right direction. But to bind a party to
his offers, as what claimants would make this Court do, would defeat the salutary purpose
of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits than
those stipulated in the overseas-employment contracts of the claimants. It was of the belief
that "where the laws of the host country are more favorable and beneficial to the workers,
then the laws of the host country shall form part of the overseas employment contract." It
quoted with approval the observation of the POEA Administrator that ". . . in labor
proceedings, all doubts in the implementation of the provisions of the Labor Code and its
implementing regulations shall be resolved in favor of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to
enforce the overseas-employment contracts, which became the law of the parties. They
contend that the principle that a law is deemed to be a part of a contract applies only to
provisions of Philippine law in relation to contracts executed in the Philippines.
26

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]).
CONFLICT OF LAWS CASES
Applying the said legal precepts, we read the overseas-employment contracts in question
as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be governed (Cheshire, Private
International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a "system"
to regulate the relations of the parties, including questions of their capacity to enter into
the contract, the formalities to be observed by them, matters of performance, and so forth
(16 Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may just agree that
specific provisions of a foreign statute shall be deemed incorporated into their contract "as
a set of terms." By such reference to the provisions of the foreign law, the contract does
not become a foreign contract to be governed by the foreign law. The said law does not
operate as a statute but as a set of contractual terms deemed written in the contract (Anton,
Private International Law, 197 [1967]; Dicey and Morris, The Conflict of Laws, 702-703,
[8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law
in Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]). Such
party expectation is protected by giving effect to the parties' own choice of the applicable
law (Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must,
however, bear some relationship to the parties or their transaction (Scoles and Hayes,
Conflict of Law 644-647 [1982]). There is no question that the contracts sought to be
enforced by claimants have a direct connection with the Bahrain law because the services
were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management Co. and the late husband of the
private respondent, expressly provided that in the event of illness or injury to the employee
arising out of and in the course of his employment and not due to his own misconduct,
"compensation shall be paid to employee in accordance with and subject to the limitation
of the Workmen's Compensation Act of the Republic of the Philippines or the Worker's
Insurance Act of registry of the vessel, whichever is greater." Since the laws of Singapore,
the place of registry of the vessel in which the late husband of private respondent served
at the time of his death, granted a better compensation package, we applied said foreign
law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor Relations
Commission, 135 SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the
facts of the cases at bench. The issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the shipboard
employment contract executed in the Philippines or the Hongkong law. Holding that the
27

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
CONFLICT OF LAWS CASES
v. Intermediate Appellate Court, 190 SCRA 653 [1990]; Pagdonsalan v. National Labor
Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the POEA
Administrator to hold new hearings for 683 claimants listed in Annex D of the Resolution
dated September 2, 1991 whose claims had been denied by the POEA Administrator "for
lack of proof" and for 69 claimants listed in Annex E of the same Resolution, whose claims
had been found by NLRC itself as not "supported by evidence" (Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines, which
empowers it "[to] conduct investigation for the determination of a question, matter or
controversy, within its jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to
remand a case involving claims which had already been dismissed because such provision
contemplates only situations where there is still a question or controversy to be resolved
(Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of procedure
and evidence do not apply to the proceedings conducted by administrative agencies (First
Asian Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld
Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in Article
221 of the Labor Code of the Philippines and is now the bedrock of proceedings before
NLRC.
Notwithstanding the non-applicability of technical rules of procedure and evidence in
administrative proceedings, there are cardinal rules which must be observed by the
hearing officers in order to comply with the due process requirements of the Constitution.
These cardinal rules are collated in Ang Tibay v. Court of Industrial Relations, 69 Phil. 635
(1940).
VIII
The three petitions were filed under Rule 65 of the Revised Rules of Court on the grounds
that NLRC had committed grave abuse of discretion amounting to lack of jurisdiction in
issuing the questioned orders. We find no such abuse of discretion.
WHEREFORE, all the three petitions are DISMISSED.
SO ORDERED.
28

G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vs HON. BLAS
F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in
his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA
MOONYEEN MAMASIG, respondents.
1. Labor Relations; Due Process; Petitioner's right to procedural due process was not
violated even if no formal or oral hearing was conducted, considering that it had ample
opportunity to explain its side.-
The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation of
petitioner's right to procedural due process. This claim, however, cannot be given serious
consideration. Petitioner was ordered by the Regional Director to submit not only its
position paper but also such evidence in its favor as it might have. Petitioner opted to rely
solely upon its position paper; we must assume it had no evidence to sustain its assertions.
Thus, even if no formal or oral hearing was conducted, petitioner had ample oppor- tunity
to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of
Labor and Employment.
2. Contracts; Parties may not contract away applicable provisions of law especially
peremptory provisions dealing with matters heavily impressed with public interest. The
principle of party autonomy in contracts is not absolute.-
A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. The principle of party autonomy in contracts is not,
however, an absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem convenient,
"provided they are not contrary to law, morals, good customs, public order or public policy."
Thus, counterbalancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written into the contract. Put a little differently, the
governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public
interest. The law relating to labor and employment is clearly such an area and parties are
not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other. It is thus necessary to appraise the
contractual provisions invoked by petitioner PIA in terms of their consistency with
applicable Philippine law and regulations.
3. Labor Law; A contract providing for employment with a fixed period was not necessarily
unlawful.-
CONFLICT OF LAWS CASES
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., the Court had occasion to
examine in detail the question of whether employment for a fixed term has been outlawed
under the above quoted provisions of the Labor Code. After an extensive examination of
the history and development of Articles 280 and 281, the Court reached the conclusion
that a contract providing for employment with a fixed period was not necessarily unlawful:
"There can of course be no quarrel with the proposition that where from the circumstances
it is apparent that periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be struck down or disregarded as contrary to public policy,
morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise,
where the reason for the law does not exist, e.g., where it is indeed the employee himself
who insists upon a period or where the nature of the engagement is such that, without
being seasonal or for a specific project, a definite date of termination is a sine qua non,
would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would
such an agreement come within the scope of Article 280 which admittedly was enacted 'to
prevent the circumvention of the right of the employee to be secured in x x (his)
employment?' As it is evident from even only the three examples already given that Article
280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust
the gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable distinctions, the right of an
employee to freely stipulate with his employer the duration of his engagement, it logically
follows that such a literal interpretation should be eschewed or avoided. The law must be
given reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom of
contract to remedy the evil of employers' using it as a means to prevent their employees
from obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head. xxx xxx xxx Accordingly, and since
the entire purpose behind the development of legislation culminating in the present Article
280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the
concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a fixed
period of employment was agreed upon knowingly and voluntarily by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or where it satisfactorily appears that
the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects
and apt to lead to absurd and unintended consequences." (Italics supplied)
29

4. Labor Law; Contracts; Conflicts of Law; When the relationship between the parties is
much affected by public interest, the otherwise applicable Philippine laws and regulations
cannot be rendered illusory by the parties agreeing upon some other law to govern their
relationship.-
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly,
lays the venue for settlement of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph 10 cannot
be invoked to prevent the application of Philippine labor laws and regulations to the subject
matter of this case, i.e., the employer-employee relationship between petitioner PIA and
private respondents. We have already pointed out that that relationship is much affected
with public interest and that the otherwise applicable Philippine laws and regulations
cannot be rendered illusory by the parties agreeing upon some other law to govern their
relationship. Neither may petitioner invoke the second clause of paragraph 10, specifying
the Karachi courts as the sole venue for the settlement of disputes between the contracting
parties. Even a cursory scrutiny of the relevant circumstances of this case will show the
multiple and substantive contacts between Philippine law and Philippine courts, on the one
hand, and the relationship between the parties, upon the other: the contract was not only
executed in the Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and residents, while petitioner, although a foreign
corporation, is licensed to do business (and actually doing business) and hence resident
in the Philippines; lastly, private respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe. All the above contacts point to the
Philippine courts and administrative agencies as a proper forum for the resolution of
contractual disputes between the parties. Under these circumstances, paragraph 10 of the
employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the
petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the
matter; it must therefore be presumed that the applicable provisions of the law of Pakistan
are the same as the applicable provisions of Philippine law.
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign
corporation licensed to do business in the Philippines, executed in Manila two (2) separate
contracts of employment, one with private respondent Ethelynne B. Farrales and the other with
private respondent Ma. M.C. Mamasig. 1The contracts, which became effective on 9 January
1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by
the mutual consent of the parties.
CONFLICT OF LAWS CASES
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the
right to terminate this agreement at any time by giving the EMPLOYEE
notice in writing in advance one month before the intended termination or
in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's
salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of
Pakistan, and only the Courts of Karachi, Pakistan shall have the
jurisdiction to consider any matter arising out of or under this agreement.
Respondents then commenced training in Pakistan. After their training period, they began
discharging their job functions as flight attendants, with base station in Manila and flying
assignments to different parts of the Middle East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the
contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the
local branch of PIA, sent separate letters both dated 1 August 1980 to private respondents
Farrales and Mamasig advising both that their services as flight stewardesses would be
terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment
agreement [they had) executed with [PIA]."2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a
complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of
company benefits and bonuses, against PIA with the then Ministry of Labor and
Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE hearing
officer Atty. Jose M. Pascual ordered the parties to submit their position papers and
evidence supporting their respective positions. The PIA submitted its position paper, 3 but
no evidence, and there claimed that both private respondents were habitual absentees;
that both were in the habit of bringing in from abroad sizeable quantities of "personal
effects"; and that PIA personnel at the Manila International Airport had been discreetly
warned by customs officials to advise private respondents to discontinue that practice. PIA
30

further claimed that the services of both private respondents were terminated pursuant to
the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the
reinstatement of private respondents with full backwages or, in the alternative, the payment
to them of the amounts equivalent to their salaries for the remainder of the fixed three-year
period of their employment contracts; the payment to private respondent Mamasig of an
amount equivalent to the value of a round trip ticket Manila-USA Manila; and payment of
a bonus to each of the private respondents equivalent to their one-month salary. 4 The
Order stated that private respondents had attained the status of regular employees after
they had rendered more than a year of continued service; that the stipulation limiting the
period of the employment contract to three (3) years was null and void as violative of the
provisions of the Labor Code and its implementing rules and regulations on regular and
casual employment; and that the dismissal, having been carried out without the requisite
clearance from the MOLE, was illegal and entitled private respondents to reinstatement
with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy
Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director and
affirmed the latter's award save for the portion thereof giving PIA the option, in lieu of
reinstatement, "to pay each of the complainants [private respondents] their salaries
corresponding to the unexpired portion of the contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional
Director and the Order of the Deputy Minister as having been rendered without jurisdiction;
for having been rendered without support in the evidence of record since, allegedly, no
hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and for having been
issued in disregard and in violation of petitioner's rights under the employment contracts
with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over
the subject matter of the complaint initiated by private respondents for illegal dismissal,
jurisdiction over the same being lodged in the Arbitration Branch of the National Labor
Relations Commission ("NLRC") It appears to us beyond dispute, however, that both at
the time the complaint was initiated in September 1980 and at the time the Orders assailed
were rendered on January 1981 (by Regional Director Francisco L. Estrella) and August
1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction
over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of
employees with at least one (1) year of service without prior clearance from the
Department of Labor and Employment:
CONFLICT OF LAWS CASES
Art. 278. Miscellaneous Provisions — . . .
(b) With or without a collective agreement, no employer may shut down his
establishment or dismiss or terminate the employment of employees with
at least one year of service during the last two (2) years, whether such
service is continuous or broken, without prior written authority issued in
accordance with such rules and regulations as the Secretary may
promulgate . . . (emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code,
made clear that in case of a termination without the necessary clearance, the
Regional Director was authorized to order the reinstatement of the employee
concerned and the payment of backwages; necessarily, therefore, the Regional
Director must have been given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. — Any shutdown or
dismissal without prior clearance shall be conclusively presumed to be
termination of employment without a just cause. The Regional Director
shall, in such case order the immediate reinstatement of the employee and
the payment of his wages from the time of the shutdown or dismissal until
the time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976,
was similarly very explicit about the jurisdiction of the Regional Director over
termination of employment cases:
Under PD 850, termination cases — with or without CBA — are now placed
under the original jurisdiction of the Regional Director. Preventive
suspension cases, now made cognizable for the first time, are also placed
under the Regional Director. Before PD 850, termination cases where
there was a CBA were under the jurisdiction of the grievance machinery
and voluntary arbitration, while termination cases where there was no CBA
were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its
implementing rules and regulations with respect to termination and
preventive suspension cases are:
1. The Regional Director is now required to rule on every application for
clearance, whether there is opposition or not, within ten days from receipt
thereof.
31

xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had
jurisdiction, still his order was null and void because it had been issued in violation of
petitioner's right to procedural due process .6 This claim, however, cannot be given serious
consideration. Petitioner was ordered by the Regional Director to submit not only its
position paper but also such evidence in its favor as it might have. Petitioner opted to rely
solely upon its position paper; we must assume it had no evidence to sustain its assertions.
Thus, even if no formal or oral hearing was conducted, petitioner had ample opportunity to
explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of
Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be rejected.
At the time the complaint was filed by private respondents on 21 September 1980 and at
the time the Regional Director issued his questioned order on 22 January 1981, applicable
regulation, as noted above, specified that a "dismissal without prior clearance shall be
conclusively presumed to be termination of employment without a cause", and the
Regional Director was required in such case to" order the immediate reinstatement of the
employee and the payment of his wages from the time of the shutdown or dismiss until . .
. reinstatement." In other words, under the then applicable rule, the Regional Director did
not even have to require submission of position papers by the parties in view of the
conclusive (juris et de jure) character of the presumption created by such applicable law
and regulation. In Cebu Institute of Technology v. Minister of Labor and Employment, 8 the
Court pointed out that "under Rule 14, Section 2, of the Implementing Rules and
Regulations, the termination of [an employee] which was without previous clearance from
the Ministry of Labor is conclusively presumed to be without [just] cause . . . [a presumption
which] cannot be overturned by any contrary proof however strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of
employment with private respondents Farrales and Mamasig, arguing that its relationship
with them was governed by the provisions of its contract rather than by the general
provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible
by agreement between the parties; while paragraph 6 provided that, notwithstanding any
other provision in the Contract, PIA had the right to terminate the employment agreement
at any time by giving one-month's notice to the employee or, in lieu of such notice, one-
months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a
contract is the law between the parties. 10 The principle of party autonomy in contracts is
CONFLICT OF LAWS CASES
not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem
convenient, "provided they are not contrary to law, morals, good customs, public order or
public policy." Thus, counter-balancing the principle of autonomy of contracting parties is
the equally general rule that provisions of applicable law, especially provisions relating to
matters affected with public policy, are deemed written into the contract. 11 Put a little
differently, the governing principle is that parties may not contract away applicable
provisions of law especially peremptory provisions dealing with matters heavily impressed
with public interest. The law relating to labor and employment is clearly such an area and
parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other. It is thus necessary to
appraise the contractual provisions invoked by petitioner PIA in terms of their consistency
with applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that
paragraph 5 of that employment contract was inconsistent with Articles 280 and 281 of the
Labor Code as they existed at the time the contract of employment was entered into, and
hence refused to give effect to said paragraph 5. These Articles read as follows:
Art. 280. Security of Tenure. — In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed from the time his
compensation was withheld from him up to the time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: provided, that, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered as regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists. (Emphasis supplied)
32

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., the Court had occasion to
12
examine in detail the question of whether employment for a fixed term has been outlawed
under the above quoted provisions of the Labor Code. After an extensive examination of
the history and development of Articles 280 and 281, the Court reached the conclusion
that a contract providing for employment with a fixed period was not necessarily unlawful:
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals, etc. But where
no such intent to circumvent the law is shown, or stated otherwise, where
the reason for the law does not exist e.g. where it is indeed the employee
himself who insists upon a period or where the nature of the engagement
is such that, without being seasonal or for a specific project, a definite date
of termination is a sine qua non would an agreement fixing a period be
essentially evil or illicit, therefore anathema Would such an agreement
come within the scope of Article 280 which admittedly was enacted "to
prevent the circumvention of the right of the employee to be secured in . .
. (his) employment?"
As it is evident from even only the three examples already given that Article
280 of the Labor Code, under a narrow and literal interpretation, not only
fails to exhaust the gamut of employment contracts to which the lack of a
fixed period would be an anomaly, but would also appear to restrict, without
reasonable distinctions, the right of an employee to freely stipulate with his
employer the duration of his engagement, it logically follows that such a
literal interpretation should be eschewed or avoided. The law must be
given reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to boot
the principle of freedom of contract to remedy the evil of employers" using
it as a means to prevent their employees from obtaining security of tenure
is like cutting off the nose to spite the face or, more relevantly, curing a
headache by lopping off the head.
xxx xxx xxx
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has
CONFLICT OF LAWS CASES
singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary,
unjust in its effects and apt to lead to absurd and unintended
consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or
absence of a substantial indication that the period specified in an employment
agreement was designed to circumvent the security of tenure of regular employees
which is provided for in Articles 280 and 281 of the Labor Code. This indication
must ordinarily rest upon some aspect of the agreement other than the mere
specification of a fixed term of the ernployment agreement, or upon
evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between
petitioner PIA and private respondents, we consider that those provisions must be read
together and when so read, the fixed period of three (3) years specified in paragraph 5 will
be seen to have been effectively neutralized by the provisions of paragraph 6 of that
agreement. Paragraph 6 in effect took back from the employee the fixed three (3)-year
period ostensibly granted by paragraph 5 by rendering such period in effect a facultative
one at the option of the employer PIA. For petitioner PIA claims to be authorized to shorten
that term, at any time and for any cause satisfactory to itself, to a one-month period, or
even less by simply paying the employee a month's salary. Because the net effect of
paragraphs 5 and 6 of the agreement here involved is to render the employment of private
respondents Farrales and Mamasig basically employment at the pleasure of petitioner PIA,
the Court considers that paragraphs 5 and 6 were intended to prevent any security of
tenure from accruing in favor of private respondents even during the limited period of three
(3) years,13 and thus to escape completely the thrust of Articles 280 and 281 of the Labor
Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which
specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly,
lays the venue for settlement of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi Pakistan". The first clause of paragraph 10 cannot
be invoked to prevent the application of Philippine labor laws and regulations to the subject
matter of this case, i.e., the employer-employee relationship between petitioner PIA and
33
 CONFLICT OF LAWS CASES
private respondents. We have already pointed out that the relationship is much affected
with public interest and that the otherwise applicable Philippine laws and regulations
cannot be rendered illusory by the parties agreeing upon some other law to govern their
relationship. Neither may petitioner invoke the second clause of paragraph 10, specifying
the Karachi courts as the sole venue for the settlement of dispute; between the contracting
parties. Even a cursory scrutiny of the relevant circumstances of this case will show the
multiple and substantive contacts between Philippine law and Philippine courts, on the one
hand, and the relationship between the parties, upon the other: the contract was not only
executed in the Philippines, it was also performed here, at least partially; private
respondents are Philippine citizens and respondents, while petitioner, although a foreign
corporation, is licensed to do business (and actually doing business) and hence resident
in the Philippines; lastly, private respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe. All the above contacts point to the
Philippine courts and administrative agencies as a proper forum for the resolution of
contractual disputes between the parties. Under these circumstances, paragraph 10 of the
employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the
petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the
matter; it must therefore be presumed that the applicable provisions of the law of Pakistan
are the same as the applicable provisions of Philippine law.14

We conclude that private respondents Farrales and Mamasig were illegally dismissed and
that public respondent Deputy Minister, MOLE, had not committed any grave abuse of
discretion nor any act without or in excess of jurisdiction in ordering their reinstatement
with backwages. Private respondents are entitled to three (3) years backwages without
qualification or deduction. Should their reinstatement to their former or other substantially
equivalent positions not be feasible in view of the length of time which has gone by since
their services were unlawfully terminated, petitioner should be required to pay separation
pay to private respondents amounting to one (1) month's salary for every year of service
rendered by them, including the three (3) years service putatively rendered.

ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the
Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that (1)
private respondents are entitled to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to their former positions
or to substantially equivalent positions not be feasible, then petitioner shall, in lieu thereof,
pay to private respondents separation pay amounting to one (1)-month's salary for every
year of service actually rendered by them and for the three (3) years putative service by
private respondents. The Temporary Restraining Order issued on 13 September 1982 is
hereby LIFTED. Costs against petitioner.

SO ORDERED.

34

G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased. PEOPLE'S BANK and TRUST
COMPANY, executor. MARIA CRISTINA BELLIS and MIRIAM PALMA
BELLIS, oppositors-appellants, vs. EDWARD A. BELLIS, ET AL., heirs-appellees.
1. Wills; Succession; Conflict of laws; Renvoi doctrine.-
The doctrine of renvoi is usually pertinent where the decedent is a national of one country
and is domiciled in another. It does not apply to a case where the decedent was a citizen
of Texas and was domiciled therein at the time of his death. So that, even assuming that
Texas has a conflicts rule providing that the domiciliary law should govern successional
rights, the same would not result in a reference back (renvoi) to Philippine law, but it would
still refer to Texas law. Nonetheless, if Texas has a conflicts rule, adopting the rule of lex
rei sitae, which calls for the application of the law of the place where the properties are
situated, renvoi would arise, where the properties involved are found in the Philippines.
2. Wills; Foreign laws.-
In the absence of proof as to the conflicts rule of Texas, it would be presumed to be the
same as our local conflicts rule.
3. Wills; Applicability of national law to succession; Capacity to succeed-
The decedent's national law governs the order of succession, the amount of successional
rights, the intrinsic validity of the provisions of the will and capacity to succeed.
4. Wills; Third paragraph of article 17 of New Civil Code does not modify article 16.-
The third paragraph of article 17 of the New Civil Code is not an exception to the second
paragraph of article 16. Precisely, Congress deleted the phrase, "notwithstanding the
provisions of this and the next preceding article," when it incorporated article 11 of the old
Civil Code as article 17, while reproducing without substantial change the second
paragraph of article 10 of the old Civil Code, as article 16. The legislative intent must have
been to make the second paragraph of article 176 a specific provision in itself which must
be applied in testate and intestate succession. As a further indication of this legislative
intent, Congress added a new provision, under article 1039, which decrees that capacity
to succeed is governed by the decedent's national law,
5. Wills; Legitimes; Statutes; Special and general provisions.-
Whatever public policy and good customs may be involved in our system of legitimes,
Congres has not intended to extend the same to the succession of foreign nationals. It has
CONFLICT OF LAWS CASES
specifically chosen the decedent's national law to govern, inter alia, the amount of
successional rights. Specific provisions must prevail over general ones.
6. Wills; Testamentary provision that successional right to decedent's estate would be
governed by law other than his national law is void.-
A provision in a foreigner's will that his properties should be distributed in accordance with
Philippine law and not in accordance with his national law is void, being contrary to article
16 of the New Civil Code.
7. Wills; System of legitimes does not apply to estate of a citizen of Texas.-
Where the decedent was a citizen of Texas and under Texas laws there are no forced
heirs, the system of legitimes in Philippine law cannot be applied to the succession to the
decedent's testate because the intrinsic validity of the provisions of the decedent's will and
the amount of successional rights are to be determined under Texas law.
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of
First Instance of Manila dated April 30, 1964, approving the project of partition filed by the
executor in Civil Case No. 37089 therein. 1äwphï1.ñët
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United
States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children:
Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who
survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis and
Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria
Cristina Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed
that after all taxes, obligations, and expenses of administration are paid for, his
distributable estate should be divided, in trust, in the following order and manner: (a)
$240,000.00 to his first wife, Mary E. Mallen; (b) P120,000.00 to his three illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis, or P40,000.00 each
and (c) after the foregoing two items have been satisfied, the remainder shall go to his
seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry A.
Bellis, Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and
Dorothy E. Bellis, in equal shares.1äwphï1.ñët
35

