Forum Non Conveniens ‘9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265

dated December 12, 1991 was obtained without the assistance of counsel for
G.R. No. 141536. February 26, 2001 [petitioner] and without sufficient notice to him and therefore, was rendered in
clear violation of [petitioner’s] constitutional rights to substantial and procedural
GIL MIGUEL T. PUYAT, petitioner, due process.
vs.
RON ZABARTE, respondent. ‘10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 was procured by means of fraud or collusion or undue
DECISION influence and/or based on a clear mistake of fact and law.

PANGANIBAN, J.: ‘11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 is contrary to the laws, public policy and canons of
morality obtaining in the Philippines and the enforcement of such judgment in
Summary judgment in a litigation is resorted to if there is no genuine issue as to any
the Philippines would result in the unjust enrichment of [respondent] at the
material fact, other than the amount of damages. If this verity is evident from the pleadings
expense of [petitioner] in this case.
and the supporting affidavits, depositions and admissions on file with the court, the
moving party is entitled to such remedy as a matter of course.
‘12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265
dated December 12, 1991 is null and void and unenforceable in the Philippines.
The Case

‘13) In the transaction, which is the subject matter in Case #C21-00265,

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
[petitioner] is not in any way liable, in fact and in law, to [respondent] in this
challenging the August 31, 1999 Decision 1 of the Court of Appeals (CA), which affirmed
case, as contained in [petitioner’s] ‘Answer to Complaint’ in Case #C21-00265
the Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the
dated April 1, 1991, Annex ‘B’ of [respondent’s] ‘Complaint’ dated December
January 20, 2000 CA Resolution 2 which denied reconsideration.
6, 1993.

The assailed CA Decision disposed as follows:

’14) [Respondent] is guilty of misrepresentation or falsification in the filing of
his ‘Complaint’ in this case dated December 6, 1993. Worse, [respondent] has
“WHEREFORE, finding no error in the judgment appealed from, the same is no capacity to sue in the Philippines.
AFFIRMED." 3
’15) Venue has been improperly laid in this case.’
The Facts
(Record, pp. 42-44)
The facts of this case, as narrated by the Court of Appeals, are as follows: 4
“On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment
“It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to under Rule 34 of the Rules of Court alleging that the [A]nswer filed by
enforce the money judgment rendered by the Superior Court for the State of California, [petitioner] failed to tender any genuine issue as to the material facts. In his
County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with the [O]pposition to [respondent’s] motion, [petitioner] demurred as follows:
following special and affirmative defenses:
‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that
xxx xxx xxx in his ‘Answer with Special and Affirmative Defenses’ dated March 16, 1994
[petitioner] has interposed that the ‘Judgment on Stipulations for Entry in
‘8) The Superior Court for the State of California, County of Contra Costa[,] did Judgment’ is null and void, fraudulent, illegal and unenforceable, the same
not properly acquire jurisdiction over the subject matter of and over the persons having been obtained by means of fraud, collusion, undue influence and/or clear
involved in [C]ase #C21-00265. mistake of fact and law. In addition, [he] has maintained that said ‘Judgment on
Stipulations for Entry in Judgment’ was obtained without the assistance of
1

counsel for [petitioner] and without sufficient notice to him and therefore, was
rendered in violation of his constitutional rights to substantial and procedural
due process.’
“The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August
1994 during which [respondent] marked and submitted in evidence the
following:
Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In Judgment of the
Supreme Court of the State of California[,] County of Contra Costa[,] signed by
Hon. Ellen James, Judge of the Superior Court.
Exhibit ‘B’ - x x x Certificate of Authentication of the [O]rder signed by the
Hon. Ellen James, issued by the Consulate General of the Republic of the
Philippines.
Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by
the sheriff/marshall, County of Santa Clara, State of California.
Exhibit ‘D’ - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of
[L]evy, [M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of
[J]udgment.
Exhibit ‘F’ - Certification issued by the Secretary of State, State of California
that Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the
County of Contra Costa of the State of California.
Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit of [E]xecution.
“On 6 April 1995, the court a quo issued an [O]rder granting [respondent’s] [M]otion for
[S]ummary [J]udgment [and] likewise granting [petitioner] ten (10) days to submit
opposing affidavits, after which the case would be deemed submitted for resolution
(Record, pp. 152-153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid
[O]rder and [respondent] filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion
to [D]ismiss on the ground of lack of jurisdiction over the subject matter of the case and
forum-non-conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion
(Record, pp. 181-182) [respondent] contended that [petitioner could] no longer question
the jurisdiction of the lower court on the ground that [the latter’s] Answer had failed to
raise the issue of jurisdiction. [Petitioner] countered by asserting in his Reply that
jurisdiction [could] not be fixed by agreement of the parties. The lower court dismissed
[his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x
x x.”
2
5 6
The RTC eventually rendered its February 21, 1997 Decision, which disposed as
follows:
“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent]
the following amounts:
“1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October
18, 1991, or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in
[J]udgment dated December 19, 1991;
“2. The amount of P30,000.00 as attorney’s fees;
“3. To pay the costs of suit.
“The claim for moral damages, not having been substantiated, it is hereby denied.” 7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was estopped from
assailing the judgment that had become final and had, in fact, been partially executed. The
CA also ruled that summary judgment was proper, because petitioner had failed to tender
any genuine issue of fact and was merely maneuvering to delay the full effects of the
judgment.
Citing Ingenohl v. Olsen, 8 the CA also rejected petitioner’s argument that the RTC should
have dismissed the action for the enforcement of a foreign judgment, on the ground of
forum non conveniens. It reasoned out that the recognition of the foreign judgment was
based on comity, reciprocity and res judicata.
Hence, this Petition. 9
Issue
In his Memorandum, petitioner submits this lone but all-embracing issue:
“Whether or not the Court of Appeals acted in a manner x x x contrary to law when it
affirmed the Order of the trial court granting respondent’s Motion for Summary Judgment
and rendering judgment against the petitioner.” 10
In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
 (b) the validity of the foreign judgment
(c) the judgment’s conformity to Philippine laws, public policy, canons of morality,
and norms against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.
This Court’s Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at
bar, arguing that his Answer allegedly raised genuine and material factual matters which
he should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine issues of fact” raised by
petitioner are mere conclusions of law, or “propositions arrived at not by any process of
natural reasoning from a fact or a combination of facts stated but by the application of the
artificial rules of law to the facts pleaded.” 11
The RTC granted respondent’s Motion for Summary Judgment because petitioner, in his
Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment.
Besides, he had already paid $5,000 to respondent, as provided in the foreign judgment
sought to be enforced. 12 Hence, the trial court ruled that, there being no genuine issue as
to any material fact, the case should properly be resolved through summary judgment. The
CA affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural device for the
prompt disposition of actions in which the pleadings raise only a legal issue, and not a
genuine issue as to any material fact. By genuine issue is meant a question of fact that
calls for the presentation of evidence. It should be distinguished from an issue that is
sham, contrived, set in bad faith and patently unsubstantial. 13
Summary judgment is resorted to in order to avoid long drawn out litigations and useless
delays. When affidavits, depositions and admissions on file show that there are no genuine
issues of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings
and to obtain immediate relief by way of summary judgment. In short, since the facts are
not in dispute, the court is allowed to decide the case summarily by applying the law to the
material facts.
Petitioner contends that by allowing summary judgment, the two courts a quo prevented
him from presenting evidence to substantiate his claims. We do not agree. Summary
3
judgment is based on facts directly proven by affidavits, depositions or admissions. 14 In
this case, the CA and the RTC both merely ruled that trial was not necessary to resolve the
case. Additionally and correctly, the RTC specifically ordered petitioner to submit
opposing affidavits to support his contentions that (1) the Judgment on Stipulation for
Entry in Judgment was procured on the basis of fraud, collusion, undue influence, or a
clear mistake of law or fact; and (2) that it was contrary to public policy or the canons of
morality. 15
Again, in its Order 16 dated November 29, 1995, the trial court clarified that the opposing
affidavits were “for [petitioner] to spell out the facts or circumstances [that] would
constitute lack of jurisdiction over the subject matter of and over the persons involved in
Case No. C21-00265,” and that would render the judgment therein null and void. In this
light, petitioner’s contention that he was not allowed to present evidence to substantiate
his claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a)
that there must be no genuine issue as to any material fact, except for the amount of
damages; and (b) that the party presenting the motion for summary judgment must be
entitled to a judgment as a matter of law. 17 As mentioned earlier, petitioner admitted that a
foreign judgment had been rendered against him and in favor of respondent, and that he
had paid $5,000 to the latter in partial compliance therewith. Hence, respondent, as the
party presenting the Motion for Summary Judgment, was shown to be entitled to the
judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no
genuine issue, it relied instead on the finality of the foreign judgment which was, in fact,
partially executed. Hence, we shall show in the following discussion how the defenses
presented by petitioner failed to tender any genuine issue of fact, and why a full-blown
trial was not necessary for the resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership
interest, was vested in the Securities and Exchange Commission, not in the Superior Court
of California, County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
presumption of identity or similarity, also known as processual presumption. 18 The
Complaint, 19 which respondent filed with the trial court, was for the enforcement of a
foreign judgment. He alleged therein that the action of the foreign court was for the
collection of a sum of money, breach of promissory notes, and damages. 20
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the
Securities and Exchange Commission (SEC). The jurisdiction of the latter is exclusively
over matters enumerated in Section 5, PD 902-A, 21 prior to its latest amendment. If the
foreign court did not really have jurisdiction over the case, as petitioner claims, it would
have been very easy for him to show this. Since jurisdiction is determined by the
allegations in a complaint, he only had to submit a copy of the complaint filed with the
foreign court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form of a Compromise
Agreement, cannot be executed without the parties being assisted by their chosen lawyers.
The reason for this, he points out, is to eliminate collusion, undue influence and/or
improper exertion of ascendancy by one party over the other. He alleges that he discharged
his counsel during the proceedings, because he felt that the latter was not properly
attending to the case. The judge, however, did not allow him to secure the services of
another counsel. Insisting that petitioner settle the case with respondent, the judge
practically imposed the settlement agreement on him. In his Opposing Affidavit, petitioner
states:
“It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I
discharged him because I then felt that he was not properly attending to my case or was
not competent enough to represent my interest. I asked the Judge for time to secure
another counsel but I was practically discouraged from engaging one as the Judge was
insistent that I settle the case at once with the [respondent]. Being a foreigner and not a
lawyer at that I did not know what to do. I felt helpless and the Judge and [respondent’s]
lawyer were the ones telling me what to do. Under ordinary circumstances, their directives
should have been taken with a grain of salt especially so [since respondent’s] counsel, who
was telling me what to do, had an interest adverse to mine. But [because] time constraints
and undue influence exerted by the Judge and [respondent’s] counsel on me disturbed and
seriously affected my freedom to act according to my best judgment and belief. In point of
fact, the terms of the settlement were practically imposed on me by the Judge seconded all
the time by [respondent’s] counsel. I was then helpless as I had no counsel to assist me
and the collusion between the Judge and [respondent’s] counsel was becoming more
evident by the way I was treated in the Superior Court of [t]he State of California. I signed
the ‘Judgment on Stipulation for Entry in Judgment’ without any lawyer assisting me at
the time and without being fully aware of its terms and stipulations.” 22
The manifestation of petitioner that the judge and the counsel for the opposing party had
pressured him would gain credibility only if he had not been given sufficient time to
engage the services of a new lawyer. Respondent’s Affidavit 23 dated May 23, 1994,
clarified, however, that petitioner had sufficient time, but he failed to retain a counsel.
Having dismissed his lawyer as early as June 19, 1991, petitioner directly handled his own
defense and negotiated a settlement with respondent and his counsel in December 1991.
Respondent also stated that petitioner, ignoring the judge’s reminder of the importance of
having a lawyer, argued that “he would be the one to settle the case and pay” anyway.
Eventually, the Compromise Agreement was presented in court and signed before Judge
4
Ellen James on January 3, 1992. Hence, petitioner’s rights to counsel and to due process
were not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the norm against unjust
enrichment because the judge made him shoulder all the liabilities in the case, even if
there were two other defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the foreign judgment, even if
there are other defendants who are not being held liable together with him. First, the
foreign judgment itself does not mention these other defendants, their participation or their
liability to respondent. Second, petitioner’s undated Opposing Affidavit states:
“[A]lthough myself and these entities were initially represented by Atty. Lawrence L.
Severson of the Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said
lawyer. Subsequently, I assumed the representation for myself and these firms and this
was allowed by the Superior Court of the State of California without any authorization
from G.G.P. & Sons, Inc. and the Genesis Group.” 24 Clearly, it was petitioner who chose
to represent the other defendants; hence, he cannot now be allowed to impugn a decision
based on this ground.
In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti does
not apply to this case. This doctrine contemplates payment when there is no duty to pay,
and the person who receives the payment has no right to receive it. 25 In this case,
petitioner merely argues that the other two defendants whom he represented were liable
together with him. This is not a case of unjust enrichment.
We do not see, either, how the foreign judgment could be contrary to law, morals, public
policy or the canons of morality obtaining in the country. Petitioner owed money, and the
judgment required him to pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court reinforce our belief that
his claims are unfounded. Instead of filing opposing affidavits to support his affirmative
defenses, he filed a Motion for Reconsideration of the Order allowing summary judgment,
as well as a Motion to Dismiss the action on the ground of forum non conveniens. His
opposing affidavits were filed only after the Order of November 29, 1995 had denied both
Motions. 26 Such actuation was considered by the trial court as a dilatory ploy which
justified the resolution of the action by summary judgment. According to the CA,
petitioner’s allegations sought to delay the full effects of the judgment; hence, summary
judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain the Complaint for
enforcement of the foreign judgment on the principle of forum non conveniens. He claims
that the trial court had no jurisdiction, because the case involved partnership interest, and
there was difficulty in ascertaining the applicable law in California. All the aspects of the
transaction took place in a foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of
jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any
of the following practical reasons:
“1) The belief that the matter can be better tried and decided elsewhere, either because the
main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum
shopping[,] merely to secure procedural advantages or to convey or harass the defendant;
mistake of law or fact. But precisely, this possibility signals the need for a local trial court
to exercise jurisdiction. Clearly, the application of forum non coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he insists that
the RTC take jurisdiction over the enforcement case in order to invalidate the foreign
judgment; yet, he avers that the trial court should not exercise jurisdiction over the same
case on the basis of forum non conveniens. Not only do these defenses weaken each other,
but they bolster the finding of the lower courts that he was merely maneuvering to avoid
or delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution
AFFIRMED. Double costs against petitioner.

3) The unwillingness to extend local judicial facilities to non-residents or aliens when the
docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be
maintained; and

The difficulty of ascertaining foreign law.” 27

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the
present action, there was no more need for material witnesses, no forum shopping or
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign
judgment, and no question raised as to the application of any foreign law.