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas,
U.S.A. His will was admitted to probate in the Court of First Instance of Manila on
September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests
therein including the amount of $240,000.00 in the form of shares of stock to Mary E.
Mallen and to the three (3) illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis and
Miriam Palma Bellis, various amounts totalling P40,000.00 each in satisfaction of their
respective legacies, or a total of P120,000.00, which it released from time to time according
as the lower court approved and allowed the various motions or petitions filed by the latter
three requesting partial advances on account of their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and
filed its "Executor's Final Account, Report of Administration and Project of Partition"
wherein it reported, inter alia, the satisfaction of the legacy of Mary E. Mallen by the
delivery to her of shares of stock amounting to $240,000.00, and the legacies of Amos
Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in the amount of P40,000.00 each
or a total of P120,000.00. In the project of partition, the executor — pursuant to the
"Twelfth" clause of the testator's Last Will and Testament — divided the residuary estate
into seven equal portions for the benefit of the testator's seven legitimate children by his
first and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective
oppositions to the project of partition on the ground that they were deprived of their
legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which
is evidenced by the registry receipt submitted on April 27, 1964 by the executor.1
After the parties filed their respective memoranda and other pertinent pleadings, the lower
court, on April 30, 1964, issued an order overruling the oppositions and approving the
executor's final account, report and administration and project of partition. Relying upon
Art. 16 of the Civil Code, it applied the national law of the decedent, which in this case is
Texas law, which did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower court on
June 11, 1964, oppositors-appellants appealed to this Court to raise the issue of which law
must apply — Texas law or Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of
renvoi, applied by this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963.
Said doctrine is usually pertinent where the decedent is a national of one country, and a
CONFLICT OF LAWS CASES
domicile of another. In the present case, it is not disputed that the decedent was both a
national of Texas and a domicile thereof at the time of his death.2 So that even assuming
Texas has a conflict of law rule providing that the domiciliary system (law of the domicile)
should govern, the same would not result in a reference back (renvoi) to Philippine law,
but would still refer to Texas law. Nonetheless, if Texas has a conflicts rule adopting the
situs theory (lex rei sitae) calling for the application of the law of the place where the
properties are situated, renvoi would arise, since the properties here involved are found in
the Philippines. In the absence, however, of proof as to the conflict of law rule of Texas, it
should not be presumed different from ours.3 Appellants' position is therefore not rested
on the doctrine of renvoi. As stated, they never invoked nor even mentioned it in their
arguments. Rather, they argue that their case falls under the circumstances mentioned in
the third paragraph of Article 17 in relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the
decedent, in intestate or testamentary successions, with regard to four items: (a) the order
of succession; (b) the amount of successional rights; (e) the intrinsic validity of the
provisions of the will; and (d) the capacity to succeed. They provide that —
ART. 16. Real property as well as personal property is subject to the law of the
country where it is situated.
However, intestate and testamentary successions, both with respect to the order
of succession and to the amount of successional rights and to the intrinsic validity
of testamentary provisions, shall be regulated by the national law of the person
whose succession is under consideration, whatever may he the nature of the
property and regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the
decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating
that —
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.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not
correct. Precisely, Congress deleted the phrase, "notwithstanding the provisions of this
and the next preceding article" when they incorporated Art. 11 of the old Civil Code as Art.
17 of the new Civil Code, while reproducing without substantial change the second
36
 CONFLICT OF LAWS CASES
paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must have been their
purpose to make the second paragraph of Art. 16 a specific provision in itself which must
be applied in testate and intestate succession. As further indication of this legislative intent,
Congress added a new provision, under Art. 1039, which decrees that capacity to succeed
is to be governed by the national law of the decedent.

It is therefore evident that whatever public policy or good customs may be involved in our
System of legitimes, Congress has not intended to extend the same to the succession of
foreign nationals. For it has specifically chosen to leave, inter alia, the amount of
successional rights, to the decedent's national law. Specific provisions must prevail over
general ones.

Appellants would also point out that the decedent executed two wills — one to govern his
Texas estate and the other his Philippine estate — arguing from this that he intended
Philippine law to govern his Philippine estate. Assuming that such was the decedent's
intention in executing a separate Philippine will, it would not alter the law, for as this Court
ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect
that his properties shall be distributed in accordance with Philippine law and not with his
national law, is illegal and void, for his national law cannot be ignored in regard to those
matters that Article 10 — now Article 16 — of the Civil Code states said national law should
govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas,
U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes.
Accordingly, since the intrinsic validity of the provision of the will and the amount of
successional rights are to be determined under Texas law, the Philippine law on legitimes
cannot be applied to the testacy of Amos G. Bellis.

Wherefore, the order of the probate court is hereby affirmed in toto, with costs against
appellants. So ordered.

37

G.R. No. 104235 November 18, 1993
SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners, vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES,
INC., respondents.
1. Evidence; International Law; Foreign Law, How Proved; Foreign laws do not prove
themselves. They must be alleged and proved.-
That there was fraud or bad faith on the part of respondent airline when it did not allow
petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be
disputed. The U.S. law or regulation allegedly authorizing overbooking has never been
proved. Foreign laws do not prove themselves nor can the courts take judicial notice of
them. Like any other fact, they must be alleged and proved. Written law may be
evidenced by an official publication thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and accompanied with a certificate that
such officer has custody. The certificate may be made by a secretary of an embassy or
legation, consul general, consul, vice-consul, or consular agent or by any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is
kept, and authenticated by the seal of his office.
2. Evidence; International Law; Foreign Law, How Proved; Where no official publication
of the foreign laws was presented as evidence, respondent court’s finding has no basis.-
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather its customer
service agent, in her deposition dated January 27, 1986 that the Code of Federal
Regulations of the Civil Aeronautics Board allows overbooking. Aside from said
statement, no official publication of said code was presented as evidence. Thus,
respondent court’s finding that overbooking is specifically allowed by the US Code of
Federal Regulations has no basis in fact.
3. Evidence; International Law; Foreign Law, How Proved; Lex Loci Contractus; The law
of the place where the airline ticket was issued should be applied by the court where the
passengers are residents and nationals of the forum and the ticket is issued in such state
by the defendant airlines.-
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
applicable to the case at bar in accordance with the principle of lex loci contractus which
requires that the law of the place where the airline ticket was issued should be applied by
the court where the passengers are residents and nationals of the forum and the ticket is
issued in such State by the defendant airline. Since the tickets were sold and issued in
the Philippines, the applicable law in this case would be Philippine law.
CONFLICT OF LAWS CASES
4. Contract of Carriage; Damages; Overbooking amounts to bad faith, entitling the
passengers to award of moral damages.-
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling
the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of
Appeals, where passengers with confirmed bookings were refused carriage on the last
minute, this Court held that when an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage arises, and the passenger has
every right to expect that he would fly on that flight and on that date. If he does not, then
the carrier opens itself to a suit for breach of contract of carriage. Where an airline had
deliberately overbooked, it took the risk of having to deprive some passengers of their
seats in case all of them would show up for check in. For the indignity and inconvenience
of being refused a confirmed seat on the last minute, said passenger is entitled to an
award of moral damages.
5. Contract of Carriage; Damages; Where an airline acted in bad faith in violating the
passenger’s rights under their contract of carriage, it is liable for injuries that the
passenger sustained as a result.-
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, where private respondent was
not allowed to board the plane because her seat had already been given to another
passenger even before the allowable period for passengers to check in had lapsed
despite the fact that she had a confirmed ticket and she had arrived on time, this Court
held that petitioner airline acted in bad faith in violating private respondent’s rights under
their contract of carriage and is therefore liable for the injuries she has sustained as a
result.
6. Contract of Carriage; Damages; Award of damages is proper where a confirmed
passenger included in the manifest was denied accommodation in such flight.-
In fact, existing jurisprudence abounds with rulings where the breach of contract of
carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate
Appellate Court, where a would-be passenger had the necessary ticket, baggage claim
and clearance from immigration all clearly and unmistakably showing that she was
indeed a confirmed passenger and that she was, in fact, included in the passenger
manifest for said flight, and yet was denied accommodation in said flight, this Court did
not hesitate to affirm the lower court’s finding awarding her damages.
7. Contract of Carriage; Damages; Inattention and lack of care for the interest of its
passengers who are entitled to its utmost consideration entitles the passenger to an
award of moral damages.-
38

A contract to transport passengers is quite different in kind and degree from any other
contractual relation. So ruled this Court in Zulueta v. Pan American World Airways, Inc.
This is so, for a contract of carriage generates a relation attended with public duty—a
duty to provide public service and convenience to its passengers which must be
paramount to self-interest or enrichment. Thus, it was also held that the switch of planes
from Lockheed 1011 to a smaller Boeing 707 because there were only 138 confirmed
economy class passengers who could very well be accommodated in the smaller planes,
thereby sacrificing the comfort of its first class passengers for the sake of economy,
amounts to bad faith. Such inattention and lack of care for the interest of its passengers
who are entitled to its utmost consideration entitles the passenger to an award of moral
damages.
8. Contract of Carriage; Damages; Respondent TWA airline is still guilty of bad faith even
if overbooking is allowed if it did not properly inform passengers that it could breach the
contract of carriage even if they were confirmed passengers.-
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of
bad faith in not informing its passengers beforehand that it could breach the contract of
carriage even if they have confirmed tickets if there was overbooking. Respondent TWA
should have incorporated stipulations on overbooking on the tickets issued or to properly
inform its passengers about these policies so that the latter would be prepared for such
eventuality or would have the choice to ride with another airline.
9. Contract of Carriage; Damages; Respondent TWA was also guilty of not informing its
passengers of its policy of giving less priority to discounted tickets.-
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged
policy of giving less priority to discounted tickets. While the petitioners had checked in at
the same time, and held confirmed tickets, yet, only one of them was allowed to board
the plane ten minutes before departure time because the full-fare ticket he was holding
was given priority over discounted tickets. The other two petitioners were left behind.
10. Contract of Carriage; Damages; In placing self-interest over the rights of its
passengers and such conscious disregard of its passengers’ rights, respondent airline is
liable for moral damages.-
It is respondent TWA’s position that the practice of overbooking and the airline system of
boarding priorities are reasonable policies, which when implemented do not amount to
bad faith. But the issue raised in this case is not the reasonableness of said policies but
whether or not said policies were incorporated or deemed written on petitioner’s
contracts of carriage. Respondent TWA failed to show that there are provisions to that
effect. Neither did it present any argument of substance to show that petitioners were
duly apprised of the overbooked condition of the flight or that there is a hierarchy of
CONFLICT OF LAWS CASES
boarding priorities in booking passengers. It is evident that petitioners had the right to
rely upon the assurance of respondent TWA, thru its agent in Manila, then in New York,
that their tickets represented confirmed seats without any qualification. The failure of
respondent TWA to so inform them when it could easily have done so thereby enabling
respondent to hold on to them as passengers up to the last minute amounts to bad faith.
Evidently respondent TWA placed its self-interest over the rights of petitioners under
their contracts of carriage. Such conscious disregard of petitioners’ rights makes
respondent TWA liable for moral damages.
11. Civil Law; Contract; Respondent airline is responsible for all damages which may be
reasonably attributed to the non-performance of its obligations.-
The respondent court erred, however, in not ordering the refund of the cost of the
American Airlines tickets purchased and used by petitioners Suthira and Liana. The
evidence shows that petitioners Suthira and Liana were constrained to take the American
Airlines flight to Los Angeles not because they “opted not to use their TWA tickets on
another TWA flight” but because respondent TWA could not accommodate them either
on the next TWA flight which was also fully booked. The purchase of the American
Airlines tickets by petitioners Suthira and Liana was the consequence of respondent
TWA’s unjustifiable breach of its contracts of carriage with petitioners. In accordance with
Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all
damages which may be reasonably attributed to the non-performance of its obligation. In
the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly held
that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for
a flight on another airline. Thus, instead of simply being refunded for the cost of the
unused TWA tickets, petitioners should be awarded the actual cost of their flight from
New-York to Los Angeles. On this score, we differ from the trial court’s ruling which
ordered not only the reimbursement of the American Airlines tickets but also the refund
of the unused TWA tickets. To require both prestations would have enabled petitioners to
fly from New York to Los Angeles without any fare being paid.
Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight
007 departing from New York to Los Angeles on June 6, 1984 despite possession of
confirmed tickets, petitioners filed an action for damages before the Regional Trial Court
of Makati, Metro Manila, Branch 145. Advocating petitioner's position, the trial court
categorically ruled that respondent TransWorld Airlines (TWA) breached its contract of
carriage with petitioners and that said breach was "characterized by bad faith." On appeal,
however, the appellate court found that while there was a breach of contract on respondent
TWA's part, there was neither fraud nor bad faith because under the Code of Federal
Regulations by the Civil Aeronautics Board of the United States of America it is allowed to
overbook flights.
The factual backdrop of the case is as follows:
39

Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana
Zalamea, purchased three (3) airline tickets from the Manila agent of respondent
TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984. The
tickets of petitioners-spouses were purchased at a discount of 75% while that of their
daughter was a full fare ticket. All three tickets represented confirmed reservations.
While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of
their reservations for said flight. On the appointed date, however, petitioners checked in at
10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the
wait-list because the number of passengers who had checked in before them had already
taken all the seats available on the flight. Liana Zalamea appeared as the No. 13 on the
wait-list while the two other Zalameas were listed as "No. 34, showing a party of two." Out
of the 42 names on the wait list, the first 22 names were eventually allowed to board the
flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other
hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding
full-fare tickets were given first priority among the wait-listed passengers. Mr. Zalamea,
who was holding the full-fare ticket of his daughter, was allowed to board the plane; while
his wife and daughter, who presented the discounted tickets were denied boarding.
According to Mr. Zalamea, it was only later when he discovered the he was holding his
daughter's full-fare ticket.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be
accommodated because it was also fully booked. Thus, they were constrained to book in
another flight and purchased two tickets from American Airlines at a cost of Nine Hundred
Eighteen ($918.00) Dollars.
Upon their arrival in the Philippines, petitioners filed an action for damages based on
breach of contract of air carriage before the Regional Trial Court of Makati, Metro Manila,
Branch 145. As aforesaid, the lower court ruled in favor of petitioners in its decision 1 dated
January 9, 1989 the dispositive portion of which states as follows:
WHEREFORE, judgment is hereby rendered ordering the defendant to pay
plaintiffs the following amounts:
(1) US $918.00, or its peso equivalent at the time of payment representing
the price of the tickets bought by Suthira and Liana Zalamea from
American Airlines, to enable them to fly to Los Angeles from New York
City;
(2) US $159.49, or its peso equivalent at the time of payment, representing
the price of Suthira Zalamea's ticket for TWA Flight 007;
CONFLICT OF LAWS CASES
(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos
(P8,934.50, Philippine Currency, representing the price of Liana Zalamea's
ticket for TWA Flight 007,
(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine
Currency, as moral damages for all the plaintiffs'
(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as
and for attorney's fees; and
(6) The costs of suit.
SO ORDERED. 2
On appeal, the respondent Court of Appeals held that moral damages are recoverable in
a damage suit predicated upon a breach of contract of carriage only where there is fraud
or bad faith. Since it is a matter of record that overbooking of flights is a common and
accepted practice of airlines in the United States and is specifically allowed under the Code
of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be
imputed on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight
was overbooked and that even a person with a confirmed reservation may be denied
accommodation on an overbooked flight, nevertheless it ruled that such omission or
negligence cannot under the circumstances be considered to be so gross as to amount to
bad faith.
Finally, it also held that there was no bad faith in placing petitioners in the wait-list along
with forty-eight (48) other passengers where full-fare first class tickets were given priority
over discounted tickets.
The dispositive portion of the decision of respondent Court of Appeals3 dated October 25,
1991 states as follows:
WHEREFORE, in view of all the foregoing, the decision under review is
hereby MODIFIED in that the award of moral and exemplary damages to
the plaintiffs is eliminated, and the defendant-appellant is hereby ordered
to pay the plaintiff the following amounts:
(1) US$159.49, or its peso equivalent at the time of the payment,
representing the price of Suthira Zalamea's ticket for TWA Flight 007;
40

(2) US$159.49, or its peso equivalent at the time of the payment,
representing the price of Cesar Zalamea's ticket for TWA Flight 007;
(3) P50,000.00 as and for attorney's fees.
(4) The costs of suit.
SO ORDERED.4
Not satisfied with the decision, petitioners raised the case on petition for review
on certiorari and alleged the following errors committed by the respondent Court of
Appeals, to wit:
I.
. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON
THE PART OF RESPONDENT TWA BECAUSE IT HAS A RIGHT TO
OVERBOOK FLIGHTS.
II.
. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
III.
. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA
TICKET AND PAYMENT FOR THE AMERICAN AIRLINES
TICKETS.5
That there was fraud or bad faith on the part of respondent airline when it did not allow
petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be
disputed. The U.S. law or regulation allegedly authorizing overbooking has never been
proved. Foreign laws do not prove themselves nor can the courts take judicial notice of
them. Like any other fact, they must be alleged and proved.6 Written law may be evidenced
by an official publication thereof or by a copy attested by the officer having the legal
custody of the record, or by his deputy, and accompanied with a certificate that such officer
has custody. The certificate may be made by a secretary of an embassy or legation, consul
general, consul, vice-consul, or consular agent or by any officer in the foreign service of
the Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office.7
CONFLICT OF LAWS CASES
Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer
service agent, in her deposition dated January 27, 1986 that the Code of Federal
Regulations of the Civil Aeronautics Board allows overbooking. Aside from said statement,
no official publication of said code was presented as evidence. Thus, respondent court's
finding that overbooking is specifically allowed by the US Code of Federal Regulations has
no basis in fact.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not
applicable to the case at bar in accordance with the principle of lex loci contractus which
require that the law of the place where the airline ticket was issued should be applied by
the court where the passengers are residents and nationals of the forum and the ticket is
issued in such State by the defendant airline.8 Since the tickets were sold and issued in
the Philippines, the applicable law in this case would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages. In Alitalia Airways v. Court of
Appeals,9 where passengers with confirmed bookings were refused carriage on the last
minute, this Court held that when an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage arises, and the passenger has
every right to expect that he would fly on that flight and on that date. If he does not, then
the carrier opens itself to a suit for breach of contract of carriage. Where an airline had
deliberately overbooked, it took the risk of having to deprive some passengers of their
seats in case all of them would show up for the check in. For the indignity and
inconvenience of being refused a confirmed seat on the last minute, said passenger is
entitled to an award of moral damages.
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, 10 where private respondent was
not allowed to board the plane because her seat had already been given to another
passenger even before the allowable period for passengers to check in had lapsed despite
the fact that she had a confirmed ticket and she had arrived on time, this Court held that
petitioner airline acted in bad faith in violating private respondent's rights under their
contract of carriage and is therefore liable for the injuries she has sustained as a result.
In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage
amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate
Court, 11 where a would-be passenger had the necessary ticket, baggage claim and
clearance from immigration all clearly and unmistakably showing that she was, in fact,
included in the passenger manifest of said flight, and yet was denied accommodation in
said flight, this Court did not hesitate to affirm the lower court's finding awarding her
damages.
A contract to transport passengers is quite different in kind and degree from any other
contractual relation. So ruled this Court in Zulueta v. Pan American World Airways,
41

Inc. This is so, for a contract of carriage generates a relation attended with public duty
12
— a duty to provide public service and convenience to its passengers which must be
paramount to self-interest or enrichment. Thus, it was also held that the switch of planes
from Lockheed 1011 to a smaller Boeing 707 because there were only 138 confirmed
economy class passengers who could very well be accommodated in the smaller planes,
thereby sacrificing the comfort of its first class passengers for the sake of economy,
amounts to bad faith. Such inattention and lack of care for the interest of its passengers
who are entitled to its utmost consideration entitles the passenger to an award of moral
damages. 13
Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad
faith in not informing its passengers beforehand that it could breach the contract of carriage
even if they have confirmed tickets if there was overbooking. Respondent TWA should
have incorporated stipulations on overbooking on the tickets issued or to properly inform
its passengers about these policies so that the latter would be prepared for such
eventuality or would have the choice to ride with another airline.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were
written the name of the passenger and the points of origin and destination, contained such
a notice. An examination of Exhibit I does not bear this out. At any rate, said exhibit was
not offered for the purpose of showing the existence of a notice of overbooking but to show
that Exhibit I was used for flight 007 in first class of June 11, 1984 from New York to Los
Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged
policy of giving less priority to discounted tickets. While the petitioners had checked in at
the same time, and held confirmed tickets, yet, only one of them was allowed to board the
plane ten minutes before departure time because the full-fare ticket he was holding was
given priority over discounted tickets. The other two petitioners were left behind.
It is respondent TWA's position that the practice of overbooking and the airline system of
boarding priorities are reasonable policies, which when implemented do not amount to bad
faith. But the issue raised in this case is not the reasonableness of said policies but whether
or not said policies were incorporated or deemed written on petitioners' contracts of
carriage. Respondent TWA failed to show that there are provisions to that effect. Neither
did it present any argument of substance to show that petitioners were duly apprised of
the overbooked condition of the flight or that there is a hierarchy of boarding priorities in
booking passengers. It is evident that petitioners had the right to rely upon the assurance
of respondent TWA, thru its agent in Manila, then in New York, that their tickets
represented confirmed seats without any qualification. The failure of respondent TWA to
so inform them when it could easily have done so thereby enabling respondent to hold on
to them as passengers up to the last minute amounts to bad faith. Evidently, respondent
TWA placed its self-interest over the rights of petitioners under their contracts of carriage.
CONFLICT OF LAWS CASES
Such conscious disregard of petitioners' rights makes respondent TWA liable for moral
damages. To deter breach of contracts by respondent TWA in similar fashion in the future,
we adjudge respondent TWA liable for exemplary damages, as well.
Petitioners also assail the respondent court's decision not to require the refund of Liana
Zalamea's ticket because the ticket was used by her father. On this score, we uphold the
respondent court. Petitioners had not shown with certainty that the act of respondent TWA
in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence or
deliberate act. Petitioners had also failed to establish that they did not accede to said
agreement. The logical conclusion, therefore, is that both petitioners and respondent TWA
agreed, albeit impliedly, to the course of action taken.
The respondent court erred, however, in not ordering the refund of the American Airlines
tickets purchased and used by petitioners Suthira and Liana. The evidence shows that
petitioners Suthira and Liana were constrained to take the American Airlines flight to Los
Angeles not because they "opted not to use their TWA tickets on another TWA flight" but
because respondent TWA could not accommodate them either on the next TWA flight
which was also fully booked. 14 The purchase of the American Airlines tickets by petitioners
Suthira and Liana was the consequence of respondent TWA's unjustifiable breach of its
contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code,
respondent TWA should, therefore, be responsible for all damages which may be
reasonably attributed to the non-performance of its obligation. In the previously cited case
of Alitalia Airways v. Court of Appeals, 15 this Court explicitly held that a passenger is
entitled to be reimbursed for the cost of the tickets he had to buy for a flight to another
airline. Thus, instead of simply being refunded for the cost of the unused TWA tickets,
petitioners should be awarded the actual cost of their flight from New York to Los Angeles.
On this score, we differ from the trial court's ruling which ordered not only the
reimbursement of the American Airlines tickets but also the refund of the unused TWA
tickets. To require both prestations would have enabled petitioners to fly from New York to
Los Angeles without any fare being paid.
The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil
Code which allows recovery when the defendant's act or omission has compelled plaintiff
to litigate or to incur expenses to protect his interest. However, the award for moral
damages and exemplary damages by the trial court is excessive in the light of the fact that
only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral
damages and another P50,000.00 exemplary damages would suffice under the
circumstances obtaining in the instant case.
WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court
of Appeals is hereby MODIFIED to the extent of adjudging respondent TransWorld Airlines
to pay damages to petitioners in the following amounts, to wit:
42
 CONFLICT OF LAWS CASES
(1) US$918.00 or its peso equivalent at the time of payment representing the price of the
tickets bought by Suthira and Liana Zalamea from American Airlines, to enable them to fly
to Los Angeles from New York City;

(2) P50,000.00 as moral damages;

(3) P50,000.00 as exemplary damages;

(4) P50,000.00 as attorney's fees; and

(5) Costs of suit.

SO ORDERED.