Authorities agree that the issue of whether a suit should be entertained or dismissed on the
basis of the above-mentioned principle depends largely upon the facts of each case and on
the sound discretion of the trial court. 28 Since the present action lodged in the RTC was
for the enforcement of a foreign judgment, there was no need to ascertain the rights and
the obligations of the parties based on foreign laws or contracts. The parties needed only
to perform their obligations under the Compromise Agreement they had entered into.
1âwphi1.nêt

Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action
in personam rendered by a foreign tribunal clothed with jurisdiction is presumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent
title. 29

Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere --
enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it
is regularly performing its official duty. 30 Its judgment may, however, be assailed if there
is evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear
5
Forum Non Conveniens
G.R. No. 120135 March 31, 2003
BANK OF AMERICA NT & SA, BANK OF AMERICA INTERNATIONAL, LTD.,
petitioners,
vs.
COURT OF APPEALS, HON. MANUEL PADOLINA, EDUARDO LITONJUA,
SR., and AURELIO K. LITONJUA, JR., respondents.
AUSTRIA-MARTINEZ, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
November 29, 1994 decision of the Court of Appeals1 and the April 28, 1995 resolution
denying petitioners' motion for reconsideration.
The factual background of the case is as follows:
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for
brevity) filed a Complaint2 before the Regional Trial Court of Pasig against the Bank of
America NT&SA and Bank of America International, Ltd. (defendant banks for brevity)
alleging that: they were engaged in the shipping business; they owned two vessels: Don
Aurelio and El Champion, through their wholly-owned corporations; they deposited their
revenues from said business together with other funds with the branches of said banks in
the United Kingdom and Hongkong up to 1979; with their business doing well, the
defendant banks induced them to increase the number of their ships in operation, offering
them easy loans to acquire said vessels;3 thereafter, the defendant banks acquired, through
their (Litonjuas') corporations as the borrowers: (a) El Carrier4; (b) El General5; (c) El
Challenger6; and (d) El Conqueror7; the vessels were registered in the names of their
corporations; the operation and the funds derived therefrom were placed under the
complete and exclusive control and disposition of the petitioners;8 and the possession the
vessels was also placed by defendant banks in the hands of persons selected and
designated by them (defendant banks).9
The Litonjuas claimed that defendant banks as trustees did not fully render an account of
all the income derived from the operation of the vessels as well as of the proceeds of the
subsequent foreclosure sale;10 because of the breach of their fiduciary duties and/or
negligence of the petitioners and/or the persons designated by them in the operation of
private respondents' six vessels, the revenues derived from the operation of all the vessels
declined drastically; the loans acquired for the purchase of the four additional vessels then
matured and remained unpaid, prompting defendant banks to have all the six vessels,
including the two vessels originally owned by the private respondents, foreclosed and sold
at public auction to answer for the obligations incurred for and in behalf of the operation
of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds
equivalent to ten percent (10%) of the acquisition cost of the four vessels and were left
6
with the unpaid balance of their loans with defendant banks.11 The Litonjuas prayed for
the accounting of the revenues derived in the operation of the six vessels and of the
proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners;
damages for breach of trust; exemplary damages and attorney's fees. 12
Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack
of cause of action against them.13
On December 3, 1993, the trial court issued an Order denying the Motion to Dismiss, thus:
"WHEREFORE, and in view of the foregoing consideration, the Motion to
Dismiss is hereby DENIED. The defendant is therefore, given a period of ten
(10) days to file its Answer to the complaint.
"SO ORDERED."14
Instead of filing an answer the defendant banks went to the Court of Appeals on a
"Petition for Review on Certiorari"15 which was aptly treated by the appellate court as a
petition for certiorari. They assailed the above-quoted order as well as the subsequent
denial of their Motion for Reconsideration.16 The appellate court dismissed the petition
and denied petitioners' Motion for Reconsideration.17
Hence, herein petition anchored on the following grounds:
"1. RESPONDENT COURT OF APPEALS FAILED TO CONSIDER THE
FACT THAT THE SEPARATE PERSONALITIES OF THE PRIVATE
RESPONDENTS (MERE STOCKHOLDERS) AND THE FOREIGN
CORPORATIONS (THE REAL BORROWERS) CLEARLY SUPPORT,
BEYOND ANY DOUBT, THE PROPOSITION THAT THE PRIVATE
RESPONDENTS HAVE NO PERSONALITIES TO SUE.
"2. THE RESPONDENT COURT OF APPEALS FAILED TO REALIZE
THAT WHILE THE PRINCIPLE OF FORUM NON CONVENIENS IS NOT
MANDATORY, THERE ARE, HOWEVER, SOME GUIDELINES TO
FOLLOW IN DETERMINING WHETHER THE CHOICE OF FORUM
SHOULD BE DISTURBED. UNDER THE CIRCUMSTANCES
SURROUNDING THE INSTANT CASE, DISMISSAL OF THE COMPLAINT
ON THE GROUND OF FORUM NON-CONVENIENS IS MORE
APPROPRIATE AND PROPER.
"3. THE PRINCIPLE OF RES JUDICATA IS NOT LIMITED TO FINAL
JUDGMENT IN THE PHILIPPINES. IN FACT, THE PENDENCY OF
FOREIGN ACTION MAY BE THE LEGAL BASIS FOR THE DISMISSAL
OF THE COMPLAINT FILED BY THE PRIVATE RESPONDENT.
COROLLARY TO THIS, THE RESPONDENT COURT OF APPEALS
 FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENTS ARE
GUILTY OF FORUM SHOPPING." 18
As to the first assigned error: Petitioners argue that the borrowers and the registered
owners of the vessels are the foreign corporations and not private respondents Litonjuas
who are mere stockholders; and that the revenues derived from the operations of all the
vessels are deposited in the accounts of the corporations. Hence, petitioners maintain that
these foreign corporations are the legal entities that have the personalities to sue and not
herein private respondents; that private respondents, being mere shareholders, have no
claim on the vessels as owners since they merely have an inchoate right to whatever may
remain upon the dissolution of the said foreign corporations and after all creditors have
been fully paid and satisfied;19 and that while private respondents may have allegedly
spent amounts equal to 10% of the acquisition costs of the vessels in question, their 10%
however represents their investments as stockholders in the foreign corporations.20
Anent the second assigned error, petitioners posit that while the application of the
principle of forum non conveniens is discretionary on the part of the Court, said discretion
is limited by the guidelines pertaining to the private as well as public interest factors in
determining whether plaintiffs' choice of forum should be disturbed, as elucidated in Gulf
Oil Corp. vs. Gilbert21 and Piper Aircraft Co. vs. Reyno,22 to wit:
"Private interest factors include: (a) the relative ease of access to sources of
proof; (b) the availability of compulsory process for the attendance of unwilling
witnesses; (c) the cost of obtaining attendance of willing witnesses; or (d) all
other practical problems that make trial of a case easy, expeditious and
inexpensive. Public interest factors include: (a) the administrative difficulties
flowing from court congestion; (b) the local interest in having localized
controversies decided at home; (c) the avoidance of unnecessary problems in
conflict of laws or in the application of foreign law; or (d) the unfairness of
burdening citizens in an unrelated forum with jury duty."23
In support of their claim that the local court is not the proper forum, petitioners allege the
following:
"i) The Bank of America Branches involved, as clearly mentioned in the
Complaint, are based in Hongkong and England. As such, the evidence and the
witnesses are not readily available in the Philippines;
"ii) The loan transactions were obtained, perfected, performed, consummated
and partially paid outside the Philippines;
"iii) The monies were advanced outside the Philippines. Furthermore, the
mortgaged vessels were part of an offshore fleet, not based in the Philippines;
7
"iv) All the loans involved were granted to the Private Respondents' foreign
CORPORATIONS;
"v) The Restructuring Agreements were ALL governed by the laws of England;
"vi) The subsequent sales of the mortgaged vessels and the application of the
sales proceeds occurred and transpired outside the Philippines, and the
deliveries of the sold mortgaged vessels were likewise made outside the
Philippines;
"vii) The revenues of the vessels and the proceeds of the sales of these vessels
were ALL deposited to the Accounts of the foreign CORPORATIONS abroad;
and
"viii) Bank of America International Ltd. is not licensed nor engaged in trade or
business in the Philippines."24
Petitioners argue further that the loan agreements, security documentation and all
subsequent restructuring agreements uniformly, unconditionally and expressly provided
that they will be governed by the laws of England;25 that Philippine Courts would then
have to apply English law in resolving whatever issues may be presented to it in the event
it recognizes and accepts herein case; that it would then be imposing a significant and
unnecessary expense and burden not only upon the parties to the transaction but also to the
local court. Petitioners insist that the inconvenience and difficulty of applying English law
with respect to a wholly foreign transaction in a case pending in the Philippines may be
avoided by its dismissal on the ground of forum non conveniens. 26
Finally, petitioners claim that private respondents have already waived their alleged causes
of action in the case at bar for their refusal to contest the foreign civil cases earlier filed by
the petitioners against them in Hongkong and England, to wit:
"1.) Civil action in England in its High Court of Justice, Queen's Bench Division
Commercial Court (1992-Folio No. 2098) against (a) LIBERIAN TRANSPORT
NAVIGATION. SA.; (b) ESHLEY COMPANIA NAVIERA SA., (c) EL
CHALLENGER SA; (d) ESPRIONA SHIPPING CO. SA; (e) PACIFIC
NAVIGATOS CORP. SA; (f) EDDIE NAVIGATION CORP. SA; (g)
EDUARDO K. LITONJUA & (h) AURELIO K. LITONJUA.
"2.) Civil action in England in its High Court of Justice, Queen's Bench
Division, Commercial Court (1992-Folio No. 2245) against (a) EL
CHALLENGER S.A., (b) ESPRIONA SHIPPING COMPANY S.A., (c)
EDUARDO KATIPUNAN LITONJUA and (d) AURELIO KATIPUNAN
LITONJUA.
 "3.) Civil action in the Supreme Court of Hongkong High Court (Action No.
4039 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d)
PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC.,
(g) AURELIO KATIPUNAN LITONJUA, JR., and (h) EDUARDO
KATIPUNAN LITONJUA.
"4.) A civil action in the Supreme Court of Hong Kong High Court (Action No.
4040 of 1992), against (a) ESHLEY COMPANIA NAVIERA S.A., (b) EL
CHALLENGER S.A., (c) ESPRIONA SHIPPING COMPANY S.A., (d)
PACIFIC NAVIGATORS CORPORATION (e) EDDIE NAVIGATION
CORPORATION S.A., (f) LITONJUA CHARTERING (EDYSHIP) CO., INC.,
(g) AURELIO KATIPUNAN LITONJUA, RJ., and (h) EDUARDO
KATIPUNAN LITONJUA."
and that private respondents' alleged cause of action is already barred by the pendency of
another action or by litis pendentia as shown above.27
On the other hand, private respondents contend that certain material facts and pleadings
are omitted and/or misrepresented in the present petition for certiorari; that the prefatory
statement failed to state that part of the security of the foreign loans were mortgages on a
39-hectare piece of real estate located in the Philippines;28 that while the complaint was
filed only by the stockholders of the corporate borrowers, the latter are wholly-owned by
the private respondents who are Filipinos and therefore under Philippine laws, aside from
the said corporate borrowers being but their alter-egos, they have interests of their own in
the vessels.29 Private respondents also argue that the dismissal by the Court of Appeals of
the petition for certiorari was justified because there was neither allegation nor any
showing whatsoever by the petitioners that they had no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law from the Order of the trial judge denying
their Motion to Dismiss; that the remedy available to the petitioners after their Motion to
Dismiss was denied was to file an Answer to the complaint;30 that as upheld by the Court
of Appeals, the decision of the trial court in not applying the principle of forum non
conveniens is in the lawful exercise of its discretion.31 Finally, private respondents aver
that the statement of petitioners that the doctrine of res judicata also applies to foreign
judgment is merely an opinion advanced by them and not based on a categorical ruling of
this Court;32 and that herein private respondents did not actually participate in the
proceedings in the foreign courts.33
We deny the petition for lack of merit.
It is a well-settled rule that the order denying the motion to dismiss cannot be the subject
of petition for certiorari. Petitioners should have filed an answer to the complaint, proceed
to trial and await judgment before making an appeal. As repeatedly held by this Court:
8
"An order denying a motion to dismiss is interlocutory and cannot be the subject
of the extraordinary petition for certiorari or mandamus. The remedy of the
aggrieved party is to file an answer and to interpose as defenses the objections
raised in his motion to dismiss, proceed to trial, and in case of an adverse
decision, to elevate the entire case by appeal in due course. xxx Under certain
situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a)
when the trial court issued the order without or in excess of jurisdiction; (b)
where there is patent grave abuse of discretion by the trial court; or (c) appeal
would not prove to be a speedy and adequate remedy as when an appeal would
not promptly relieve a defendant from the injurious effects of the patently
mistaken order maintaining the plaintiff's baseless action and compelling the
defendant needlessly to go through a protracted trial and clogging the court
dockets by another futile case."34
Records show that the trial court acted within its jurisdiction when it issued the assailed
Order denying petitioners' motion to dismiss. Does the denial of the motion to dismiss
constitute a patent grave abuse of discretion? Would appeal, under the circumstances, not
prove to be a speedy and adequate remedy? We will resolve said questions in conjunction
with the issues raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the
complaint on the ground that plaintiffs have no cause of action against defendants since
plaintiffs are merely stockholders of the corporations which are the registered owners of
the vessels and the borrowers of petitioners?
No. Petitioners' argument that private respondents, being mere stockholders of the foreign
corporations, have no personalities to sue, and therefore, the complaint should be
dismissed, is untenable. A case is dismissible for lack of personality to sue upon proof that
the plaintiff is not the real party-in-interest. Lack of personality to sue can be used as a
ground for a Motion to Dismiss based on the fact that the complaint, on the face thereof,
evidently states no cause of action.35 In San Lorenzo Village Association, Inc. vs. Court of
Appeals,36 this Court clarified that a complaint states a cause of action where it contains
three essential elements of a cause of action, namely: (1) the legal right of the plaintiff, (2)
the correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a cause of action. 37 To
emphasize, it is not the lack or absence of cause of action that is a ground for dismissal of
the complaint but rather the fact that the complaint states no cause of action. 38 "Failure to
state a cause of action" refers to the insufficiency of allegation in the pleading, unlike
"lack of cause of action" which refers to the insufficiency of factual basis for the action.
"Failure to state a cause of action" may be raised at the earliest stages of an action through
a motion to dismiss the complaint, while "lack of cause of action" may be raised any time
after the questions of fact have been resolved on the basis of stipulations, admissions or
evidence presented.39
In the case at bar, the complaint contains the three elements of a cause of action. It alleges
that: (1) plaintiffs, herein private respondents, have the right to demand for an accounting
from defendants (herein petitioners), as trustees by reason of the fiduciary relationship that
was created between the parties involving the vessels in question; (2) petitioners have the
obligation, as trustees, to render such an accounting; and (3) petitioners failed to do the
same.
Petitioners insist that they do not have any obligation to the private respondents as they are
mere stockholders of the corporation; that the corporate entities have juridical personalities
separate and distinct from those of the private respondents. Private respondents maintain
that the corporations are wholly owned by them and prior to the incorporation of such
entities, they were clients of petitioners which induced them to acquire loans from said
petitioners to invest on the additional ships.
We agree with private respondents. As held in the San Lorenzo case, 40
"xxx assuming that the allegation of facts constituting plaintiffs' cause of action
is not as clear and categorical as would otherwise be desired, any uncertainty
thereby arising should be so resolved as to enable a full inquiry into the merits
of the action."
As this Court has explained in the San Lorenzo case, such a course, would preclude
multiplicity of suits which the law abhors, and conduce to the definitive determination and
termination of the dispute. To do otherwise, that is, to abort the action on account of the
alleged fatal flaws of the complaint would obviously be indecisive and would not end the
controversy, since the institution of another action upon a revised complaint would not be
foreclosed.41
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning 'the forum is inconvenient',
emerged in private international law to deter the practice of global forum shopping, 42 that
is to prevent non-resident litigants from choosing the forum or place wherein to bring their
suit for malicious reasons, such as to secure procedural advantages, to annoy and harass
the defendant, to avoid overcrowded dockets, or to select a more friendly venue. Under
this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere.43
Whether a suit should be entertained or dismissed on the basis of said doctrine depends
largely upon the facts of the particular case and is addressed to the sound discretion of the
trial court.44 In the case of Communication Materials and Design, Inc. vs. Court of
Appeals,45 this Court held that "xxx [a Philippine Court may assume jurisdiction over the
case if it chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2) that the
9
Philippine Court is in a position to make an intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is likely to have power to enforce its decision."46
Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of
Appeals,47 that the doctrine of forum non conveniens should not be used as a ground for a
motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said
doctrine as a ground. This Court further ruled that while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so only after
vital facts are established, to determine whether special circumstances require the court's
desistance; and that the propriety of dismissing a case based on this principle of forum non
conveniens requires a factual determination, hence it is more properly considered a matter
of defense.48
Third issue. Are private respondents guilty of forum shopping because of the pendency of
foreign action?
No. Forum shopping exists where the elements of litis pendentia are present and where a
final judgment in one case will amount to res judicata in the other.49 Parenthetically, for
litis pendentia to be a ground for the dismissal of an action there must be: (a) identity of
the parties or at least such as to represent the same interest in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the
identity in the two cases should be such that the judgment which may be rendered in one
would, regardless of which party is successful, amount to res judicata in the other.50
In case at bar, not all the requirements for litis pendentia are present. While there may be
identity of parties, notwithstanding the presence of other respondents, 51 as well as the
reversal in positions of plaintiffs and defendants52, still the other requirements necessary
for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were
filed in Hongkong and England without however showing the identity of rights asserted
and the reliefs sought for as well as the presence of the elements of res judicata should
one of the cases be adjudged.
As the Court of Appeals aptly observed:
"xxx [T]he petitioners, by simply enumerating the civil actions instituted abroad
involving the parties herein xxx, failed to provide this Court with relevant and
clear specifications that would show the presence of the above-quoted elements
or requisites for res judicata. While it is true that the petitioners in their motion
for reconsideration (CA Rollo, p. 72), after enumerating the various civil actions
instituted abroad, did aver that "Copies of the foreign judgments are hereto
attached and made integral parts hereof as Annexes 'B', 'C', 'D' and 'E'", they
failed, wittingly or inadvertently, to include a single foreign judgment in their
pleadings submitted to this Court as annexes to their petition. How then could
We have been expected to rule on this issue even if We were to hold that foreign
 judgments could be the basis for the application of the aforementioned principle
of res judicata?"53