43

G.R. No. 138322 October 2, 2001
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO, petitioner, vs. REDERICK A.
RECIO, respondents.
1. Marriages; Husband and Wife; Divorce; Conflict of Laws; Philippine law does not
provide for absolute divorce, hence, our courts cannot grant it, and a marriage between
two Filipinos cannot be dissolved even by a divorce obtained abroad.-
At the outset, we lay the following basic legal principles as the take-off points for our
discussion. Philippine law does not provide for absolute divorce; hence, our courts
cannot grant it. A marriage between two Filipinos cannot be dissolved even by a divorce
obtained abroad, because of Articles 15 and 17 of the Civil Code. In mixed marriages
involving a Filipino and a foreigner, Article 26 of the Family Code allows the former to
contract a subsequent marriage in case the divorce is “validly obtained abroad by the
alien spouse capacitating him or her to remarry.” A divorce obtained abroad by a couple,
who are both aliens, may be recognized in the Philippines, provided it is consistent with
their respective national laws.
2. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; Before a foreign
divorce decree can be recognized, the party pleading it must prove the divorce as a fact
and demonstrate its conformity to the foreign law allowing it.-
A comparison between marriage and divorce, as far as pleading and proof are
concerned, can be made. Van Dorn v. Romillo, Jr. decrees that “aliens may obtain
divorces abroad, which may be recognized in the Philippines, provided they are valid
according to their national law.” Therefore, before a foreign divorce decree can be
recognized by our courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it. Presentation solely of the
divorce decree is insufficient.
3. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; Before a foreign
judgment is given presumptive evidentiary value, the document must first be presented
and admitted in evidence.-
Respondent, on the other hand, argues that the Australian divorce decree is a public
document—a written official act of an Australian family court. Therefore, it requires no
further proof of its authenticity and due execution. Respondent is getting ahead of
himself. Before a foreign judgment is given presumptive evidentiary value, the document
must first be presented and admitted in evidence. A divorce obtained abroad is proven
by the divorce decree itself. Indeed the best evidence of a judgment is the judgment
itself. The decree purports to be a written act or record of an act of an official body or
tribunal of a foreign country.
CONFLICT OF LAWS CASES
4. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; Proof of Foreign
Public or Official Records; Requisites.-
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be
proven as a public or official record of a foreign country by either (1) an official
publication, or (2) a copy thereof attested by the officer having legal custody of the
document. If the record is not kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or consular officer in the
Philippine foreign service stationed in the foreign country in which the record is kept, and
(b) authenticated by the seal of his office. The divorce decree between respondent and
Editha Samson appears to be an authentic one issued by an Australian family court.
However, appearance is not sufficient; compliance with the aforementioned rules on
evidence must be demonstrated.
5. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; A party’s failure to
object properly renders a foreign divorce decree admissible as a written act of the court
of another State.-
Fortunately for respondent’s cause, when the divorce decree of May 18, 1989 was
submitted in evidence, counsel for petitioner objected, not to its admissibility, but only to
the fact that it had not been registered in the Local Civil Registry of Cabanatuan City.
The trial court ruled that it was admissible, subject to petitioner’s qualification. Hence, it
was admitted in evidence and accorded weight by the judge. Indeed, petitioner’s failure
to object properly rendered the divorce decree admissible as a written act of the Family
Court of Sydney, Australia.
6. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; Citizenship; A
former Filipino is no longer bound by Philippine personal laws after he acquires another
State’s citizenship.-
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary,
respondent was no longer bound by Philippine personal laws after he acquired Australian
citizenship in 1992. Natu- ralization is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a citizen. Naturalized citizens, freed from the
protective cloak of their former states, don the attires of their adoptive countries. By
becoming an Australian, respondent severed his allegiance to the Philippines and the
vinculum juris that had tied him to Philippine personal laws.
7. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; The burden of
proof lies with the party who alleges the existence of a fact or thing necessary in the
prosecution or defense of an action; Where a divorce decree is a defense raised by a
party, the burden of proving the pertinent foreign law validating it falls squarely upon
him.-
44

The burden of proof lies with “the party who alleges the existence of a fact or thing
necessary in the prosecution or defense of an action.” In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those are denied by the
answer; and defendants have the burden of proving the material allegations in their
answer when they introduce new matters. Since the divorce was a defense raised by
respondent, the burden of proving the pertinent Australian law validating it falls squarely
upon him.
8. Marriages; Husband and Wife; Divorce; Conflict of Laws; Evidence; Judicial Notice;
Our courts do not take judicial notice of foreign laws—like any other facts, they must be
alleged and proved.-
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign
laws. Like any other facts, they must be alleged and proved. Australian marital laws are
not among those matters that judges are supposed to know by reason of their judicial
function. The power of judicial notice must be exercised with caution, and every
reasonable doubt upon the subject should be resolved in the negative.
9. Marriages; Husband and Wife; Divorce; Conflict of Laws; Words and Phrases; In its
strict legal sense, divorce means the legal dissolution of a lawful union for a cause
arising after marriage; A decree nisi or an interlocutory order—a conditional or
provisional judgment of divorce—is in effect the same as a separation from bed and
board, although an absolute divorce may follow after the lapse of the prescribed period
during which no reconciliation is effected.-
Respondent’s contention is untenable. In its strict legal sense, divorce means the legal
dissolution of a lawful union for a cause arising after marriage. But divorces are of
different types. The two basic ones are (1) absolute divorce or a vinculo matrimonii, and
(2) limited divorce or a mensa et thoro. The first kind terminates the marriage, while the
second suspends it and leaves the bond in full force. There is no showing in the case at
bar which type of divorce was procured by respondent. Respondent presented a decree
nisi or an interlocutory decree—a conditional or provi- sional judgment of divorce. It is in
effect the same as a separation from bed and board, although an absolute divorce may
follow after the lapse of the prescribed period during which no reconciliation is effected.
Even after the divorce becomes absolute, the court may under some foreign statutes and
practices, still restrict remarriage. Under some other jurisdictions, remarriage may be
limited by statute; thus, the guilty party in a divorce which was granted on the ground of
adultery may be prohibited from marrying again. The court may allow a remarriage only
after proof of good behavior.
10. Marriages; Husband and Wife; Divorce; Conflict of Laws; Presumptions; A divorce
decree does not raise a disputable presumption or presumptive evidence as to the civil
CONFLICT OF LAWS CASES
status of the person presenting it where no proof has been presented on the legal effects
of the divorce decree obtained under the foreign law.-
We also reject the claim of respondent that the divorce decree raises a disputable
presumption or presumptive evidence as to his civil status based on Section 48, Rule 39
of the Rules of Court, for the simple reason that no proof has been presented on the
legal effects of the divorce decree obtained under Australian laws.
11. Marriages; Husband and Wife; Divorce; Conflict of Laws; Certificate of Legal
Capacity; The legal capacity to contract marriage is determined by the national law of the
party concerned; The certificate of legal capacity mentioned in Article 21 of the Family
Code is sufficient to establish the legal capacity of a foreign national—a duly
authenticated and admitted certificate is prima facie evidence of legal capacity to marry
on the part of the alien applicant for a marriage license.-
Petitioner argues that the certificate of legal capacity required by Article 21 of the Family
Code was not submitted together with the application for a marriage license. According
to her, its absence is proof that respondent did not have legal capacity to remarry. We
clarify. To repeat, the legal capacity to contract marriage is determined by the national
law of the party concerned. The certificate mentioned in Article 21 of the Family Code
would have been sufficient to establish the legal capacity of respondent, had he duly
presented it in court. A duly authenticated and admitted certificate is prima facie
evidence of legal capacity to marry on the part of the alien applicant for a marriage
license.
12. Marriages; Husband and Wife; Divorce; Conflict of Laws; Certificate of Legal
Capacity; The absence of a certificate of legal capacity is merely an irregularity in
complying with the formal requirements for procuring a marriage license, an irregularity
which will not affect the validity of a marriage celebrated on the basis of a marriage
license issued without that certificate.-
In passing, we note that the absence of the said certificate is merely an irregularity in
complying with the for- mal requirement for procuring a marriage license. Under Article 4
of the Family Code, an irregularity will not affect the validity of a marriage celebrated on
the basis of a marriage license issued without that certificate. (Vitug, Compendium, pp.
120-126; Sempio-Diy, Handbook on the Family Code of the Philippines, 1997 reprint, p.
17; Rufus Rodriguez, The Family Code of the Philippines Annotated, 1990 ed., p. 42;
Melencio Sta. Maria, Jr., Persons and Family Relations Law, 1999 ed., p. 146.).
13. Marriages; Husband and Wife; Divorce; Conflict of Laws; A divorce decree does not
ipso facto clothed a divorcee with the legal capacity to remarry—he must still adduce
sufficient evidence to show the foreign State’s personal law governing his status, or at
the very least, he should still prove his legal capacity to contract the second marriage.-
45

Based on the above records, we cannot conclude that respondent, who was then a
naturalized Australian citizen, was legally capacitated to marry petitioner on January 12,
1994. We agree with petitioner’s contention that the court a quo erred in finding that the
divorce decree ipso facto clothed respondent with the legal capacity to remarry without
requiring him to adduce sufficient evidence to show the Australian personal law
governing his status; or at the very least, to prove his legal capacity to contract the
second marriage.
14. Marriages; Husband and Wife; Divorce; Conflict of Laws; The Court may not declare
the second marriage of a divorcee null and void on the ground of bigamy where there is
a possibility that, under the foreign law, the divorcee was really capacitated to remarry as
a result of the divorce decree—the most judicious course is to remand the case to the
trial court to receive evidence, if any, which show the divorcee’s legal capacity to
remarry.-
Neither can we grant petitioner’s prayer to declare her marriage to respondent null and
void on the ground of bigamy. After all, it may turn out that under Australian law, he was
really capacitated to marry petitioner as a direct result of the divorce decree. Hence, we
believe that the most judicious course is to remand this case to the trial court to receive
evidence, if any, which show petitioner’s legal capacity to marry petitioner. Failing in that,
then the court a quo may declare a nullity of the parties’ marriage on the ground of
bigamy, there being already in evidence two existing marriage certificates, which were
both obtained in the Philippines, one in Malabon, Metro Manila dated March 1, 1987 and
the other, in Cabanatuan City dated January 12, 1994.
A divorce obtained abroad by an alien may be recognized in our jurisdiction, provided such
decree is valid according to the national law of the foreigner. However, the divorce decree
and the governing personal law of the alien spouse who obtained the divorce must be
proven. Our courts do not take judicial notice of foreign laws and judgment; hence, like any
other facts, both the divorce decree and the national law of the alien must be alleged and
proven according to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to nullify
the January 7, 1999 Decision1 and the March 24, 1999 Order2 of the Regional Trial Court
of Cabanatuan City, Branch 28, in Civil Case No. 3026-AF. The assailed Decision
disposed as follows:
"WHEREFORE, this Court declares the marriage between Grace J. Garcia and
Rederick A. Recio solemnized on January 12, 1994 at Cabanatuan City as
dissolved and both parties can now remarry under existing and applicable laws to
any and/or both parties."3
CONFLICT OF LAWS CASES
The assailed Order denied reconsideration of the above-quoted Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an Australian citizen, in
Malabon, Rizal, on March 1, 1987.4 They lived together as husband and wife in Australia.
On May 18, 1989,5 a decree of divorce, purportedly dissolving the marriage, was issued
by an Australian family court.
On June 26, 1992, respondent became an Australian citizen, as shown by a "Certificate of
Australian Citizenship" issued by the Australian government.6 Petitioner – a Filipina – and
respondent were married on January 12, 1994 in Our Lady of Perpetual Help Church in
Cabanatuan City.7 In their application for a marriage license, respondent was declared as
"single" and "Filipino."8
Starting October 22, 1995, petitioner and respondent lived separately without prior judicial
dissolution of their marriage. While the two were still in Australia, their conjugal assets
were divided on May 16, 1996, in accordance with their Statutory Declarations secured in
Australia.9
On March 3, 1998, petitioner filed a Complaint for Declaration of Nullity of Marriage10 in the
court a quo, on the ground of bigamy – respondent allegedly had a prior subsisting
marriage at the time he married her on January 12, 1994. She claimed that she learned of
respondent's marriage to Editha Samson only in November, 1997.
In his Answer, respondent averred that, as far back as 1993, he had revealed to petitioner
his prior marriage and its subsequent dissolution.11 He contended that his first marriage to
an Australian citizen had been validly dissolved by a divorce decree obtained in Australian
in 1989;12 thus, he was legally capacitated to marry petitioner in 1994.
1âw phi 1.nêt
On July 7, 1998 – or about five years after the couple's wedding and while the suit for the
declaration of nullity was pending – respondent was able to secure a divorce decree from
a family court in Sydney, Australia because the "marriage ha[d] irretrievably broken
down."13
Respondent prayed in his Answer that the Complained be dismissed on the ground that it
stated no cause of action.14 The Office of the Solicitor General agreed with
respondent.15 The court marked and admitted the documentary evidence of both
parties.16 After they submitted their respective memoranda, the case was submitted for
resolution.17
Thereafter, the trial court rendered the assailed Decision and Order.
46