Consequently, both courts correctly denied the dismissal of herein subject complaint.

WHEREFORE, the petition is DENIED for lack of merit.

Costs against petitioners.

SO ORDERED.

10
Forum Non Conveniens
G.R. No. 154830 June 8, 2007
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES
HOLDINGS, and PHILIP J. KLEPZIG, petitioners,
vs.
ANTONIO D. TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the
Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155
and its Resolution2 of August 21, 2002 denying petitioners’ Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the
Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money and Damages
with Preliminary Attachment against Pioneer International Limited (PIL), Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G.
McDonald (McDonald) and Philip J. Klepzig (Klepzig).3
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing
under the laws of Australia and is principally engaged in the ready-mix concrete and
concrete aggregates business; PPHI is the company established by PIL to own and hold
the stocks of its operating company in the Philippines; PCPI is the company established by
PIL to undertake its business of ready-mix concrete, concrete aggregates and quarrying
operations in the Philippines; McDonald is the Chief Executive of the Hongkong office of
PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has
been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company
engaged in pre-mixed concrete and concrete aggregate production; he resigned from
Betonval in February 1996; in May 1996, PIL contacted Todaro and asked him if he was
available to join them in connection with their intention to establish a ready-mix concrete
plant and other related operations in the Philippines; Todaro informed PIL of his
availability and interest to join them; subsequently, PIL and Todaro came to an agreement
wherein the former consented to engage the services of the latter as a consultant for two to
three months, after which, he would be employed as the manager of PIL's ready-mix
concrete operations should the company decide to invest in the Philippines; subsequently,
PIL started its operations in the Philippines; however, it refused to comply with its
undertaking to employ Todaro on a permanent basis.4 Instead of filing an Answer, PPHI,
PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the
complaint states no cause of action, that the RTC has no jurisdiction over the subject
11
matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the
complaint should be dismissed on the basis of the doctrine of forum non conveniens.5
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein
petitioners' respective motions to dismiss.6 Herein petitioners, as defendants, filed an
Urgent Omnibus Motion7 for the reconsideration of the trial court's Order of January 4,
1999 but the trial court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On
October 31, 2000, the CA rendered its presently assailed Decision denying herein
petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the
CA denied it in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of
errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT
STATES A CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT
ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY
BELIE THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT
CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN
A WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE
JURISDICTION OF THE TRIAL COURT DESPITE THE FACT THAT THE
COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN
ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE,
FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL
LABOR RELATIONS COMMISSION.
C
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER
THE PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID
GROUND FOR DISMISSING A COMPLAINT.10
In their first assigned error, petitioners contend that there was no perfected employment
contract between PIL and herein respondent. Petitioners assert that the annexes to
respondent's complaint show that PIL's offer was for respondent to be employed as the
manager only of its pre-mixed concrete operations and not as the company's managing
director or CEO. Petitioners argue that when respondent reiterated his intention to become
the manager of PIL's overall business venture in the Philippines, he, in effect did not
accept PIL's offer of employment and instead made a counter-offer, which, however, was
not accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code,
one of the requisites for a contract to be perfected is the consent of the contracting parties;
that under Article 1319 of the same Code, consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract;
that the offer must be certain and the acceptance absolute; that a qualified acceptance
constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's
counter-offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of
Articles 19 and 21 of the Civil Code is baseless because it was shown that there was no
perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment
contract, petitioners contend that PCPI and PPHI, may not also be held liable because they
are juridical entities with personalities which are separate and distinct from PIL, even if
they are subsidiary corporations of the latter. Petitioners also aver that the annexes to
respondent's complaint show that the negotiations on the alleged employment contract
took place between respondent and PIL through its office in Hongkong. In other words,
PCPI and PPHI were not privy to the negotiations between PIL and respondent for the
possible employment of the latter; and under Article 1311 of the Civil Code, a contract is
not binding upon and cannot be enforced against one who was not a party to it even if he
be aware of such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is
simply acting in his capacity as president of PCPI and PPHI and settled is the rule that an
officer of a corporation is not personally liable for acts done in the performance of his
duties and within the bounds of the authority conferred on him. Furthermore, petitioners
argue that even if PCPI and PPHI are held liable, respondent still has no cause of action
against Klepzig because PCPI and PPHI have personalities which are separate and distinct
from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims
for actual, moral and exemplary damages are solely premised on the alleged breach of
employment contract, the present case should be considered as falling within the exclusive
jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisidiction is authorized by law, courts
may refuse to entertain a case involving a foreign element where the matter can be better
tried and decided elsewhere, either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence there and the plaintiff
sought the forum merely to secure procedural advantage or to annoy or harass the
12
defendant. Petitioners also argue that one of the factors in determining the most
convenient forum for conflicts problem is the power of the court to enforce its decision.
Petitioners contend that since the majority of the defendants in the present case are not
residents of the Philippines, they are not subject to compulsory processes of the Philippine
court handling the case for purposes of requiring their attendance during trial. Even
assuming that they can be summoned, their appearance would entail excessive costs.
Petitioners further assert that there is no allegation in the complaint from which one can
conclude that the evidence to be presented during the trial can be better obtained in the
Philippines. Moreover, the events which led to the present controversy occurred outside
the Philippines. Petitioners conclude that based on the foregoing factual circumstances, the
case should be dismissed under the principle of forum non conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that
the factual allegations in the complaint determine whether or not the complaint states a
cause of action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not
based on a contract of employment. Rather, it was based on petitioners' unwarranted
breach of their contractual obligation to employ respondent. This breach, respondent
argues, gave rise to an action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the
NLRC to acquire jurisdiction, the claim for damages must have a reasonable causal
connection with the employer-employee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and petitioners as
they both agreed that the latter shall employ him to manage and operate their ready-mix
concrete operations in the Philippines. Even assuming that there was no perfected contract,
respondent contends that his complaint alleges an alternative cause of action which is
based on the provisions of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the
question of whether a suit should be entertained or dismissed on the basis of the principle
of forum non conveniens depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial judge, who is in the best position to
determine whether special circumstances require that the court desist from assuming
jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or
omission by which a party violates a right of another. A cause of action exists if the
following elements are present: (1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and, (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
The elementary test for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded. Stated otherwise,
may the court render a valid judgment upon the facts alleged therein? The
inquiry is into the sufficiency, not the veracity of the material allegations. If the
allegations in the complaint furnish sufficient basis on which it can be
maintained, it should not be dismissed regardless of the defense that may be
presented by the defendants.13
Moreover, the complaint does not have to establish or allege facts proving the existence of
a cause of action at the outset; this will have to be done at the trial on the merits of the
case.14 To sustain a motion to dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist, rather than that a claim has been defectively stated,
or is ambiguous, indefinite or uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of
action, the trial court correctly limited itself to examining the sufficiency of the allegations
in the Complaint as well as the annexes thereto. It is proscribed from inquiring into the
truth of the allegations in the Complaint or the authenticity of any of the documents
referred or attached to the Complaint, since these are deemed hypothetically admitted by
the respondent.
This Court has reviewed respondent’s allegations in its Complaint. In a nutshell,
respondent alleged that herein petitioners reneged on their contractual obligation to
employ him on a permanent basis. This allegation is sufficient to constitute a cause of
action for damages.
The issue as to whether or not there was a perfected contract between petitioners and
respondent is a matter which is not ripe for determination in the present case; rather, this
issue must be taken up during trial, considering that its resolution would necessarily entail
an examination of the veracity of the allegations not only of herein respondent as plaintiff
but also of petitioners as defendants.
The Court does not agree with petitioners' contention that they were not privy to the
negotiations for respondent's possible employment. It is evident from paragraphs 24 to 28
of the Complaint16 that, on various occasions, Klepzig conducted negotiations with
respondent regarding the latter's possible employment. In fact, Annex "H"17 of the
complaint shows that it was Klepzig who informed respondent that his company was no
longer interested in employing respondent. Hence, based on the allegations in the
13
Complaint and the annexes attached thereto, respondent has a cause of action against
herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-
employee relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction.18 In the present case, no
employer-employee relationship exists between petitioners and respondent. In fact, in his
complaint, private respondent is not seeking any relief under the Labor Code, but seeks
payment of damages on account of petitioners' alleged breach of their obligation under
their agreement to employ him. It is settled that an action for breach of contractual
obligation is intrinsically a civil dispute.19 In the alternative, respondent seeks redress on
the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that
the present action is within the realm of civil law, and jurisdiction over it belongs to the
regular courts.20
With respect to the applicability of the principle of forum non conveniens in the present
case, this Court's ruling in Bank of America NT & SA v. Court of Appeals21 is instructive,
to wit:
The doctrine of forum non conveniens, literally meaning ‘the forum is
inconvenient’, emerged in private international law to deter the practice of
global forum shopping, that is to prevent non-resident litigants from choosing
the forum or place wherein to bring their suit for malicious reasons, such as to
secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a
court, in conflicts of law cases, may refuse impositions on its jurisdiction where
it is not the most "convenient" or available forum and the parties are not
precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine
depends largely upon the facts of the particular case and is addressed to the
sound discretion of the trial court. In the case of Communication Materials and
Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine Court
may assume jurisdiction over the case if it chooses to do so; provided, that the
following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position
to make an intelligent decision as to the law and the facts; and, (3) that the
Philippine Court has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of
Appeals, that the doctrine of forum non conveniens should not be used as a
ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court
does not include said doctrine as a ground. This Court further ruled that
while it is within the discretion of the trial court to abstain from assuming
 jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the court’s
desistance; and that the propriety of dismissing a case based on this
principle of forum non conveniens requires a factual determination, hence it
is more properly considered a matter of defense.22 (emphasis supplied)

In the present case, the factual circumstances cited by petitioners which would allegedly
justify the application of the doctrine of forum non conveniens are matters of defense, the
merits of which should properly be threshed out during trial.

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution
of the Court of Appeals are AFFIRMED.

Costs against petitioners.

14
Forum Non Conveniens
G.R. No. 162894 February 26, 2008
RAYTHEON INTERNATIONAL, INC., petitioner,
vs.
STOCKTON W. ROUZIE, JR., respondent.
DECISION
TINGA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure which seeks the reversal of the Decision 1 and Resolution2 of the Court of
Appeals in CA-G.R. SP No. 67001 and the dismissal of the civil case filed by respondent
against petitioner with the trial court.
As culled from the records of the case, the following antecedents appear:
Sometime in 1990, Brand Marine Services, Inc. (BMSI), a corporation duly organized and
existing under the laws of the State of Connecticut, United States of America, and
respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby
BMSI hired respondent as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the gross
receipts. On 11 March 1992, respondent secured a service contract with the Republic of
the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo
eruption and mudflows.3
On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor
Relations Commission (NLRC) a suit against BMSI and Rust International, Inc. (RUST),
Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions,
illegal termination and breach of employment contract. 4 On 28 September 1995, Labor
Arbiter Pablo C. Espiritu, Jr. rendered judgment ordering BMSI and RUST to pay
respondent’s money claims.5 Upon appeal by BMSI, the NLRC reversed the decision of
the Labor Arbiter and dismissed respondent’s complaint on the ground of lack of
jurisdiction.6 Respondent elevated the case to this Court but was dismissed in a Resolution
dated 26 November 1997. The Resolution became final and executory on 09 November
1998.
On 8 January 1999, respondent, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union. The Complaint,7
docketed as Civil Case No. 1192-BG, named as defendants herein petitioner Raytheon
International, Inc. as well as BMSI and RUST, the two corporations impleaded in the
earlier labor case. The complaint essentially reiterated the allegations in the labor case that
BMSI verbally employed respondent to negotiate the sale of services in government
15
projects and that respondent was not paid the commissions due him from the Pinatubo
dredging project which he secured on behalf of BMSI. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and functioned as one
company.
In its Answer,8 petitioner alleged that contrary to respondent’s claim, it was a foreign
corporation duly licensed to do business in the Philippines and denied entering into any
arrangement with respondent or paying the latter any sum of money. Petitioner also denied
combining with BMSI and RUST for the purpose of assuming the alleged obligation of the
said companies.9 Petitioner also referred to the NLRC decision which disclosed that per
the written agreement between respondent and BMSI and RUST, denominated as "Special
Sales Representative Agreement," the rights and obligations of the parties shall be
governed by the laws of the State of Connecticut.10 Petitioner sought the dismissal of the
complaint on grounds of failure to state a cause of action and forum non conveniens and
prayed for damages by way of compulsory counterclaim.11
On 18 May 1999, petitioner filed an Omnibus Motion for Preliminary Hearing Based on
Affirmative Defenses and for Summary Judgment12 seeking the dismissal of the complaint
on grounds of forum non conveniens and failure to state a cause of action. Respondent
opposed the same. Pending the resolution of the omnibus motion, the deposition of Walter
Browning was taken before the Philippine Consulate General in Chicago. 13
In an Order14 dated 13 September 2000, the RTC denied petitioner’s omnibus motion. The
trial court held that the factual allegations in the complaint, assuming the same to be
admitted, were sufficient for the trial court to render a valid judgment thereon. It also ruled
that the principle of forum non conveniens was inapplicable because the trial court could
enforce judgment on petitioner, it being a foreign corporation licensed to do business in
the Philippines.15
Petitioner filed a Motion for Reconsideration16 of the order, which motion was opposed by
respondent.17 In an Order dated 31 July 2001,18 the trial court denied petitioner’s motion.
Thus, it filed a Rule 65 Petition19 with the Court of Appeals praying for the issuance of a
writ of certiorari and a writ of injunction to set aside the twin orders of the trial court dated
13 September 2000 and 31 July 2001 and to enjoin the trial court from conducting further
proceedings.20
On 28 August 2003, the Court of Appeals rendered the assailed Decision 21 denying the
petition for certiorari for lack of merit. It also denied petitioner’s motion for
reconsideration in the assailed Resolution issued on 10 March 2004. 22
The appellate court held that although the trial court should not have confined itself to the
allegations in the complaint and should have also considered evidence aliunde in resolving
petitioner’s omnibus motion, it found the evidence presented by petitioner, that is, the
deposition of Walter Browning, insufficient for purposes of determining whether the
complaint failed to state a cause of action. The appellate court also stated that it could not
rule one way or the other on the issue of whether the corporations, including petitioner,
named as defendants in the case had indeed merged together based solely on the evidence
presented by respondent. Thus, it held that the issue should be threshed out during trial.23
Moreover, the appellate court deferred to the discretion of the trial court when the latter
decided not to desist from assuming jurisdiction on the ground of the inapplicability of the
principle of forum non conveniens.
Hence, this petition raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF
ACTION AGAINST RAYTHEON INTERNATIONAL, INC.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REFUSING TO
DISMISS THE COMPLAINT ON THE GROUND OF FORUM NON
CONVENIENS.24
Incidentally, respondent failed to file a comment despite repeated notices. The Ceferino
Padua Law Office, counsel on record for respondent, manifested that the lawyer handling
the case, Atty. Rogelio Karagdag, had severed relations with the law firm even before the
filing of the instant petition and that it could no longer find the whereabouts of Atty.
Karagdag or of respondent despite diligent efforts. In a Resolution 25 dated 20 November
2006, the Court resolved to dispense with the filing of a comment.
The instant petition lacks merit.
Petitioner mainly asserts that the written contract between respondent and BMSI included
a valid choice of law clause, that is, that the contract shall be governed by the laws of the
State of Connecticut. It also mentions the presence of foreign elements in the dispute –
namely, the parties and witnesses involved are American corporations and citizens and the
evidence to be presented is located outside the Philippines – that renders our local courts
inconvenient forums. Petitioner theorizes that the foreign elements of the dispute
necessitate the immediate application of the doctrine of forum non conveniens.
Recently in Hasegawa v. Kitamura,26 the Court outlined three consecutive phases
involved in judicial resolution of conflicts-of-laws problems, namely: jurisdiction, choice
of law, and recognition and enforcement of judgments. Thus, in the instances27 where the
Court held that the local judicial machinery was adequate to resolve controversies with a
foreign element, the following requisites had to be proved: (1) that the Philippine Court is
one to which the parties may conveniently resort; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have the power to enforce its decision. 28
On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a
Philippine court and where the court has jurisdiction over the subject matter, the parties
16
and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or the
convenience of the parties point to a foreign forum. This is an exercise of sovereign
prerogative of the country where the case is filed.29
Jurisdiction over the nature and subject matter of an action is conferred by the Constitution
and the law30 and by the material allegations in the complaint, irrespective of whether or
not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein. 31
Civil Case No. 1192-BG is an action for damages arising from an alleged breach of
contract. Undoubtedly, the nature of the action and the amount of damages prayed are
within the jurisdiction of the RTC.
As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein
respondent (as party plaintiff) upon the filing of the complaint. On the other hand,
jurisdiction over the person of petitioner (as party defendant) was acquired by its
voluntary appearance in court.32
That the subject contract included a stipulation that the same shall be governed by the laws
of the State of Connecticut does not suggest that the Philippine courts, or any other foreign
tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and choice
of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a
defendant to travel to this state; choice of law asks the further question whether the
application of a substantive law which will determine the merits of the case is fair to both
parties.33 The choice of law stipulation will become relevant only when the substantive
issues of the instant case develop, that is, after hearing on the merits proceeds before the
trial court.
Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may
refuse impositions on its jurisdiction where it is not the most "convenient" or available
forum and the parties are not precluded from seeking remedies elsewhere. 34 Petitioner’s
averments of the foreign elements in the instant case are not sufficient to oust the trial
court of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved.
Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered as a
matter of defense. While it is within the discretion of the trial court to abstain from
assuming jurisdiction on this ground, it should do so only after vital facts are established,
to determine whether special circumstances require the court’s desistance.35
Finding no grave abuse of discretion on the trial court, the Court of Appeals respected its
conclusion that it can assume jurisdiction over the dispute notwithstanding its foreign
elements. In the same manner, the Court defers to the sound discretion of the lower courts
because their findings are binding on this Court.
Petitioner also contends that the complaint in Civil Case No. 1192-BG failed to state a
cause of action against petitioner. Failure to state a cause of action refers to the
insufficiency of allegation in the pleading.36 As a general rule, the elementary test for
failure to state a cause of action is whether the complaint alleges facts which if true would
justify the relief demanded.37

The complaint alleged that petitioner had combined with BMSI and RUST to function as
one company. Petitioner contends that the deposition of Walter Browning rebutted this
allegation. On this score, the resolution of the Court of Appeals is instructive, thus:

x x x Our examination of the deposition of Mr. Walter Browning as well as

other documents produced in the hearing shows that these evidence aliunde are
not quite sufficient for us to mete a ruling that the complaint fails to state a cause
of action.

Annexes "A" to "E" by themselves are not substantial, convincing and

conclusive proofs that Raytheon Engineers and Constructors, Inc. (REC)
assumed the warranty obligations of defendant Rust International in the Makar
Port Project in General Santos City, after Rust International ceased to exist after
being absorbed by REC. Other documents already submitted in evidence are
likewise meager to preponderantly conclude that Raytheon International, Inc.,
Rust International[,] Inc. and Brand Marine Service, Inc. have combined into
one company, so much so that Raytheon International, Inc., the surviving
company (if at all) may be held liable for the obligation of BMSI to respondent
Rouzie for unpaid commissions. Neither these documents clearly speak
otherwise.38

As correctly pointed out by the Court of Appeals, the question of whether petitioner,
BMSI and RUST merged together requires the presentation of further evidence, which
only a full-blown trial on the merits can afford.

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 67001 are hereby
AFFIRMED. Costs against petitioner.