Ruling of the Trial Court
The trial court declared the marriage dissolved on the ground that the divorce issued in
Australia was valid and recognized in the Philippines. It deemed the marriage ended, but
not on the basis of any defect in an essential element of the marriage; that is, respondent's
alleged lack of legal capacity to remarry. Rather, it based its Decision on the divorce decree
obtained by respondent. The Australian divorce had ended the marriage; thus, there was
no more martial union to nullify or annual.
Hence, this Petition.18
Issues
Petitioner submits the following issues for our consideration:
"I
The trial court gravely erred in finding that the divorce decree obtained in Australia
by the respondent ipso facto terminated his first marriage to Editha Samson
thereby capacitating him to contract a second marriage with the petitioner.
"2
The failure of the respondent, who is now a naturalized Australian, to present a
certificate of legal capacity to marry constitutes absence of a substantial requisite
voiding the petitioner' marriage to the respondent.
"3
The trial court seriously erred in the application of Art. 26 of the Family Code in this
case.
"4
The trial court patently and grievously erred in disregarding Arts. 11, 13, 21, 35,
40, 52 and 53 of the Family Code as the applicable provisions in this case.
"5
The trial court gravely erred in pronouncing that the divorce gravely erred in
pronouncing that the divorce decree obtained by the respondent in Australia ipso
CONFLICT OF LAWS CASES
facto capacitated the parties to remarry, without first securing a recognition of the
judgment granting the divorce decree before our courts."19
The Petition raises five issues, but for purposes of this Decision, we shall concentrate on
two pivotal ones: (1) whether the divorce between respondent and Editha Samson was
proven, and (2) whether respondent was proven to be legally capacitated to marry
petitioner. Because of our ruling on these two, there is no more necessity to take up the
rest.
The Court's Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial court's recognition of the divorce between respondent and Editha
Samson. Citing Adong v. Cheong Seng Gee,20 petitioner argues that the divorce decree,
like any other foreign judgment, may be given recognition in this jurisdiction only upon
proof of the existence of (1) the foreign law allowing absolute divorce and (2) the alleged
divorce decree itself. She adds that respondent miserably failed to establish these
elements.
Petitioner adds that, based on the first paragraph of Article 26 of the Family Code,
marriages solemnized abroad are governed by the law of the place where they were
celebrated (the lex loci celebrationist). In effect, the Code requires the presentation of the
foreign law to show the conformity of the marriage in question to the legal requirements of
the place where the marriage was performed.
At the outset, we lay the following basic legal principles as the take-off points for our
discussion. Philippine law does not provide for absolute divorce; hence, our courts cannot
grant it.21 A marriage between two Filipinos cannot be dissolved even by a divorce obtained
abroad, because of Articles 1522 and 1723 of the Civil Code.24 In mixed marriages involving
a Filipino and a foreigner, Article 2625 of the Family Code allows the former to contract a
subsequent marriage in case the divorce is "validly obtained abroad by the alien spouse
capacitating him or her to remarry."26 A divorce obtained abroad by a couple, who are both
aliens, may be recognized in the Philippines, provided it is consistent with their respective
national laws.27
A comparison between marriage and divorce, as far as pleading and proof are concerned,
can be made. Van Dorn v. Romillo Jr. decrees that "aliens may obtain divorces abroad,
47

which may be recognized in the Philippines, provided they are valid according to their
national law."28 Therefore, before a foreign divorce decree can be recognized by our
courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity
to the foreign law allowing it.29 Presentation solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in evidence, it must first
comply with the registration requirements under Articles 11, 13 and 52 of the Family Code.
These articles read as follows:
"ART. 11. Where a marriage license is required, each of the contracting parties
shall file separately a sworn application for such license with the proper local civil
registrar which shall specify the following:
xxx xxx xxx
"(5) If previously married, how, when and where the previous marriage was
dissolved or annulled;
xxx xxx xxx
"ART. 13. In case either of the contracting parties has been previously married,
the applicant shall be required to furnish, instead of the birth of baptismal certificate
required in the last preceding article, the death certificate of the deceased spouse
or the judicial decree of annulment or declaration of nullity of his or her previous
marriage. x x x.
"ART. 52. The judgment of annulment or of absolute nullity of the marriage, the
partition and distribution of the properties of the spouses, and the delivery of the
children's presumptive legitimes shall be recorded in the appropriate civil registry
and registries of property; otherwise, the same shall not affect their persons."
Respondent, on the other hand, argues that the Australian divorce decree is a public
document – a written official act of an Australian family court. Therefore, it requires no
further proof of its authenticity and due execution.
Respondent is getting ahead of himself. Before a foreign judgment is given presumptive
evidentiary value, the document must first be presented and admitted in evidence.30 A
divorce obtained abroad is proven by the divorce decree itself. Indeed the best evidence
of a judgment is the judgment itself.31 The decree purports to be a written act or record of
an act of an officially body or tribunal of a foreign country.32
CONFLICT OF LAWS CASES
Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be
proven as a public or official record of a foreign country by either (1) an official publication
or (2) a copy thereof attested33 by the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b) authenticated by the
seal of his office.34
The divorce decree between respondent and Editha Samson appears to be an authentic
one issued by an Australian family court.35 However, appearance is not sufficient;
compliance with the aforemetioned rules on evidence must be demonstrated.
Fortunately for respondent's cause, when the divorce decree of May 18, 1989 was
submitted in evidence, counsel for petitioner objected, not to its admissibility, but only to
the fact that it had not been registered in the Local Civil Registry of Cabanatuan City.36 The
trial court ruled that it was admissible, subject to petitioner's qualification.37Hence, it was
admitted in evidence and accorded weight by the judge. Indeed, petitioner's failure to
object properly rendered the divorce decree admissible as a written act of the Family Court
of Sydney, Australia.38
Compliance with the quoted articles (11, 13 and 52) of the Family Code is not necessary;
respondent was no longer bound by Philippine personal laws after he acquired Australian
citizenship in 1992.39 Naturalization is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a citizen.40 Naturalized citizens, freed from the
protective cloak of their former states, don the attires of their adoptive countries. By
becoming an Australian, respondent severed his allegiance to the Philippines and
the vinculum juris that had tied him to Philippine personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law falls upon petitioner,
because she is the party challenging the validity of a foreign judgment. He contends that
petitioner was satisfied with the original of the divorce decree and was cognizant of the
marital laws of Australia, because she had lived and worked in that country for quite a long
time. Besides, the Australian divorce law is allegedly known by Philippine courts: thus,
judges may take judicial notice of foreign laws in the exercise of sound discretion.
We are not persuaded. The burden of proof lies with "the party who alleges the existence
of a fact or thing necessary in the prosecution or defense of an action."41 In civil cases,
plaintiffs have the burden of proving the material allegations of the complaint when those
are denied by the answer; and defendants have the burden of proving the material
allegations in their answer when they introduce new matters.42 Since the divorce was a
48

defense raised by respondent, the burden of proving the pertinent Australian law validating
it falls squarely upon him.
It is well-settled in our jurisdiction that our courts cannot take judicial notice of foreign
laws.43 Like any other facts, they must be alleged and proved. Australian marital laws are
not among those matters that judges are supposed to know by reason of their judicial
function.44 The power of judicial notice must be exercised with caution, and every
reasonable doubt upon the subject should be resolved in the negative.
Second Issue:
Respondent's Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the divorce, respondent was
legally incapacitated to marry her in 1994.
Hence, she concludes that their marriage was void ab initio.
Respondent replies that the Australian divorce decree, which was validly admitted in
evidence, adequately established his legal capacity to marry under Australian law.
Respondent's contention is untenable. In its strict legal sense, divorce means the legal
dissolution of a lawful union for a cause arising after marriage. But divorces are of different
types. The two basic ones are (1) absolute divorce or a vinculo matrimonii and (2) limited
divorce or a mensa et thoro. The first kind terminates the marriage, while the second
suspends it and leaves the bond in full force.45 There is no showing in the case at bar which
type of divorce was procured by respondent.
Respondent presented a decree nisi or an interlocutory decree – a conditional or
provisional judgment of divorce. It is in effect the same as a separation from bed and board,
although an absolute divorce may follow after the lapse of the prescribed period during
which no reconciliation is effected.46
Even after the divorce becomes absolute, the court may under some foreign statutes and
practices, still restrict remarriage. Under some other jurisdictions, remarriage may be
limited by statute; thus, the guilty party in a divorce which was granted on the ground of
adultery may be prohibited from remarrying again. The court may allow a remarriage only
after proof of good behavior.47
On its face, the herein Australian divorce decree contains a restriction that reads:
CONFLICT OF LAWS CASES
"1. A party to a marriage who marries again before this decree becomes absolute
(unless the other party has died) commits the offence of bigamy."48
This quotation bolsters our contention that the divorce obtained by respondent may have
been restricted. It did not absolutely establish his legal capacity to remarry according to
his national law. Hence, we find no basis for the ruling of the trial court, which erroneously
assumed that the Australian divorce ipso facto restored respondent's capacity to remarry
despite the paucity of evidence on this matter.
We also reject the claim of respondent that the divorce decree raises a disputable
presumption or presumptive evidence as to his civil status based on Section 48, Rule
3949 of the Rules of Court, for the simple reason that no proof has been presented on the
legal effects of the divorce decree obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of the Family
Code was not submitted together with the application for a marriage license. According to
her, its absence is proof that respondent did not have legal capacity to remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by the national
law of the party concerned. The certificate mentioned in Article 21 of the Family Code
would have been sufficient to establish the legal capacity of respondent, had he duly
presented it in court. A duly authenticated and admitted certificate is prima facie evidence
of legal capacity to marry on the part of the alien applicant for a marriage license.50
As it is, however, there is absolutely no evidence that proves respondent's legal capacity
to marry petitioner. A review of the records before this Court shows that only the following
exhibits were presented before the lower court: (1) for petitioner: (a) Exhibit "A" –
Complaint;51 (b) Exhibit "B" – Certificate of Marriage Between Rederick A. Recto (Filipino-
Australian) and Grace J. Garcia (Filipino) on January 12, 1994 in Cabanatuan City, Nueva
Ecija;52 (c) Exhibit "C" – Certificate of Marriage Between Rederick A. Recio (Filipino) and
Editha D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila;53 (d) Exhibit
"D" – Office of the City Registrar of Cabanatuan City Certification that no information of
annulment between Rederick A. Recto and Editha D. Samson was in its records;54 and (e)
Exhibit "E" – Certificate of Australian Citizenship of Rederick A. Recto;55 (2) for respondent:
(Exhibit "1" – Amended Answer;56 (b) Exhibit "S" – Family Law Act 1975 Decree Nisi of
Dissolution of Marriage in the Family Court of Australia;57 (c) Exhibit "3" – Certificate of
Australian Citizenship of Rederick A. Recto;58 (d) Exhibit "4" – Decree Nisi of Dissolution
of Marriage in the Family Court of Australia Certificate;59 and Exhibit "5" – Statutory
Declaration of the Legal Separation Between Rederick A. Recto and Grace J. Garcia Recio
since October 22, 1995.60
49
 CONFLICT OF LAWS CASES
Based on the above records, we cannot conclude that respondent, who was then a
naturalized Australian citizen, was legally capacitated to marry petitioner on January 12,
1994. We agree with petitioner's contention that the court a quo erred in finding that the
divorce decree ipso facto clothed respondent with the legal capacity to remarry without
requiring him to adduce sufficient evidence to show the Australian personal law governing
his status; or at the very least, to prove his legal capacity to contract the second marriage.

Neither can we grant petitioner's prayer to declare her marriage to respondent null and
void on the ground of bigamy. After all, it may turn out that under Australian law, he was
really capacitated to marry petitioner as a direct result of the divorce decree. Hence, we
believe that the most judicious course is to remand this case to the trial court to receive
evidence, if any, which show petitioner's legal capacity to marry petitioner. Failing in that,
then the court a quo may declare a nullity of the parties' marriage on the ground of bigamy,
there being already in evidence two existing marriage certificates, which were both
obtained in the Philippines, one in Malabon, Metro Manila dated March 1, 1987 and the
other, in Cabanatuan City dated January 12, 1994.