17
Forum Non Conveniens
G.R. No. 120077 October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J.
DIOSANA AND MARCELO G. SANTOS, respondents.
PARDO, J.:
The case before the Court is a petition for certiorari1 to annul the following orders of the
National Labor Relations Commission (hereinafter referred to as "NLRC") for having
been issued without or with excess jurisdiction and with grave abuse of discretion:2
(1) Order of May 31, 1993.3 Reversing and setting aside its earlier resolution of
August 28, 1992.4 The questioned order declared that the NLRC, not the
Philippine Overseas Employment Administration (hereinafter referred to as
"POEA"), had jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994.5 Directing petitioners to jointly and
severally pay private respondent twelve thousand and six hundred dollars (US$
12,600.00) representing salaries for the unexpired portion of his contract; three
thousand six hundred dollars (US$3,600.00) as extra four months salary for the
two (2) year period of his contract, three thousand six hundred dollars
(US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight
hundred dollars (US$19,800.00) or its peso equivalent and attorney's fees
amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for reconsideration of the
petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was
an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of
Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing,
People's Republic of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the
Manila Hotel International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled
corporation duly organized and existing under the laws of the Philippines.
18
MHICL is a corporation duly organized and existing under the laws of Hong Kong.7
MHC is an "incorporator" of MHICL, owning 50% of its capital stock.8
By virtue of a "management agreement"9 with the Palace Hotel (Wang Fu Company
Limited), MHICL10 trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman,
respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt,
General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos
that he was recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher
monthly salary and increased benefits. The position was slated to open on October 1,
1988.11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of
the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign
employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in Manila, together with his
passport and two additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective
June 30, 1988, under the pretext that he was needed at home to help with the family's
piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's
letter. Respondent Santos enclosed four (4) signed copies of the employment contract
(dated June 4, 1988) and notified them that he was going to arrive in Manila during the
first week of July 1988.
The employment contract of June 4, 1988 stated that his employment would commence
September 1, 1988 for a period of two years.12 It provided for a monthly salary of nine
hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing
Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the
Palace Hotel.14
Subsequently, respondent Santos signed an amended "employment agreement" with the
Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the
Palace Hotel. The Vice President (Operations and Development) of petitioner MHICL
Miguel D. Cergueda signed the employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He
returned to China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a
handwritten note that respondent Santos be given one (1) month notice of his release from
employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr.
Shmidt that his employment at the Palace Hotel print shop would be terminated due to
business reverses brought about by the political upheaval in China.15 We quote the
letter:16
"After the unfortunate happenings in China and especially Beijing (referring to
Tiannamen Square incidents), our business has been severely affected. To
reduce expenses, we will not open/operate printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this
does in no way reflect your past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will contact you directly and
give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos
and paid all benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr.
Shmidt, demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:17
His service with the Palace Hotel, Beijing was not abruptly terminated but we
followed the one-month notice clause and Mr. Santos received all benefits due
him.
19
"For your information the Print Shop at the Palace Hotel is still not operational
and with a low business outlook, retrenchment in various departments of the
hotel is going on which is a normal management practice to control costs.
"When going through the latest performance ratings, please also be advised that
his performance was below average and a Chinese National who is doing his job
now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed up
for work but still enjoyed free accommodation/laundry/meals up to the day of
his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the
Arbitration Branch, National Capital Region, National Labor Relations Commission
(NLRC). He prayed for an award of nineteen thousand nine hundred and twenty three
dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as
exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The
complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated
in the proceedings before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners,
thus:19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the
NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:20
 "WHEREFORE, let the appealed Decision be, as it is hereby, declared null and
void for want of jurisdiction. Complainant is hereby enjoined to file his
complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted
resolution. He argued that the case was not cognizable by the POEA as he was not an
"overseas contract worker."21
On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed
Labor Arbiter Emerson Tumanon to hear the case on the question of whether private
respondent was retrenched or dismissed.22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the
testimonial and documentary evidence presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National
Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G.
de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted his report.25 He found that
respondent Santos was illegally dismissed from employment and recommended that he be
paid actual damages equivalent to his salaries for the unexpired portion of his contract.26
On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:27
"WHEREFORE, finding that the report and recommendations of Arbiter de
Vera are supported by substantial evidence, judgment is hereby rendered,
directing the respondents to jointly and severally pay complainant the following
computed contractual benefits: (1) US$12,600.00 as salaries for the unexpired
portion of the parties' contract; (2) US$3,600.00 as extra four (4) months salary
for the two (2) years period (sic) of the parties' contract; (3) US$3,600.00 as
"14th month pay" for the aforesaid two (2) years contract stipulated by the
parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorney's fees
of 10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor
Arbiter de Vera's recommendation had no basis in law and in fact.28
On March 30, 1995, the NLRC denied the motion for reconsideration.29
20
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a
temporary restraining order and/or writ of preliminary injunction and a motion for the
annulment of the entry of judgment of the NLRC dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's urgent motion. The Court required
respondents to file their respective comments, without giving due course to the petition.32
On March 8, 1996, the Solicitor General filed a manifestation stating that after going over
the petition and its annexes, they can not defend and sustain the position taken by the
NLRC in its assailed decision and orders. The Solicitor General prayed that he be excused
from filing a comment on behalf of the NLRC33
On April 30,1996, private respondent Santos filed his comment.34
On June 26, 1996, the Court granted the manifestation of the Solicitor General and
required the NLRC to file its own comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the
case involves purely foreign elements. The only link that the Philippines has with the case
is that respondent Santos is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be tried here.
The employment contract. — Respondent Santos was hired directly by the Palace Hotel, a
foreign employer, through correspondence sent to the Sultanate of Oman, where
respondent Santos was then employed. He was hired without the intervention of the POEA
or any authorized recruitment agency of the government.36
Under the rule of forum non conveniens, a Philippine court or agency may assume
jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is
one to which the parties may conveniently resort to; (2) that the Philippine court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine court has or is likely to have power to enforce its decision.37 The conditions
are unavailing in the case at bar.
Not Convenient. — We fail to see how the NLRC is a convenient forum given that all the
incidents of the case — from the time of recruitment, to employment to dismissal occurred
outside the Philippines. The inconvenience is compounded by the fact that the proper
defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither .are
they "doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and
Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. — Neither can an intelligent decision be made as
to the law governing the employment contract as such was perfected in foreign soil. This
calls to fore the application of the principle of lex loci contractus (the law of the place
where the contract was made).38
The employment contract was not perfected in the Philippines. Respondent Santos
signified his acceptance by writing a letter while he was in the Republic of Oman. This
letter was sent to the Palace Hotel in the People's Republic of China.
No power to determine the facts. — Neither can the NLRC determine the facts
surrounding the alleged illegal dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a position to determine whether the
Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to
justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. — Even assuming that a proper
decision could be reached by the NLRC, such would not have any binding effect against
the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the
laws of China and was not even served with summons. Jurisdiction over its person was not
acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither are we saying that we do not have power over an
employment contract executed in a foreign country. If Santos were an "overseas contract
worker", a Philippine forum, specifically the POEA, not the NLRC, would protect him.39
He is not an "overseas contract worker" a fact which he admits with conviction.40
Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's
decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2)
that MHICL was liable for Santos' retrenchment, still MHC, as a separate and distinct
juridical entity cannot be held liable.
21
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock.
However, this is not enough to pierce the veil of corporate fiction between MHICL and
MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the
corporate fiction is used to defeat public convenience, justify wrong, protect fraud or
defend a crime. 41 It is done only when a corporation is a mere alter ego or business
conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,42 we held that "the mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself a sufficient reason for disregarding the fiction of separate
corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the
defendant must have control or complete domination of the other corporation's finances,
policy and business practices with regard to the transaction attacked. There must be proof
that the other corporation had no separate mind, will or existence with respect the act
complained of. Second, control must be used by the defendant to commit fraud or wrong.
Third, the aforesaid control or breach of duty must be the proximate cause of the injury or
loss complained of. The absence of any of the elements prevents the piercing of the
corporate veil.43
It is basic that a corporation has a personality separate and distinct from those composing
it as well as from that of any other legal entity to which it may be related.44 Clear and
convincing evidence is needed to pierce the veil of corporate fiction.45 In this case, we
find no evidence to show that MHICL and MHC are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his
employment contract with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel
D. Cergueda signed the employment contract as a mere witness. He merely signed under
the word "noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would.46 In Sichangco v. Board of Commissioners of Immigration,47 the Court
recognized that the term "noted" means that the person so noting has merely taken
cognizance of the existence of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part"
of the document is that which, "in a deed or other formal instrument is that part which
comes after the recitals, or where there are no recitals, after the parties (emphasis
ours)."48 As opposed to a party to a contract, a witness is simply one who, "being present,
personally sees or perceives a thing; a beholder, a spectator, or eyewitness."49 One who
"notes" something just makes a "brief written statement"50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship
between Santos and MHICL. In determining the existence of an employer-employee
relationship, the following elements are considered:51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It did not
select respondent Santos as an employee for the Palace Hotel. He was referred to the
Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos to
work. The terms of employment were negotiated and finalized through correspondence
between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL. Neither did respondent Santos adduce
any proof that MHICL had the power to control his conduct. Finally, it was the Palace
Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."52 There is
no proof that MHICL "supplied" respondent Santos or even referred him for employment
to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the
same entity. The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not
enough to pierce the corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no
employer-employee relationship existed between MHICL, MHC and respondent Santos,
Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondent's claim in
NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following:53
"1. Unfair labor practice cases;
22
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can be resolved
by reference to the Labor Code, or other labor statutes, or their collective bargaining
agreements.54
"To determine which body has jurisdiction over the present controversy, we rely on the
sound judicial principle that jurisdiction over the subject matter is conferred by law and is
determined by the allegations of the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the
complaint. His failure to dismiss the case amounts to grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the
orders and resolutions of the National Labor Relations Commission dated May 31, 1993,
December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR
Case No. 00-02-01058-90).
Assume Jurisdiction and Apply Foreign Law It was also necessary for the petitioner to prove that the testator had his domicile in West
Virginia and not establish this fact consisted of the recitals in the CATHY will and the
G.R. No. L-32636 March 17, 1930 testimony of the petitioner. Also in beginning administration proceedings orginally in the
Philippine Islands, the petitioner violated his own theory by attempting to have the
principal administration in the Philippine Islands.
In the matter Estate of Edward Randolph Hix, deceased.
A.W. FLUEMER, petitioner-appellant,
vs. While the appeal pending submission in this court, the attorney for the appellant presented
ANNIE COUSHING HIX, oppositor-appellee. an unverified petition asking the court to accept as part of the evidence the documents
attached to the petition. One of these documents discloses that a paper writing purporting
MALCOLM, J.: to be the was presented for probate on June 8, 1929, to the clerk of Randolph Country,
State of West Virginia, in vacation, and was duly proven by the oaths of Dana Wamsley
and Joseph L. MAdden, the subscribing witnesses thereto , and ordered to be recorded and
The special administrator of the estate of Edward Randolph Hix appeals from a decision of
filed. It was shown by another document that, in vacation, on June 8, 1929, the clerk of
Judge of First Instance Tuason denying the probate of the document alleged to by the last
court of Randolph Country, West Virginia, appointed Claude W. Maxwell as
will and testament of the deceased. Appellee is not authorized to carry on this appeal. We
administrator, cum testamento annexo, of the estate of Edward Randolph Hix, deceased. In
think, however, that the appellant, who appears to have been the moving party in these
this connection, it is to be noted that the application for the probate of the will in the
proceedings, was a "person interested in the allowance or disallowance of a will by a
Philippines was filed on February 20, 1929, while the proceedings in West Virginia appear
Court of First Instance," and so should be permitted to appeal to the Supreme Court from
to have been initiated on June 8, 1929. These facts are strongly indicative of an intention
the disallowance of the will (Code of Civil Procedure, sec. 781, as amended; Villanueva
to make the Philippines the principal administration and West Virginia the ancillary
vs. De Leon [1925], 42 Phil., 780).
administration. However this may be, no attempt has been made to comply with Civil
Procedure, for no hearing on the question of the allowance of a will said to have been
It is theory of the petitioner that the alleged will was executed in Elkins, West Virginia, on proved and allowed in West Virginia has been requested. There is no showing that the
November 3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of deceased left any property at any place other than the Philippine Islands and no contention
West Verginia Code, Annotated, by Hogg, Charles E., vol. 2, 1914, p. 1690, and as that he left any in West Virginia.
certified to by the Director of the National Library. But this was far from a compliance
with the law. The laws of a foreign jurisdiction do not prove themselves in our courts. the
Reference has been made by the parties to a divorce purported to have been awarded
courts of the Philippine Islands are not authorized to take American Union. Such laws
Edward Randolph Hix from Annie Cousins Hix on October 8, 1925, in the State of West
must be proved as facts. (In re Estate of Johnson [1918], 39 Phil., 156.) Here the
specific pronouncements on the validity or validity of this alleged divorce.
requirements of the law were not met. There was no was printed or published under the
authority of the State of West Virginia, as provided in section 300 of the Code of Civil
Procedure. Nor was the extract from the law attested by the certificate of the officer For all of the foregoing, the judgment appealed from will be affirmed, with the costs of
having charge of the original, under the sale of the State of West Virginia, as provided in this instance against the appellant.
section 301 of the Code of Civil Procedure. No evidence was introduced to show that the
extract from the laws of West Virginia was in force at the time the alleged will was
executed.

In addition, the due execution of the will was not established. The only evidence on this
point is to be found in the testimony of the petitioner. Aside from this, there was nothing
to indicate that the will was acknowledged by the testator in the presence of two
competent witnesses, of that these witnesses subscribed the will in the presence of the
testator and of each other as the law of West Virginia seems to require. On the supposition
that the witnesses to the will reside without the Philippine Islands, it would then the duty
of the petitioner to prove execution by some other means (Code of Civil Procedure, sec.
633.)

23
Assume jurisdiction and apply foreign law to the Farmers and Merchants National Bank of Los Angeles, California, U.S.A. in trust
only for the benefit of testator's grandson Edward George Bohanan, which consists of
G.R. No. L-12105 January 30, 1960 several mining companies; (2) the other half of the residuary estate to the testator's
brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share and share alike. This
TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., consist in the same amount of cash and of shares of mining stock similar to those given to
executor-appellee, testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert
vs. Bohana, and his daughter, Mary Lydia Bohanan, to be paid in three yearly installments;
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA (4) legacies to Clara Daen, in the amount of P10,000.00; Katherine Woodward, P2,000;
BOHANAN, oppositors-appellants. Beulah Fox, P4,000; and Elizabeth Hastings, P2,000;

LABRADOR, J.: It will be seen from the above that out of the total estate (after deducting administration
expenses) of P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half
of all shares of stock of several mining companies and to his brother and sister the same
Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose,
amount. To his children he gave a legacy of only P6,000 each, or a total of P12,000.
presiding, dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and
Edward Bohanan to the project of partition submitted by the executor and approving the
said project. The wife Magadalena C. Bohanan and her two children question the validity of the
testamentary provisions disposing of the estate in the manner above indicated, claiming
that they have been deprived of the legitimate that the laws of the form concede to them.
On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding,
admitted to probate a last will and testament of C. O. Bohanan, executed by him on April
23, 1944 in Manila. In the said order, the court made the following findings: The first question refers to the share that the wife of the testator, Magdalena C. Bohanan,
should be entitled to received. The will has not given her any share in the estate left by the
testator. It is argued that it was error for the trial court to have recognized the Reno
According to the evidence of the opponents the testator was born in Nebraska
divorce secured by the testator from his Filipino wife Magdalena C. Bohanan, and that
and therefore a citizen of that state, or at least a citizen of California where some
said divorce should be declared a nullity in this jurisdiction, citing the case of Querubin vs.
of his properties are located. This contention in untenable. Notwithstanding the
Querubin, 87 Phil., 124, 47 Off. Gaz., (Sup, 12) 315, Cousins Hiz vs. Fluemer, 55 Phil.,
long residence of the decedent in the Philippines, his stay here was merely
852, Ramirez vs. Gmur, 42 Phil., 855 and Gorayeb vs. Hashim, 50 Phil., 22. The court
temporary, and he continued and remained to be a citizen of the United States
below refused to recognize the claim of the widow on the ground that the laws of Nevada,
and of the state of his pertinent residence to spend the rest of his days in that
of which the deceased was a citizen, allow him to dispose of all of his properties without
state. His permanent residence or domicile in the United States depended upon
requiring him to leave any portion of his estate to his wife. Section 9905 of Nevada
his personal intent or desire, and he selected Nevada as his homicide and
Compiled Laws of 1925 provides:
therefore at the time of his death, he was a citizen of that state. Nobody can
choose his domicile or permanent residence for him. That is his exclusive
personal right. Every person over the age of eighteen years, of sound mind, may, by last will,
dispose of all his or her estate, real and personal, the same being chargeable with
the payment of the testator's debts.
Wherefore, the court finds that the testator C. O. Bohanan was at the time of his
death a citizen of the United States and of the State of Nevada and declares that
his will and testament, Exhibit A, is fully in accordance with the laws of the Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in
state of Nevada and admits the same to probate. Accordingly, the Philippine the testator's estafa had already been passed upon adversely against her in an order dated
Trust Company, named as the executor of the will, is hereby appointed to such June 19, 1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become
executor and upon the filing of a bond in the sum of P10,000.00, let letters final, as Magdalena C. Bohanan does not appear to have appealed therefrom to question its
testamentary be issued and after taking the prescribed oath, it may enter upon validity. On December 16, 1953, the said former wife filed a motion to withdraw the sum
the execution and performance of its trust. (pp. 26-27, R.O.A.). of P20,000 from the funds of the estate, chargeable against her share in the conjugal
property, (See pp. 294-297, Vol. I, Record, Court of First Instance), and the court in its
said error found that there exists no community property owned by the decedent and his
It does not appear that the order granting probate was ever questions on appeal. The
former wife at the time the decree of divorce was issued. As already and Magdalena C.
executor filed a project of partition dated January 24, 1956, making, in accordance with
Bohanan may no longer question the fact contained therein, i.e. that there was no
the provisions of the will, the following adjudications: (1) one-half of the residuary estate,
24
community property acquired by the testator and Magdalena C. Bohanan during their he record, or by his deputy, and accompanied, if the record is not kept in the
converture. Philippines, with a certificate that such officer has the custody. . . . (Rule 123).

Moreover, the court below had found that the testator and Magdalena C. Bohanan were
married on January 30, 1909, and that divorce was granted to him on May 20, 1922; that
sometime in 1925, Magdalena C. Bohanan married Carl Aaron and this marriage was
subsisting at the time of the death of the testator. Since no right to share in the inheritance
in favor of a divorced wife exists in the State of Nevada and since the court below had
already found that there was no conjugal property between the testator and Magdalena C.
Bohanan, the latter can now have no longer claim to pay portion of the estate left by the
testator.
We have, however, consulted the records of the case in the court below and we have found
that during the hearing on October 4, 1954 of the motion of Magdalena C. Bohanan for
withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled
Nevada Laws. was introduced in evidence by appellant's (herein) counsel as Exhibits "2"
(See pp. 77-79, VOL. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again said
laws presented by the counsel for the executor and admitted by the Court as Exhibit "B"
during the hearing of the case on January 23, 1950 before Judge Rafael Amparo (se
Records, Court of First Instance, Vol. 1).

The most important issue is the claim of the testator's children, Edward and Mary Lydia,
who had received legacies in the amount of P6,000 each only, and, therefore, have not
been given their shares in the estate which, in accordance with the laws of the forum,
should be two-thirds of the estate left by the testator. Is the failure old the testator to give
his children two-thirds of the estate left by him at the time of his death, in accordance with
the laws of the forum valid?
The old Civil Code, which is applicable to this case because the testator died in 1944,
expressly provides that successional rights to personal property are to be earned by the
national law of the person whose succession is in question. Says the law on this point:
Nevertheless, legal and testamentary successions, in respect to the order of
succession as well as to the extent of the successional rights and the intrinsic
validity of their provisions, shall be regulated by the national law of the person
whose succession is in question, whatever may be the nature of the property and
the country in which it is found. (par. 2, Art. 10, old Civil Code, which is the
same as par. 2 Art. 16, new Civil Code.)
In addition, the other appellants, children of the testator, do not dispute the above-quoted
provision of the laws of the State of Nevada. Under all the above circumstances, we are
constrained to hold that the pertinent law of Nevada, especially Section 9905 of the
Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of
such law having been offered at the hearing of the project of partition.
As in accordance with Article 10 of the old Civil Code, the validity of testamentary
dispositions are to be governed by the national law of the testator, and as it has been
decided and it is not disputed that the national law of the testator is that of the State of
Nevada, already indicated above, which allows a testator to dispose of all his property
according to his will, as in the case at bar, the order of the court approving the project of
partition made in accordance with the testamentary provisions, must be, as it is hereby
affirmed, with costs against appellants.

In the proceedings for the probate of the will, it was found out and it was decided that the
testator was a citizen of the State of Nevada because he had selected this as his domicile
and his permanent residence. (See Decision dated April 24, 1950, supra). So the question
at issue is whether the estementary dispositions, especially hose for the children which are
short of the legitime given them by the Civil Code of the Philippines, are valid. It is not
disputed that the laws of Nevada allow a testator to dispose of all his properties by will
(Sec. 9905, Complied Nevada Laws of 1925, supra). It does not appear that at time of the
hearing of the project of partition, the above-quoted provision was introduced in evidence,
as it was the executor's duly to do. The law of Nevada, being a foreign law can only be
proved in our courts in the form and manner provided for by our Rules, which are as
follows:

SEC. 41. Proof of public or official record. — An official record or an entry

therein, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy tested by the officer having the legal custody of

25
Renvoi
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.
QUIASON, J.:
The petition in G.R. No. 104776, entitled "Bienvenido M. Cadalin, et. al. v. Philippine
Overseas Employment Administration's Administrator, et. al.," was filed under Rule 65 of
the Revised Rules of Court:
(1) to modify the Resolution dated September 2, 1991 of the National
Labor Relations Commission (NLRC) in POEA Cases Nos.
L-84-06-555, L-85-10-777, L-85-10-779 and L-86-05-460; (2) to
render a new decision: (i) declaring private respondents as in default;
(ii) declaring the said labor cases as a class suit; (iii) ordering Asia
International Builders Corporation (AIBC) and Brown and Root
International Inc. (BRII) to pay the claims of the 1,767 claimants in
said labor cases; (iv) declaring Atty. Florante M. de Castro guilty of
forum-shopping; and (v) dismissing POEA Case No. L-86-05-460;
and
(3) to reverse the Resolution dated March 24, 1992 of NLRC, denying
the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-288).
The petition in G.R. Nos. 104911-14, entitled "Bienvenido M. Cadalin, et. al., v. Hon.
National Labor Relations Commission, et. al.," was filed under Rule 65 of the Revised
Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in
POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-799 and
L-86-05-460 insofar as it: (i) applied the three-year prescriptive period
under the Labor Code of the Philippines instead of the ten-year
prescriptive period under the Civil Code of the Philippines; and (ii)
denied the
26
"three-hour daily average" formula in the computation of petitioners'
overtime pay; and
(2) to reverse the Resolution dated March 24, 1992 of NLRC, denying
the motion for reconsideration of its Resolution dated September 2,
1991 (Rollo, pp. 8-25; 26-220).
The petition in G.R. Nos. 105029-32, entitled "Asia International Builders Corporation, et.
al., v. National Labor Relations Commission, et. al." was filed under Rule 65 of the
Revised Rules of Court:
(1) to reverse the Resolution dated September 2, 1991 of NLRC in
POEA Cases Nos. L-84-06-555, L-85-10-777, L-85-10-779 and
L-86-05-460, insofar as it granted the claims of 149 claimants; and
(2) to reverse the Resolution dated March 21, 1992 of NLRC insofar
as it denied the motions for reconsideration of AIBC and BRII (Rollo,
pp. 2-59; 61-230).
The Resolution dated September 2, 1991 of NLRC, which modified the decision of POEA
in four labor cases: (1) awarded monetary benefits only to 149 claimants and (2) directed
Labor Arbiter Fatima J. Franco to conduct hearings and to receive evidence on the claims
dismissed by the POEA for lack of substantial evidence or proof of employment.
Consolidation of Cases
G.R. Nos. 104776 and 105029-32 were originally raffled to the Third Division while G.R.
Nos. 104911-14 were raffled to the Second Division. In the Resolution dated July 26,
1993, the Second Division referred G.R. Nos. 104911-14 to the Third Division (G.R. 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 June 6, 1984, Bienvenido M.. Cadalin, Rolando M. Amul and Donato B. Evangelista,
in their own behalf and on behalf of 728 other overseas contract workers (OCWs)
instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas
Employment Administration (POEA) for money claims arising from their recruitment by
AIBC and employment by BRII (POEA Case No. L-84-06-555). The claimants were
represented by Atty. Gerardo del Mundo.
BRII is a foreign corporation with headquarters in Houston, Texas, and is engaged in
construction; while AIBC is a domestic corporation licensed as a service contractor to
recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its
foreign principals.
The amended complaint principally sought the payment of the unexpired portion of the
employment contracts, which was terminated prematurely, and secondarily, the payment
of the interest of the earnings of the Travel and Reserved Fund, interest on all the unpaid
benefits; area wage and salary differential pay; fringe benefits; refund of SSS and
premium not remitted to the SSS; refund of withholding tax not remitted to the BIR;
penalties for committing prohibited practices; as well as the suspension of the license of
AIBC and the accreditation of BRII (G.R. No. 104776, Rollo, pp. 13-14).
At the hearing on June 25, 1984, AIBC was furnished a copy of the complaint and was
given, together with BRII, up to July 5, 1984 to file its answer.
On July 3, 1984, POEA Administrator, upon motion of AIBC and BRII, ordered the
claimants to file a bill of particulars within ten days from receipt of the order and the
movants to file their answers within ten days from receipt of the bill of particulars. The
POEA Administrator also scheduled a pre-trial conference on July 25, 1984.
On July 13, 1984, the claimants submitted their "Compliance and Manifestation." On July
23, 1984, AIBC filed a "Motion to Strike Out of the Records", the "Complaint" and the
"Compliance and Manifestation." On July 25, 1984, the claimants filed their "Rejoinder
and Comments," averring, among other matters, the failure of AIBC and BRII to file their
answers and to attend the pre-trial conference on July 25, 1984. The claimants alleged that
AIBC and BRII had waived their right to present evidence and had defaulted by failing to
file their answers and to attend the pre-trial conference.
On October 2, 1984, the POEA Administrator denied the "Motion to Strike Out of the
Records" filed by AIBC but required the claimants to correct the deficiencies in the
complaint pointed out in the order.
On October 10, 1984, claimants asked for time within which to comply with the Order of
October 2, 1984 and filed an "Urgent Manifestation," praying that the POEA
Administrator direct 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).
27
On October 19, 1984, claimants filed their "Compliance" with the Order dated October 2,
1984 and an "Urgent Manifestation," praying that the POEA direct the parties to submit
simultaneously their position papers after which the case would be deemed submitted for
decision. On the same day, AIBC asked for time to file its comment on the "Compliance"
and "Urgent Manifestation" of claimants. On November 6, 1984, it filed a second motion
for extension of time to file the comment.
On November 8, 1984, the POEA Administrator informed AIBC that its motion for
extension of time was granted.
On November 14, 1984, claimants filed an opposition to the motions for extension of time
and asked that AIBC and BRII be declared in default for failure to file their answers.
On November 20, 1984, AIBC and BRII filed a "Comment" praying, among other reliefs,
that claimants should be ordered to amend their complaint.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and
BRII to file their answers within ten days from receipt of the order.
On February 27, 1985, AIBC and BRII appealed to NLRC seeking the reversal of the said
order of the POEA Administrator. Claimants opposed the appeal, claiming that it was
dilatory and praying that AIBC and BRII be declared in default.
On April 2, 1985, the original claimants filed an "Amended Complaint and/or Position
Paper" dated March 24, 1985, adding new demands: namely, the payment of overtime pay,
extra night work pay, annual leave differential pay, leave indemnity pay, retirement and
savings benefits and their share of forfeitures (G.R. No. 104776, Rollo, pp. 14-16). On
April 15, 1985, the POEA Administrator directed AIBC to file its answer to the amended
complaint (G.R. No. 104776, Rollo, p. 20).
On May 28, 1985, claimants filed an "Urgent Motion for Summary Judgment." On the
same day, the POEA issued an order directing AIBC and BRII to file their answers to the
"Amended Complaint," otherwise, they would be deemed to have waived their right to
present evidence and the case would be resolved on the basis of complainant's evidence.
On June 5, 1985, AIBC countered with a "Motion to Dismiss as Improper Class Suit and
Motion for Bill of Particulars Re: Amended Complaint dated March 24, 1985." Claimants
opposed the motions.
On September 4, 1985, the POEA Administrator reiterated his directive to AIBC and BRII
to file their answers in POEA Case No. L-84-06-555.
On September 18, 1985, AIBC filed its second appeal to the NLRC, together with a
petition for the issuance of a writ of injunction. On September 19, 1985, NLRC enjoined
the POEA Administrator from hearing the labor cases and suspended the period for the
filing of the answers of AIBC and BRII.
On September 19, 1985, claimants asked the POEA Administrator to include additional
claimants in the case and to investigate alleged wrongdoings of BRII, AIBC and their
respective lawyers.
On October 10, 1985, Romeo Patag and two co-claimants filed a complaint (POEA Case
No. L-85-10-777) against AIBC and BRII with the POEA, demanding monetary claims
similar to those subject of POEA Case No. L-84-06-555. In the same month, Solomon
Reyes also filed his own complaint (POEA Case No. L-85-10-779) against AIBC and
BRII.
On October 17, 1985, the law firm of Florante M. de Castro & Associates asked for the
substitution of the original counsel of record and the cancellation of the special powers of
attorney given the original counsel.
On December 12, 1985, Atty. Del Mundo filed in NLRC a notice of the claim to enforce
attorney's lien.
On May 29, 1986, Atty. De Castro filed a complaint for money claims (POEA Case No.
86-05-460) in behalf of 11 claimants including Bienvenido Cadalin, a claimant in POEA
Case No. 84-06-555.
On December 12, 1986, the NLRC dismissed the two appeals filed on February 27, 1985
and September 18, 1985 by AIBC and BRII.
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
28
No. L-84-06-555. The second was filed on April 28, 1989 by claimants Emigdio P.
Bautista and Rolando R. Lobeta charging AIBC and BRII for violation of labor and social
legislations. The third was filed by Jose R. Santos, Maximino N. Talibsao and Amado B.
Bruce denouncing AIBC and BRII of violations of labor laws.
On January 13, 1987, AIBC filed a motion for reconsideration of the NLRC Resolution
dated December 12, 1986.
On January 14, 1987, AIBC reiterated before the POEA Administrator its motion for
suspension of the period for filing an answer or motion for extension of time to file the
same until the resolution of its motion for reconsideration of the order of the NLRC
dismissing the two appeals. On April 28, 1987, NLRC en banc denied the motion for
reconsideration.
At the hearing on June 19, 1987, AIBC submitted its answer to the complaint. At the same
hearing, the parties were given a period of 15 days from said date within which to submit
their respective position papers. On June 24, 1987 claimants filed their "Urgent Motion to
Strike Out Answer," alleging that the answer was filed out of time. On June 29, 1987,
claimants filed their "Supplement to Urgent Manifestational Motion" to comply with the
POEA Order of June 19, 1987. On February 24, 1988, AIBC and BRII submitted their
position paper. On March 4, 1988, claimants filed their "Ex-Parte Motion to Expunge
from the Records" the position paper of AIBC and BRII, claiming that it was filed out of
time.
On September 1, 1988, the claimants represented by Atty. De Castro filed their
memorandum in POEA Case No. L-86-05-460. On September 6, 1988, AIBC and BRII
submitted their Supplemental Memorandum. On September 12, 1988, BRII filed its
"Reply to Complainant's Memorandum." On October 26, 1988, claimants submitted their
"Ex-Parte Manifestational Motion and Counter-Supplemental Motion," together with 446
individual contracts of employments and service records. On October 27, 1988, AIBC and
BRII filed a "Consolidated Reply."
On January 30, 1989, the POEA Administrator rendered his decision in POEA Case No.
L-84-06-555 and the other consolidated cases, which awarded the amount of $824,652.44
in favor of only 324 complainants.
On February 10, 1989, claimants submitted their "Appeal Memorandum For Partial
Appeal" from the decision of the POEA. On the same day, AIBC also filed its motion for
reconsideration and/or appeal in addition to the "Notice of Appeal" filed earlier on
February 6, 1989 by another counsel for AIBC.
On February 17, 1989, claimants filed their "Answer to Appeal," praying for the dismissal
of the appeal of AIBC and BRII.
On March 15, 1989, claimants filed their "Supplement to Complainants' Appeal
Memorandum," together with their "newly discovered evidence" consisting of payroll
records.
On April 5, 1989, AIBC and BRII submitted to NLRC their "Manifestation," stating
among other matters that there were only 728 named claimants. On April 20, 1989, the
claimants filed their "Counter-Manifestation," alleging that there were 1,767 of them.
On July 27, 1989, claimants filed their "Urgent Motion for Execution" of the Decision
dated January 30, 1989 on the grounds that BRII had failed to appeal on time and AIBC
had not posted the supersedeas bond in the amount of $824,652.44.
On December 23, 1989, claimants filed another motion to resolve the labor cases.
On August 21, 1990, claimants filed their "Manifestational Motion," praying that all the
1,767 claimants be awarded their monetary claims for failure of private respondents to file
their answers within the reglamentary period required by law.
On September 2, 1991, NLRC promulgated its Resolution, disposing as follows:
WHEREFORE, premises considered, the Decision of the POEA in
these consolidated cases is modified to the extent and in accordance
with the following dispositions:
1. The claims of the 94 complainants identified
and listed in Annex "A" hereof are dismissed for
having prescribed;
2. Respondents AIBC and Brown & Root are
hereby ordered, jointly and severally, to pay the
149 complainants, identified and listed in Annex
"B" hereof, the peso equivalent, at the time of
payment, of the total amount in US dollars
indicated opposite their respective names;
3. The awards given by the POEA to the 19
complainants classified and listed in Annex "C"
hereof, who appear to have worked elsewhere than
in Bahrain are hereby set aside.
4. All claims other than those indicated in Annex
"B", including those for overtime work and
favorably granted by the POEA, are hereby
dismissed for lack of substantial evidence in
29
support thereof or are beyond the competence of
this Commission to pass upon.
In addition, this Commission, in the exercise of its powers and
authority under Article 218(c) of the Labor Code, as amended by R.A.
6715, hereby directs Labor Arbiter Fatima J. Franco of this
Commission to summon parties, conduct hearings and receive
evidence, as expeditiously as possible, and thereafter submit a written
report to this Commission (First Division) of the proceedings taken,
regarding the claims of the following:
(a) complainants identified and listed in Annex
"D" attached and made an integral part of this
Resolution, whose claims were dismissed by the
POEA for lack of proof of employment in Bahrain
(these complainants numbering 683, are listed in
pages 13 to 23 of the decision of POEA, subject of
the appeals) and,
(b) complainants identified and listed in Annex
"E" attached and made an integral part of this
Resolution, whose awards decreed by the POEA,
to Our mind, are not supported by substantial
evidence" (G.R. No. 104776; Rollo, pp. 113-115;
G.R. Nos. 104911-14, pp. 85-87; G.R. Nos.
105029-31, pp. 120-122).
On November 27, 1991, claimant Amado S. Tolentino and 12
co-claimants, who were former clients of Atty. Del Mundo, filed a petition for certiorari
with the Supreme Court (G.R. Nos. 120741-44). The petition was dismissed in a
resolution dated January 27, 1992.
Three motions for reconsideration of the September 2, 1991 Resolution of the NLRC were
filed. The first, by the claimants represented by Atty. Del Mundo; the second, by the
claimants represented by Atty. De Castro; and the third, by AIBC and BRII.
In its Resolution dated March 24, 1992, NLRC denied all the motions for reconsideration.
Hence, these petitions filed by the claimants represented by Atty. Del Mundo (G.R. No.
104776), the claimants represented by Atty. De Castro (G.R. Nos. 104911-14) and by
AIBC and BRII (G.R. Nos. 105029-32).
II
Compromise Agreements
Before this Court, the claimants represented by Atty. De Castro and AIBC and BRII have
submitted, from time to time, compromise agreements for our approval and jointly moved
for the dismissal of their respective petitions insofar as the claimants-parties to the
compromise agreements were concerned (See Annex A for list of claimants who signed
quitclaims).
Thus the following manifestations that the parties had arrived at a compromise agreement
and the corresponding motions for the approval of the agreements were filed by the parties
and approved by the Court:
1) Joint Manifestation and Motion involving claimant Emigdio
Abarquez and 47 co-claimants dated September 2, 1992 (G.R. Nos.
104911-14, Rollo, pp. 263-406; G.R. Nos. 105029-32, Rollo, pp.
470-615);
2) Joint Manifestation and Motion involving petitioner Bienvenido
Cadalin and 82 co-petitioners dated September 3, 1992 (G.R. No.
104776, Rollo, pp. 364-507);
3) Joint Manifestation and Motion involving claimant Jose
M. Aban and 36 co-claimants dated September 17, 1992 (G.R. Nos.
105029-32, Rollo, pp. 613-722; G.R. No. 104776, Rollo, pp. 518-626;
G.R. Nos. 104911-14, Rollo, pp. 407-516);
4) Joint Manifestation and Motion involving claimant Antonio T.
Anglo and 17 co-claimants dated October 14, 1992 (G.R. Nos.
105029-32, Rollo, pp. 778-843; G.R. No. 104776, Rollo, pp. 650-713;
G.R. Nos. 104911-14, Rollo, pp. 530-590);
5) Joint Manifestation and Motion involving claimant Dionisio
Bobongo and 6 co-claimants dated January 15, 1993 (G.R. No.
104776, Rollo, pp. 813-836; G.R. Nos. 104911-14, Rollo, pp. 629-
652);
6) Joint Manifestation and Motion involving claimant Valerio A.
Evangelista and 4 co-claimants dated March 10, 1993 (G.R. Nos.
104911-14, Rollo, pp. 731-746; G.R. No. 104776, Rollo, pp. 1815-
1829);
7) Joint Manifestation and Motion involving claimants Palconeri
Banaag and 5 co-claimants dated March 17, 1993 (G.R. No. 104776,
Rollo, pp. 1657-1703; G.R. Nos. 104911-14, Rollo, pp. 655-675);
8) Joint Manifestation and Motion involving claimant Benjamin
Ambrosio and 15 other co-claimants dated May 4, 1993 (G.R. Nos.
30
105029-32, Rollo, pp. 906-956; G.R. Nos. 104911-14, Rollo, pp. 679-
729; G.R. No. 104776, Rollo, pp. 1773-1814);
9) Joint Manifestation and Motion involving Valerio Evangelista and
3 co-claimants dated May 10, 1993 (G.R. No. 104776, Rollo, pp.
1815-1829);
10) Joint Manifestation and Motion involving petitioner Quiterio R.
Agudo and 36 co-claimants dated June 14, 1993 (G.R. Nos. 105029-
32, Rollo, pp. 974-1190; G.R. Nos. 104911-14, Rollo, pp. 748-864;
G.R. No. 104776, Rollo, pp. 1066-1183);
11) Joint Manifestation and Motion involving claimant Arnaldo J.
Alonzo and 19 co-claimants dated July 22, 1993 (G.R. No. 104776,
Rollo, pp. 1173-1235; G.R. Nos. 105029-32, Rollo, pp. 1193-1256;
G.R. Nos. 104911-14, Rollo, pp. 896-959);
12) Joint Manifestation and Motion involving claimant Ricardo C.
Dayrit and 2 co-claimants dated September 7, 1993 (G.R. Nos.
105029-32, Rollo, pp. 1266-1278; G.R. No. 104776, Rollo, pp. 1243-
1254; G.R. Nos. 104911-14, Rollo, pp. 972-984);
13) Joint Manifestation and Motion involving claimant Dante C.
Aceres and 37 co-claimants dated September 8, 1993 (G.R. No.
104776, Rollo, pp. 1257-1375; G.R. Nos. 104911-14, Rollo, pp. 987-
1105; G.R. Nos. 105029-32, Rollo, pp. 1280-1397);
14) Joint Manifestation and Motion involving Vivencio V. Abella and
27 co-claimants dated January 10, 1994 (G.R. Nos. 105029-32, Rollo,
Vol. II);
15) Joint Manifestation and Motion involving Domingo B. Solano and
six co-claimants dated August 25, 1994 (G.R. Nos. 105029-32; G.R.
No. 104776; G.R. Nos. 104911-14).
III
The facts as found by the NLRC are as follows:
We have taken painstaking efforts to sift over the more than fifty
volumes now comprising the records of these cases. From the records,
it appears that the complainants-appellants allege that they were
recruited by respondent-appellant AIBC for its accredited foreign
principal, Brown & Root, on various dates from 1975 to 1983. They
were all deployed at various projects undertaken by Brown & Root in
several countries in the Middle East, such as Saudi Arabia, Libya, of the completion or termination, or suspension of the work on which
United Arab Emirates and Bahrain, as well as in Southeast Asia, in the Employee's services were being utilized, or because of a reduction
Indonesia and Malaysia. 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
Having been officially processed as overseas contract workers by the for his return transportation to his country of origin. Normally on the
Philippine Government, all the individual complainants signed most expeditious air route, economy class accommodation.
standard overseas employment contracts (Records, Vols. 25-32.
Hereafter, reference to the records would be sparingly made, xxx xxx xxx
considering their chaotic arrangement) with AIBC before their
departure from the Philippines. These overseas employment contracts 10. VACATION/SICK LEAVE BENEFITS
invariably contained the following relevant terms and conditions.
a) After one (1) year of continuous service and/or satisfactory
PART B — completion of contract, employee shall be entitled to 12-days vacation
leave with pay. This shall be computed at the basic wage rate.
(1) Employment Position Classification :————————— Fractions of a year's service will be computed on a pro-rata basis.
(Code) :—————————
b) Sick leave of 15-days shall be granted to the employee for every
(2) Company Employment Status :————————— year of service for non-work connected injuries or illness. If the
(3) Date of Employment to Commence on :————————— employee failed to avail of such leave benefits, the same shall be
(4) Basic Working Hours Per Week :————————— forfeited at the end of the year in which said sick leave is granted.
(5) Basic Working Hours Per Month :—————————
(6) Basic Hourly Rate :————————— 11. BONUS
(7) Overtime Rate Per Hour :—————————
(8) Projected Period of Service A bonus of 20% (for offshore work) of gross income will be accrued
(Subject to C(1) of this [sic]) :————————— and payable only upon satisfactory completion of this contract.
Months and/or
Job Completion
12. OFFDAY PAY