WHEREFORE, in the interest of orderly procedure and substantial justice,

we REMAND the case to the court a quofor the purpose of receiving evidence which
conclusively show respondent's legal capacity to marry petitioner; and failing in that, of
declaring the parties' marriage void on the ground of bigamy, as above discussed. No
costs.

SO ORDERED.

50

G.R. No. 110263 July 20, 2001
ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner, vs. COURT OF
APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.
1. Conflict of Laws; Judgments; Recognition of Foreign Judgments; In the absence of a
special compact, no sovereign is bound to give effect within its dominion to a judgment
rendered by a tribunal of another country.-
Generally, in the absence of a special compact, no sovereign is bound to give effect
within its dominion to a judgment rendered by a tribunal of another country; however, the
rules of comity, utility and convenience of nations have established a usage among
civilized states by which final judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious under certain conditions that may vary in
different countries.
2. Conflict of Laws; Judgments; Recognition of Foreign Judgments; A foreign judgment is
presumed to be valid and binding in the country from which it comes, until a contrary
showing, on the basis of a presumption of regularity of proceedings and the giving of due
notice in the foreign forum; Once the authenticity of the foreign judgment is proved, the
party attacking a foreign judgment, is tasked with the burden of overcoming its
presumptive validity.-
A foreign judgment is presumed to be valid and binding in the country from which it
comes, until a contrary showing, on the basis of a presumption of regularity of
proceedings and the giving of due notice in the foreign forum. Under Section 50(b), Rule
39 of the Revised Rules of Court, which was the governing law at the time the instant
case was decided by the trial court and respondent appellate court, a judgment, against
a person, of a tribunal of a foreign country having jurisdiction to pronounce the same is
presumptive evidence of a right as between the parties and their successors in interest
by a subsequent title. The judgment may, however, be assailed by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. In
addition, under Section 3(n), Rule 131 of the Revised Rules of Court, a court, whether in
the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is proved,
the party attacking a foreign judgment, is tasked with the burden of overcoming its
presumptive validity.
3. Conflict of Laws; Judgments; Recognition of Foreign Judgments; The recognition to be
accorded a foreign judgment is not necessarily affected by the fact that the procedure in
the courts of the country in which such judgment was rendered differs from that of the
courts of the country in which the judgment is relied on—matters of remedy and
procedure such as those relating to the service of summons or court process upon the
CONFLICT OF LAWS CASES
defendant, the authority of counsel to appear and represent a defendant and the formal
requirements in a decision are governed by the lex fori or the internal law of the forum.-
The foregoing reasons or grounds relied upon by private respondent in preventing
enforcement and recognition of the Malaysian judgment primarily refer to matters of
remedy and procedure taken by the Malaysian High Court relative to the suit for
collection initiated by petitioner. Needless to stress, the recognition to be accorded a
foreign judgment is not necessarily affected by the fact that the procedure in the courts of
the country in which such judgment was rendered differs from that of the courts of the
country in which the judgment is relied on. Ultimately, matters of remedy and procedure
such as those relating to the service of summons or court process upon the defendant,
the authority of counsel to appear and represent a defendant and the formal
requirements in a decision are governed by the lex fori or the internal law of the forum,
i.e., the law of Malaysia in this case.
4. Conflict of Laws; Judgments; Recognition of Foreign Judgments; Foreign procedural
laws are a question of fact, not of law, and may not be taken judicial notice of—they must
be pleaded and proved like any other fact.-
In this case, it is the procedural law of Malaysia where the judgment was rendered that
determines the validity of the service of court process on private respondent as well as
other mat- ters raised by it. As to what the Malaysian procedural law is, remains a
question of fact, not of law. It may not be taken judicial notice of and must be pleaded
and proved like any other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of
Court provide that it may be evidenced by an official publication or by a duly attested or
authenticated copy thereof. It was then incumbent upon private respondent to present
evidence as to what that Malaysian procedural law is and to show that under it, the
assailed service of summons upon a financial officer of a corporation, as alleged by it, is
invalid. It did not. Accordingly, the presumption of validity and regularity of service of
summons and the decision thereafter rendered by the High Court of Malaya must stand.
5. Conflict of Laws; Judgments; Recognition of Foreign Judgments; Words and Phrases;
‘Extrinsic Fraud’ and ‘Intrinsic Fraud,’ Distinguished; Even when the foreign judgment is
based on the drafts prepared by counsel for the successful party, such is not per se
indicative of collusion or fraud; Fraud to hinder the enforcement within the jurisdiction of
a foreign judgment must be extrinsic.-
On the ground that collusion, fraud and clear mistake of fact and law tainted the
judgment of the High Court of Malaya, no clear evidence of the same was adduced or
shown. The facts which the trial court found “intriguing” amounted to mere conjectures
and specious observations. The trial court’s finding on the absence of judgment against
Asiavest-CDCP Sdn. Bhd. is contradicted by evidence on record that recovery was also
sought against AsiavestCDCP Sdn. Bhd. but the same was found insolvent.
51

Furthermore, even when the foreign judgment is based on the drafts prepared by
counsel for the successful party, such is not per se indicative of collusion or fraud. Fraud
to hinder the enforcement within the jurisdiction of a foreign judgment must be extrinsic,
i.e., fraud based on facts not controverted or resolved in the case where judgment is
rendered, or that which would go to the jurisdiction of the court or would deprive the party
against whom judgment is rendered a chance to defend the action to which he has a
meritorious defense. Intrinsic fraud is one which goes to the very existence of the cause
of action is deemed already adjudged, and it, therefore, cannot militate against the
recognition or enforcement of the foreign judgment. Evidence is wanting on the alleged
extrinsic fraud. Hence, such unsubstantiated allegation cannot give rise to liability
therein.
6. Conflict of Laws; Judgments; Recognition of Foreign Judgments; Where under the
procedural rules of another state a valid judgment may be rendered even without stating
in the judgment every fact and law upon which the judgment is based, then the same
must be accorded respect and the courts in this jurisdiction cannot invalidate the
judgment of the foreign court simply because our rules provide otherwise.-
There is no merit to the argument that the foreign judgment is not enforceable in view of
the absence of any statement of facts and law upon which the award in favor of the
petitioner was based. As aforestated, the lex fori or the internal law of the forum governs
matters of remedy and procedure. Considering that under the procedural rules of the
High Court of Malaya, a valid judgment may be rendered even without stating in the
judgment every fact and law upon which the judgment is based, then the same must be
accorded respect and the courts in this jurisdiction cannot invalidate the judgment of the
foreign court simply because our rules provide otherwise.
7. Conflict of Laws; Judgments; Recognition of Foreign Judgments; It is not for the party
seeking the enforcement of a foreign judgment to prove the validity of the same but for
the opposing party to demonstrate the alleged invalidity of such foreign judgment,
otherwise a contrary rule would render meaningless the presumption of validity accorded
a foreign judgment.-
All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of
such foreign judgment, being the party challenging the judgment rendered by the High
Court of Malaya. But instead of doing so, private respondent merely argued, to which the
trial court agreed, that the burden lay upon petitioner to prove the validity of the money
judgment. Such is clearly erroneous and would render meaningless the presumption of
validity accorded a foreign judgment were the party seeking to enforce it be required to
first establish its validity.
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals dated
May 19,1993 in CA-G.R. CY No. 35871 affirming the Decision2 dated October 14,1991 of
CONFLICT OF LAWS CASES
the Regional Trial Court of Pasig, Metro Manila, Branch 168 in Civil Case No. 56368 which
dismissed the complaint of petitioner Asiavest Merchant Bankers (M) Berhad for the
enforcement of the money of the judgment of the High Court of Malaysia in Kuala Lumpur
against private respondent Philippine National Construction Corporation. 1âwphi 1.nêt
The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under
the laws of Malaysia while private respondent Philippine National Construction Corporation
is a corporation duly incorporated and existing under Philippine laws.
It appears that sometime in 1983, petitioner initiated a suit for collection against private
respondent, then known as Construction and Development Corporation of the Philippines,
before the High Court of Malaya in Kuala Lumpur entitled "Asiavest Merchant Bankers (M)
Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and Development Corporation of
the Philippines."3
Petitioner sought to recover the indemnity of the performance bond it had put up in favor
of private respondent to guarantee the completion of the Felda Project and the
nonpayment of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion of
Paloh Hanai and Kuantan By Pass; Project.
On September 13, 1985, the High Court of Malaya (Commercial Division) rendered
judgment in favor of the petitioner and against the private respondent which is also
designated therein as the "2nd Defendant. "
The judgment reads in full:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendant
2. Construction & Development Corporation of the
Philippines
JUDGMENT
The 2nd Defendant having entered appearance herein and the Court having under Order
14, rule 3 ordered that judgment as hereinafter provided be entered for the Plaintiffs
against the 2nd Defendant.
52

IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of $5,
108,290.23 (Ringgit Five million one hundred and eight thousand two hundred and ninety
and Sen twenty-three) together with interest at the rate of 12% per annum on
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date
of payment; and
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date
of payment; and $350.00 (Ringgit Three Hundred and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar, High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building, No.4,
Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed.
(VP/Ong/81194.7/83)4
On the same day, September 13, 1985, the High Court of Malaya issued an Order directing
the private respondent (also designated therein as the "2nd Defendant") to pay petitioner
interest on the sums covered by the said Judgment, thus:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendants
2. Construction & Development Corporation of the
Philippines
BEFORE THE SENIOR ASSISTANT REGISTRAR
CIK SUSILA S. PARAM THIS 13th DAY OF IN
SEPTEMBER 1985 CHAMBERS
ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this
action AND UPON READINGthe Summons in Chambers dated the 16th day of August,
1984 and the Affidavit of Lee Foong Mee affirmed on the 14th day of August 1984 both
filed herein AND UPON HEARING Mr. T. Thomas of Counsel for the Plaintiffs and Mr.
Khaw Chay Tee of Counsel for the 2nd Defendant abovenamed on the 26th day of
December 1984 IT WAS ORDERED that the Plaintiffs be at liberty to sign final judgment
against the 2nd Defendant for the sum of $5,108,290.23 AND IT WAS ORDERED that the
CONFLICT OF LAWS CASES
2nd Defendant do pay the Plaintiffs the costs of suit at $350.00 AND IT WAS FURTHER
ORDERED that the plaintiffs be at liberty to apply for payment of interest AND upon the
application of the Plaintiffs for payment of interest coming on for hearing on the 1st day of
August in the presence of Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr.
Khaw Chay Tee of Counsel for the 2nd Defendant above-named AND UPON
HEARING Counsel as aforesaid BY CONSENT IT WAS ORDERED that the 2nd
Defendant do pay the Plaintiffs interest at a rate to be assessed AND the same coming on
for assessment this day in the presence of Mr. Palpanaban Devarajoo of Counsel for the
Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant AND UPON HEARING
Counsel as aforesaid BY CONSENT IT IS ORDERED that the 2nd Defendant do pay the
Plaintiffs interest at the rate of 12% per annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and
(ii) the sum Of $2,521,423.32 from the 11th day of March 1983 to the date of
Payment.
Dated the 13th day of September,1985.
Senior Assistant Registrar, High Court, Kuala Lumpur.5
Following unsuccessful attempts6 to secure payment from private respondent under the
judgment, petitioner initiated on September 5, 1988 the complaint before Regional Trial
Court of Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya.7
Private respondent sought the dismissal of the case via a Motion to Dismiss filed on
October 5, 1988, contending that the alleged judgment of the High Court of Malaya
should be denied recognition or enforcement since on in face, it is tainted with want of
jurisdiction, want of notice to private respondent, collusion and/or fraud, and there is a
clear mistake of law or fact.8 Dismissal was, however, denied by the trial court considering
that the grounds relied upon are not the proper grounds in a motion to dismiss under Rule
16 of the Revised Rules of Court. 9
On May 22, 1989, private respondent filed its Answer with Compulsory Counter
claim's10 and therein raised the grounds it brought up in its motion to dismiss. In its Reply
filed11 on June 8, 1989, the petitioner contended that the High Court of Malaya acquired
jurisdiction over the Person of private respondent by its voluntary submission the court's
jurisdiction through its appointed counsel, Mr. Khay Chay Tee. Furthermore, private
respondent's counsel waived any and all objections to the High Court's jurisdiction in a
pleading filed before the court.
53