xxx xxx xxx

3. HOURS OF WORK AND COMPENSATION
a) The Employee is employed at the hourly rate and overtime rate as
set out in Part B of this Document.
b) The hours of work shall be those set forth by the Employer, and
Employer may, at his sole option, change or adjust such hours as
maybe deemed necessary from time to time.
4. TERMINATION
a) Notwithstanding any other terms and conditions of this agreement,
the Employer may, at his sole discretion, terminate employee's service
with cause, under this agreement at any time. If the Employer
terminates the services of the Employee under this Agreement because
31
The seventh day of the week shall be observed as a day of rest with 8
hours regular pay. If work is performed on this day, all hours work
shall be paid at the premium rate. However, this offday pay provision
is applicable only when the laws of the Host Country require
payments for rest day.
In the State of Bahrain, where some of the individual complainants
were deployed, His Majesty Isa Bin Salman Al Kaifa, Amir of
Bahrain, issued his Amiri Decree No. 23 on June 16, 1976, otherwise
known as the Labour Law for the Private Sector (Records, Vol. 18).
This decree took effect on August 16, 1976. Some of the provisions of
Amiri Decree No. 23 that are relevant to the claims of the
complainants-appellants are as follows (italics supplied only for
emphasis):
Art. 79: . . . A worker shall receive payment for
each extra hour equivalent to his wage entitlement
increased by a minimum of twenty-five per
centum thereof for hours worked during the day;
and by a minimum of fifty per centum thereof for
hours worked during the night which shall be
deemed to being from seven o'clock in the evening
until seven o'clock in the morning. . . .
Art. 80: Friday shall be deemed to be a weekly
day of rest on full pay.
. . . an employer may require a worker, with his
consent, to work on his weekly day of rest if
circumstances so require and in respect of which
an additional sum equivalent to 150% of his
normal wage shall be paid to him. . . .
Art. 81: . . . When conditions of work require the
worker to work on any official holiday, he shall be
paid an additional sum equivalent to 150% of his
normal wage.
Art. 84: Every worker who has completed one
year's continuous service with his employer shall
be entitled to leave on full pay for a period of not
less than 21 days for each year increased to a
period not less than 28 days after five continuous
years of service.
A worker shall be entitled to such leave upon a
quantum meruit in respect of the proportion of his
service in that year.
Art. 107: A contract of employment made for a
period of indefinite duration may be terminated by
either party thereto after giving the other party
thirty days' prior notice before such termination, in
writing, in respect of monthly paid workers and
fifteen days' notice in respect of other workers.
The party terminating a contract without giving
the required notice shall pay to the other party
compensation equivalent to the amount of wages
payable to the worker for the period of such notice
or the unexpired portion thereof.
32
Art. 111: . . . the employer concerned shall pay to
such worker, upon termination of employment, a
leaving indemnity for the period of his
employment calculated on the basis of fifteen days'
wages for each year of the first three years of
service and of one month's wages for each year of
service thereafter. Such worker shall be entitled to
payment of leaving indemnity upon a quantum
meruit in proportion to the period of his service
completed within a year.
All the individual complainants-appellants have
already been repatriated to the Philippines at the
time of the filing of these cases (R.R. No. 104776,
Rollo, pp. 59-65).
IV
The issues raised before and resolved by the NLRC were:
First: — Whether or not complainants are entitled to the benefits
provided by Amiri Decree No. 23 of Bahrain;
(a) Whether or not the complainants who have
worked in Bahrain are entitled to the above-
mentioned benefits.
(b) Whether or not Art. 44 of the same Decree
(allegedly prescribing a more favorable treatment
of alien employees) bars complainants from
enjoying its benefits.
Second: — Assuming that Amiri Decree No. 23 of Bahrain is
applicable in these cases, whether or not complainants' claim for the
benefits provided therein have prescribed.
Third: — Whether or not the instant cases qualify as a class suit.
Fourth: — Whether or not the proceedings conducted by the POEA,
as well as the decision that is the subject of these appeals, conformed
with the requirements of due process;
(a) Whether or not the respondent-appellant was
denied its right to due process;
 (b) Whether or not the admission of evidence by
the POEA after these cases were submitted for
decision was valid;
(c) Whether or not the POEA acquired jurisdiction
over Brown & Root International, Inc.;
(d) Whether or not the judgment awards are
supported by substantial evidence;
(e) Whether or not the awards based on the
averages and formula presented by the
complainants-appellants are supported by
substantial evidence;
(f) Whether or not the POEA awarded sums
beyond what the complainants-appellants prayed
for; and, if so, whether or not these awards are
valid.
Fifth: — Whether or not the POEA erred in holding respondents
AIBC and Brown & Root jointly are severally liable for the judgment
awards despite the alleged finding that the former was the employer of
the complainants;
(a) Whether or not the POEA has acquired
jurisdiction over Brown & Root;
(b) Whether or not the undisputed fact that AIBC
was a licensed construction contractor precludes a
finding that Brown & Root is liable for
complainants claims.
Sixth: — Whether or not the POEA Administrator's failure to hold
respondents in default constitutes a reversible error.
Seventh: — Whether or not the POEA Administrator erred in
dismissing the following claims:
a. Unexpired portion of contract;
b. Interest earnings of Travel and Reserve Fund;
c. Retirement and Savings Plan benefits;
33
d. War Zone bonus or premium pay of at least
100% of basic pay;
e. Area Differential Pay;
f. Accrued interests on all the unpaid benefits;
g. Salary differential pay;
h. Wage differential pay;
i. Refund of SSS premiums not remitted to SSS;
j. Refund of withholding tax not remitted to BIR;
k. Fringe benefits under B & R's "A Summary of
Employee Benefits" (Annex "Q" of Amended
Complaint);
l. Moral and exemplary damages;
m. Attorney's fees of at least ten percent of the
judgment award;
n. Other reliefs, like suspending and/or cancelling
the license to recruit of AIBC and the
accreditation of B & R issued by POEA;
o. Penalty for violations of Article 34 (prohibited
practices), not excluding reportorial requirements
thereof.
Eighth: — Whether or not the POEA Administrator erred in not
dismissing POEA Case No. (L) 86-65-460 on the ground of
multiplicity of suits (G.R. Nos. 104911-14, Rollo, pp. 25-29, 51-55).
Anent the first issue, NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on
Evidence governing the pleading and proof of a foreign law and admitted in evidence a
simple copy of the Bahrain's Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector). NLRC invoked Article 221 of the Labor Code of the Philippines, vesting on the
Commission ample discretion to use every and all reasonable means to ascertain the facts
in each case without regard to the technicalities of law or procedure. NLRC agreed with
the POEA Administrator that the Amiri Decree No. 23, being more favorable and
beneficial to the workers, should form part of the overseas employment contract of the
complainants.
NLRC, however, held that the Amiri Decree No. 23 applied only to the claimants, who
worked in Bahrain, and set aside awards of the POEA Administrator in favor of the
claimants, who worked elsewhere.
On the second issue, NLRC ruled that the prescriptive period for the filing of the claims of
the complainants was three years, as provided in Article 291 of the Labor Code of the
Philippines, and not ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.
On the third issue, NLRC agreed with the POEA Administrator that the labor cases cannot
be treated as a class suit for the simple reason that not all the complainants worked in
Bahrain and therefore, the subject matter of the action, the claims arising from the Bahrain
law, is not of common or general interest to all the complainants.
On the fourth issue, NLRC found at least three infractions of the cardinal rules of
administrative due process: namely, (1) the failure of the POEA Administrator to consider
the evidence presented by AIBC and BRII; (2) some findings of fact were not supported
by substantial evidence; and (3) some of the evidence upon which the decision was based
were not disclosed to AIBC and BRII during the hearing.
On the fifth issue, NLRC sustained the ruling of the POEA Administrator that BRII and
AIBC are solidarily liable for the claims of the complainants and held that BRII was the
actual employer of the complainants, or at the very least, the indirect employer, with AIBC
as the labor contractor.
NLRC also held that jurisdiction over BRII was acquired by the POEA Administrator
through the summons served on AIBC, its local agent.
On the sixth issue, NLRC held that the POEA Administrator was correct in denying the
Motion to Declare AIBC in default.
On the seventh issue, which involved other money claims not based on the Amiri Decree
No. 23, NLRC ruled:
(1) that the POEA Administrator has no jurisdiction over the claims
for refund of the SSS premiums and refund of withholding taxes and
the claimants should file their claims for said refund with the
appropriate government agencies;
(2) the claimants failed to establish that they are entitled to the claims
which are not based on the overseas employment contracts nor the
Amiri Decree No. 23 of 1976;
34
(3) that the POEA Administrator has no jurisdiction over claims for
moral and exemplary damages and nonetheless, the basis for granting
said damages was not established;
(4) that the claims for salaries corresponding to the unexpired portion
of their contract may be allowed if filed within the three-year
prescriptive period;
(5) that the allegation that complainants were prematurely repatriated
prior to the expiration of their overseas contract was not established;
and
(6) that the POEA Administrator has no jurisdiction over the
complaint for the suspension or cancellation of the AIBC's recruitment
license and the cancellation of the accreditation of BRII.
NLRC passed sub silencio the last issue, the claim that POEA Case No. (L) 86-65-460
should have been dismissed on the ground that the claimants in said case were also
claimants in POEA Case No. (L) 84-06-555. Instead of dismissing POEA Case No. (L)
86-65-460, the POEA just resolved the corresponding claims in POEA Case No. (L) 84-
06-555. In other words, the POEA did not pass upon the same claims twice.
V
G.R. No. 104776
Claimants in G.R. No. 104776 based their petition for certiorari on the following grounds:
(1) that they were deprived by NLRC and the POEA of their right to a
speedy disposition of their cases as guaranteed by Section 16, Article
III of the 1987 Constitution. The POEA Administrator allowed private
respondents to file their answers in two years (on June 19, 1987) after
the filing of the original complaint (on April 2, 1985) and NLRC, in
total disregard of its own rules, affirmed the action of the POEA
Administrator;
(2) that NLRC and the POEA Administrator should have declared
AIBC and BRII in default and should have rendered summary
judgment on the basis of the pleadings and evidence submitted by
claimants;
(3) the NLRC and POEA Administrator erred in not holding that the
labor cases filed by AIBC and BRII cannot be considered a class suit;
 (4) that the prescriptive period for the filing of the claims is ten years;
and
(5) that NLRC and the POEA Administrator should have dismissed
POEA Case No. L-86-05-460, the case filed by Atty. Florante de
Castro (Rollo, pp. 31-40).
AIBC and BRII, commenting on the petition in G.R. No. 104776, argued:
(1) that they were not responsible for the delay in the disposition of
the labor cases, considering the great difficulty of getting all the
records of the more than 1,500 claimants, the piece-meal filing of the
complaints and the addition of hundreds of new claimants by
petitioners;
(2) that considering the number of complaints and claimants, it was
impossible to prepare the answers within the ten-day period provided
in the NLRC Rules, that when the motion to declare AIBC in default
was filed on July 19, 1987, said party had already filed its answer, and
that considering the staggering amount of the claims (more than
US$50,000,000.00) and the complicated issues raised by the parties,
the ten-day rule to answer was not fair and reasonable;
(3) that the claimants failed to refute NLRC's finding that
there was no common or general interest in the subject matter of the
controversy — which was the applicability of the Amiri Decree No.
23. Likewise, the nature of the claims varied, some being based on
salaries pertaining to the unexpired portion of the contracts while
others being for pure money claims. Each claimant demanded separate
claims peculiar only to himself and depending upon the particular
circumstances obtaining in his case;
(4) that the prescriptive period for filing the claims is that prescribed
by Article 291 of the Labor Code of the Philippines (three years) and
not the one prescribed by Article 1144 of the Civil Code of the
Philippines (ten years); and
(5) that they are not concerned with the issue of whether POEA Case
No. L-86-05-460 should be dismissed, this being a private quarrel
between the two labor lawyers (Rollo, pp. 292-305).
Attorney's Lien
On November 12, 1992, Atty. Gerardo A. del Mundo moved to strike out the joint
manifestations and motions of AIBC and BRII dated September 2 and 11, 1992, claiming
35
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).
BRII and AIBC, in their Comment, reiterated their contention in G.R. No. 104776 that the