In due time, the trial court rendered its Decision dated October 14, 1991 dismissing
petitioner's complaint. Petitioner interposed an appeal with the Court of Appeals, but the
appellate court dismissed the same and affirmed the decision of the trial court in a Decision
dated May 19, 1993.
Hence, the instant Petition which is anchored on two (2) assigned errors,12 to wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN
COURT DID NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC,
NOTWITHSTANDING THAT (a) THE FOREIGN COURT HAD SERVED
SUMMONS ON PNCC AT ITS MALAYSlA OFFICE, AND (b) PNCC ITSELF
APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT.
II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND
ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.
Generally, in the absence of a special compact, no sovereign is bound to give effect within
its dominion to a judgment rendered by a tribunal of another country;13 however, the rules
of comity, utility and convenience of nations have established a usage among civilized
states by which final judgments of foreign courts of competent jurisdiction are reciprocally
respected and rendered efficacious under certain conditions that may vary in different
countries.14
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized
insofar as the immediate parties and the underlying cause of action are concerned so long
as it is convincingly shown that there has been an opportunity for a full and fair hearing
before a court of competent jurisdiction; that the trial upon regular proceedings has been
conducted, following due citation or voluntary appearance of the defendant and under a
system of jurisprudence likely to secure an impartial administration of justice; and that
there is nothing to indicate either a prejudice in court and in the system of laws under which
it is sitting or fraud in procuring the judgment.15
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until a contrary showing, on the basis of a presumption of regularity of proceedings and
the giving of due notice in the foreign forum Under Section 50(b),16 Rule 39 of the Revised
Rules of Court, which was the governing law at the time the instant case was decided by
the trial court and respondent appellate court, a judgment, against a person, of a tribunal
of a foreign country having jurisdiction to pronounce the same is presumptive evidence of
CONFLICT OF LAWS CASES
a right as between the parties and their successors in interest by a subsequent title. The
judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact. In addition, under Section 3(n),
Rule 131 of the Revised Rules of Court, a court, whether in the Philippines or elsewhere,
enjoys the presumption that it was acting in the lawful exercise of its jurisdiction. Hence,
once the authenticity of the foreign judgment is proved, the party attacking a foreign
judgment, is tasked with the burden of overcoming its presumptive validity.
In the instant case, petitioner sufficiently established the existence of the money judgment
of the High Court of Malaya by the evidence it offered. Vinayak Prabhakar Pradhan,
presented as petitioner's sole witness, testified to the effect that he is in active practice of
the law profession in Malaysia;17 that he was connected with Skrine and Company as Legal
Assistant up to 1981;18 that private respondent, then known as Construction and
Development Corporation of the Philippines, was sued by his client, Asiavest Merchant
Bankers (M) Berhad, in Kuala Lumpur;19that the writ of summons were served on March
17, 1983 at the registered office of private respondent and on March 21, 1983 on Cora S.
Deala, a financial planning officer of private respondent for Southeast Asia
operations;20that upon the filing of the case, Messrs. Allen and Gledhill, Advocates and
Solicitors, with address at 24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur,
entered their conditional appearance for private respondent questioning the regularity of
the service of the writ of summons but subsequently withdrew the same when it realized
that the writ was properly served;21 that because private respondent failed to file a
statement of defense within two (2) weeks, petitioner filed an application for summary
judgment and submitted affidavits and documentary evidence in support of its claim;22 that
the matter was then heard before the High Court of Kuala Lumpur in a series of dates
where private respondent was represented by counsel; 23 and that the end result of all
these proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the following documentary
evidence:
(a) A certified and authenticated copy of the Judgment promulgated by the
Malaysian High Court dated September 13, 1985 directing private respondent to
pay petitioner the sum of $5,108,290.23 Malaysian Ringgit plus interests from
March 1983 until fully paid;24
(b) A certified and authenticated copy of the Order dated September 13,1985
issued by the Malaysian High Court in Civil Suit No. C638 of 1983;25
(c) Computation of principal and interest due as of January 31, 1990 on the amount
adjudged payable to petitioner by private respondent;26
54

(d) Letter and Statement of Account of petitioner's counsel in Malaysia indicating
the costs for prosecuting and implementing the Malaysian High Court's
Judgment;27
(e) Letters between petitioner's Malaysian counsel, Skrine and Co., and its local
counsel, Sycip Salazar Law Offices, relative to institution of the action in the
Philippines;28
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990
showing attorney's fees paid by and due from petitioner; 29
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such writ in
petitioner's suit against private respondent before the Malaysian High Court;30
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed by
counsel for private respondent with the Malaysian High Court;31
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, cotmsel for private
respondent, submitted during the proceedings before the Malaysian High Court;32
(j) Record of the Court's Proceedings in Civil Case No. C638 of 1983.33
(k) Petitioner 's verified Application for Summary Judgment dated August 14,
1984;34 and
(l) Letter dated November 6, 1985 from petitioner's Malaysian Counsel to private
respondent's counsel in Malaysia.35
Having thus proven, through the foregoing evidence, the existence and authenticity of the
foreign judgment, said foreign judgment enjoys presumptive validity and the burden then
fell upon the party who disputes its validity, herein private respondent, to prove otherwise.
Private respondent failed to sufficiently discharge the burden that fell upon it - to prove by
clear and convincing evidence the grounds which it relied upon to prevent enforcement of
the Malaysian High Court judgment, namely, (a) that jurisdiction was not acquired by the
Malaysian Court over the person of private respondent due to alleged improper service of
summons upon private respondent and the alleged lack of authority of its counsel to
appear and represent private respondent in the suit; (b) the foreign judgment is allegedly
tainted by evident collusion, fraud and clear mistake of fact or law; and (c) not only were
the requisites for enforcement or recognition allegedly not complied with but also that the
Malaysian judgment is allegedly contrary to the Constitutional prescription that the "every
decision must state the facts and law on which it is based."36
CONFLICT OF LAWS CASES
Private respondent relied solely on the testimony of its two (2) witnesses, namely, Mr.
Alfredo. Calupitan, an accountant of private respondent, and Virginia Abelardo, Executive
Secretary and a member of the staff of the Corporate Secretariat Section of the Corporate
Legal Division, of private respondent, both of whom failed to shed light and amplify its
defense or claim for non-enforcement of the foreign judgment against it.
Mr. Calupitan's testimony centered on the following: that from January to December 1982
he was assigned in Malaysia as Project Comptroller of the Pahang Project Package A and
B for road construction under the joint venture of private respondent and Asiavest
Holdings;37 that under the joint venture, Asiavest Holdings would handle the financial
aspect of the project, which is fifty-one percent (51 %) while private respondent would
handle the technical aspect of the project, or forty-nine percent (49%);38 and, that Cora
Deala was not authorized to receive summons for and in behalf of the private
respondent.39 Ms. Abelardo's testimony, on the other hand, focused on the following: that
there was no board resolution authorizing Allen and Gledhill to admit all the claims of
petitioner in the suit brought before the High Court of Malaya,40 though on cross-
examination she admitted that Allen and Gledhill were the retained lawyers of private
respondent in Malaysia. 41
The foregoing reasons or grounds relied upon by private respondent in preventing
enforcement and recognition of the Malaysian judgment primarily refer to matters of
remedy and procedure taken by the Malaysian High Court relative to the suit for collection
initiated by petitioner. Needless to stress, the recognition to be accorded a foreign
judgment is not necessarily affected by the fact that the procedure in the courts of the
country in which such judgment was rendered differs from that of the courts of the country
in which the judgment is relied on.42 Ultimately, matters of remedy and procedure such as
those relating to the service of summons or court process upon the defendant, the authority
of counsel to appear and represent a defendant and the formal requirements in a decision
are governed by the lex fori or the internal law of the forum,43 i.e., the law of Malaysia in
this case.
In this case, it is the procedural law of Malaysia where the judgment was rendered that
determines the validity of the service of court process on private respondent as well as
other matters raised by it. As to what the Malaysian procedural law is, remains a question
of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved
like any other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide
that it may be evidenced by an official publication or by a duly attested or authenticated
copy thereof. It was then incumbent upon private respondent to present evidence as to
what that Malaysian procedural law is and to show that under it, the assailed service of
summons upon a financial officer of a corporation, as alleged by it, is invalid. It did not.
Accordingly, the presumption of validity and regularity of service of summons and the
decision thereafter rendered by the High Court of Malaya must stand.44
55

On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent
private respondent, not only did the private respondent's witnesses admit that the said law
firm of Allen and Gledhill were its counsels in its transactions in Malaysia, 45 but of greater
significance is the fact that petitioner offered in evidence relevant Malaysian
jurisprudence46 to the effect that (a) it is not necessary under Malaysian law for counsel
appearing before the Malaysian High Court to submit a special power of attorney
authorizing him to represent a client before said court, (b) that counsel appearing before
the Malaysian High Court has full authority to compromise the suit, and (c) that counsel
appearing before the Malaysian High Court need not comply with certain pre-requisites as
required under Philippine law to appear and compromise judgments on behalf of their
clients before said court.47
CONFLICT OF LAWS CASES
judgment every fact and law upon which the judgment is based, then the same must be
accorded respect and the courts in the jurisdiction cannot invalidate the judgment of the
foreign court simply because our rules provide otherwise.
All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of
such foreign judgment, being the party challenging the judgment rendered by the High
Court of Malaya. But instead of doing so, private respondent merely argued, to which the
trial court agreed, that the burden lay upon petitioner to prove the validity of the money
judgment. Such is clearly erroneous and would render meaningless the presumption of
validity accorded a foreign judgment were the party seeking to enforce it be required to
first establish its validity.54

Furthermore, there is no basis for or truth to the appellate court's conclusion that the
conditional appearance of private respondent's counsel who was allegedly not authorized
to appear and represent, cannot be considered as voluntary submission to the jurisdiction
of the High Court of Malaya, inasmuch as said conditional appearance was not premised
on the alleged lack of authority of said counsel but the conditional appearance was entered
to question the regularity of the service of the writ of summons. Such conditional
appearance was in fact subsequently withdrawn when counsel realized that the writ was
properly served.48
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals
dated May 19,1993 in CA-G.R CY No. 35871 sustaining the Decision dated October 14,
1991 in Civil Case No. 56368 of the Regional Trial Court of Pasig, Branch 168 denying the
enforcement of the Judgment dated September 13, 1985 of the High Court of Malaya in
Kuala Lumpur is REVERSED and SET ASIDE, and another in its stead is hereby
rendered ORDERINGprivate respondent Philippine National Construction Corporation to
pay petitioner Asiavest Merchant Bankers (M) Berhad the amounts adjudged in the said
foreign Judgment, subject of the said case.

On the ground that collusion, fraud and, clear mistake of fact and law tainted the judgment Costs against the private respondent.
of the High Court of Malaya, no clear evidence of the same was adduced or shown. The
facts which the trial court found "intriguing" amounted to mere conjectures and specious SO ORDERED.
observations. The trial court's finding on the absence of judgment against Asiavest-CDCP
Sdn. Bhd. is contradicted by evidence on record that recovery was also sought against
Asiavest-CDCP Sdn. Bhd. but the same was found insolvent.49 Furthermore, even when
the foreign judgment is based on the drafts prepared by counsel for the successful party,
such is not per se indicative of collusion or fraud. Fraud to hinder the enforcement within
the jurisdiction of a foreign judgment must be extrinsic, i.e., fraud based on facts not
controverted or resolved in the case where judgment is rendered,50 or that which would go
to the jurisdiction of the court or would deprive the party against whom judgment is
rendered a chance to defend the action to which he has a meritorious defense.51 Intrinsic
fraud is one which goes to the very existence of the cause of action is deemed already
adjudged, and it, therefore, cannot militate against the recognition or enforcement of the
foreign judgment.52 Evidence is wanting on the alleged extrinsic fraud. Hence, such
unsubstantiated allegation cannot give rise to liability therein.

Lastly, there is no merit to the argument that the foreign judgment is not enforceable in
view of the absence of any statement of facts and law upon which the award in favor of
the petitioner was based. As aforestated, the lex fori or the internal law of the forum
governs matters of remedy and procedure.53 Considering that under the procedural rules
of the High Court of Malaya, a valid judgment may be rendered even without stating in the
56