prescriptive period in the Labor Code of the Philippines, a special law, prevails over that
provided in the Civil Code of the Philippines, a general law.
As to the memorandum of the Ministry of Labor of Bahrain on the method of computing
the overtime pay, BRII and AIBC claimed that they were not bound by what appeared
therein, because such memorandum was proposed by a subordinate Bahrain official and
there was no showing that it was approved by the Bahrain Minister of Labor. Likewise,
they claimed that the averaging method was discussed in the course of the negotiation for
the amicable settlement of the dispute and any offer made by a party therein could not be
used as an admission by him (Rollo, pp. 228-236).
G.R. Nos. 105029-32
In G.R. Nos. 105029-32, BRII and AIBC claim that NLRC gravely abused its discretion
when it: (1) enforced the provisions of the Amiri Decree No. 23 of 1976 and not the terms
of the employment contracts; (2) granted claims for holiday, overtime and leave indemnity
pay and other benefits, on evidence admitted in contravention of petitioner's constitutional
right to due process; and (3) ordered the POEA Administrator to hold new hearings for the
683 claimants whose claims had been dismissed for lack of proof by the POEA
Administrator or NLRC itself. Lastly, they allege that assuming that the Amiri Decree No.
23 of 1976 was applicable, NLRC erred when it did not apply the one-year prescription
provided in said law (Rollo, pp. 29-30).
VI
G.R. No. 104776; G.R. Nos. 104911-14; G.R. Nos. 105029-32
All the petitions raise the common issue of prescription although they disagreed as to the
time that should be embraced within the prescriptive period.
To the POEA Administrator, the prescriptive period was ten years, applying Article 1144
of the Civil Code of the Philippines. NLRC believed otherwise, fixing the prescriptive
period at three years as provided in Article 291 of the Labor Code of the Philippines.
The claimants in G.R. No. 104776 and G.R. Nos. 104911-14, invoking different grounds,
insisted that NLRC erred in ruling that the prescriptive period applicable to the claims was
three years, instead of ten years, as found by the POEA Administrator.
The Solicitor General expressed his personal view that the prescriptive period was one
year as prescribed by the Amiri Decree No. 23 of 1976 but he deferred to the ruling of
NLRC that Article 291 of the Labor Code of the Philippines was the operative law.
The POEA Administrator held the view that:
These money claims (under Article 291 of the Labor Code) refer to
those arising from the employer's violation of the employee's right as
provided by the Labor Code.
36
In the instant case, what the respondents violated are not the rights of
the workers as provided by the Labor Code, but the provisions of the
Amiri Decree No. 23 issued in Bahrain, which ipso facto amended the
worker's contracts of employment. Respondents consciously failed to
conform to these provisions which specifically provide for the
increase of the worker's rate. It was only after June 30, 1983, four
months after the brown builders brought a suit against B & R in
Bahrain for this same claim, when respondent AIBC's contracts have
undergone amendments in Bahrain for the new hires/renewals
(Respondent's Exhibit 7).
Hence, premises considered, the applicable law of prescription to this
instant case is Article 1144 of the Civil Code of the Philippines, which
provides:
Art. 1144. The following actions may be brought
within ten years from the time the cause of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
Thus, herein money claims of the complainants against the
respondents shall prescribe in ten years from August 16, 1976.
Inasmuch as all claims were filed within the ten-year prescriptive
period, no claim suffered the infirmity of being prescribed (G.R. No.
104776, Rollo, 89-90).
In overruling the POEA Administrator, and holding that the prescriptive period is three
years as provided in Article 291 of the Labor Code of the Philippines, the NLRC argued as
follows:
The Labor Code provides that "all money claims arising from
employer-employee relations . . . shall be filed within three years from
the time the cause of action accrued; otherwise they shall be forever
barred" (Art. 291, Labor Code, as amended). This three-year
prescriptive period shall be the one applied here and which should be
reckoned from the date of repatriation of each individual complainant,
considering the fact that the case is having (sic) filed in this country.
We do not agree with the POEA Administrator that this three-year
prescriptive period applies only to money claims specifically
recoverable under the Philippine Labor Code. Article 291 gives no
such indication. Likewise, We can not consider complainants' cause/s
of action to have accrued from a violation of their employment
 contracts. There was no violation; the claims arise from the benefits of
the law of the country where they worked. (G.R. No. 104776, Rollo,
pp.
90-91).
Anent the applicability of the one-year prescriptive period as provided by the Amiri
Decree No. 23 of 1976, NLRC opined that the applicability of said law was one of
characterization, i.e., whether to characterize the foreign law on prescription or statute of
limitation as "substantive" or "procedural." NLRC cited the decision in Bournias v.
Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955], where the issue was the
applicability of the Panama Labor Code in a case filed in the State of New York for claims
arising from said Code. In said case, the claims would have prescribed under the
Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit
Court of Appeals held that the Panamanian Law was procedural as it was not "specifically
intended to be substantive," hence, the prescriptive period provided in the law of the forum
should apply. The Court observed:
. . . And where, as here, we are dealing with a statute of limitations of
a foreign country, and it is not clear on the face of the statute that its
purpose was to limit the enforceability, outside as well as within the
foreign country concerned, of the substantive rights to which the
statute pertains, we think that as a yardstick for determining whether
that was the purpose this test is the most satisfactory one. It does not
lead American courts into the necessity of examining into the
unfamiliar peculiarities and refinements of different foreign legal
systems. . .
The court further noted:
xxx xxx xxx
Applying that test here it appears to us that the libelant is entitled to
succeed, for the respondents have failed to satisfy us that the
Panamanian period of limitation in question was specifically aimed
against the particular rights which the libelant seeks to enforce. The
Panama Labor Code is a statute having broad objectives, viz: "The
present Code regulates the relations between capital and labor, placing
them on a basis of social justice, so that, without injuring any of the
parties, there may be guaranteed for labor the necessary conditions for
a normal life and to capital an equitable return to its investment." In
pursuance of these objectives the Code gives laborers various rights
against their employers. Article 623 establishes the period of
limitation for all such rights, except certain ones which are
enumerated in Article 621. And there is nothing in the record to
indicate that the Panamanian legislature gave special consideration to
37
the impact of Article 623 upon the particular rights sought to be
enforced here, as distinguished from the other rights to which that
Article is also applicable. Were we confronted with the question of
whether the limitation period of Article 621 (which carves out
particular rights to be governed by a shorter limitation period) is to be
regarded as "substantive" or "procedural" under the rule of "specifity"
we might have a different case; but here on the surface of things we
appear to be dealing with a "broad," and not a "specific," statute of
limitations (G.R. No. 104776, Rollo, pp.
92-94).
Claimants in G.R. Nos. 104911-14 are of the view that Article 291 of the Labor Code of
the Philippines, which was applied by NLRC, refers only to claims "arising from the
employer's violation of the employee's right as provided by the Labor Code." They assert
that their claims are based on the violation of their employment contracts, as amended by
the Amiri Decree No. 23 of 1976 and therefore the claims may be brought within ten years
as provided by Article 1144 of the Civil Code of the Philippines (Rollo, G.R. Nos.
104911-14, pp.
18-21). To bolster their contention, they cite PALEA v. Philippine Airlines, Inc., 70 SCRA
244 (1976).
AIBC and BRII, insisting that the actions on the claims have prescribed under the Amiri
Decree No. 23 of 1976, argue that there is in force in the Philippines a "borrowing law,"
which is Section 48 of the Code of Civil Procedure and that where such kind of law exists,
it takes precedence over the common-law conflicts rule (G.R. No. 104776, Rollo, pp. 45-
46).
First to be determined is whether it is the Bahrain law on prescription of action based on
the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the
governing law.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
A claim arising out of a contract of employment shall not be
actionable after the lapse of one year from the date of the expiry of the
contract. (G.R. Nos. 105029-31, Rollo, p. 226).
As a general rule, a foreign procedural law will not be applied in the forum. Procedural
matters, such as service of process, joinder of actions, period and requisites for appeal, and
so forth, are governed by the laws of the forum. This is true even if the action is based
upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga,
Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may
be viewed either as procedural or substantive, depending on the characterization given
such a law.
Thus in Bournias v. Atlantic Maritime Company, supra, the American court applied the
statute of limitations of New York, instead of the Panamanian law, after finding that there
was no showing that the Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to give way to the law of
the forum on prescription of actions.
However, the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum has a "borrowing statute." Said statute has the
practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws 152-153 [1938]). A "borrowing statute" directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law
(Siegel, Conflicts, 183 [1975]). While there are several kinds of "borrowing statutes," one
form provides that an action barred by the laws of the place where it accrued, will not be
enforced in the forum even though the local statute has not run against it (Goodrich and
Scoles, Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of
this kind. Said Section provides:
If by the laws of the state or country where the cause of action arose,
the action is barred, it is also barred in the Philippines Islands.
Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article
2270 of said Code repealed only those provisions of the Code of Civil Procedures as to
which were inconsistent with it. There is no provision in the Civil Code of the Philippines,
which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure
(Paras, Philippine Conflict of Laws 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio
vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri
Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum's public
policy (Canadian Northern Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed.
713 [1920]). To enforce the one-year prescriptive period of the Amiri Decree No. 23 of
1976 as regards the claims in question would contravene the public policy on the
protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:
The state shall promote social justice in all phases of national
development. (Sec. 10).
38
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
The case of Philippine Air Lines Employees Association v. Philippine Air Lines, Inc., 70
SCRA 244 (1976) invoked by the claimants in G.R. Nos. 104911-14 is inapplicable to the
cases at bench (Rollo, p. 21). The said case involved the correct computation of overtime
pay as provided in the collective bargaining agreements and not the Eight-Hour Labor
Law.
As noted by the Court: "That is precisely why petitioners did not make any reference as to
the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA
No. 494) and instead insisted that work computation provided in the collective bargaining
agreements between the parties be observed. Since the claim for pay differentials is
primarily anchored on the written contracts between the litigants, the ten-year prescriptive
period provided by Art. 1144(1) of the New Civil Code should govern."
Section 7-a of the Eight-Hour Labor Law (CA No. 444 as amended by R.A. No. 19933)
provides:
Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued
otherwise such action shall be forever barred, . . . .
The court further explained:
The three-year prescriptive period fixed in the Eight-Hour Labor Law
(CA No. 444 as amended) will apply, if the claim for differentials for
overtime work is solely based on said law, and not on a collective
bargaining agreement or any other contract. In the instant case, the
claim for overtime compensation is not so much because of
Commonwealth Act No. 444, as amended but because the claim is
demandable right of the employees, by reason of the above-mentioned
collective bargaining agreement.
Section 7-a of the Eight-Hour Labor Law provides the prescriptive period for filing
"actions to enforce any cause of action under said law." On the other hand, Article 291 of
the Labor Code of the Philippines provides the prescriptive period for filing "money
claims arising from employer-employee relations." The claims in the cases at bench all
arose from the employer-employee relations, which is broader in scope than claims arising
from a specific law or from the collective bargaining agreement.
The contention of the POEA Administrator, that the three-year prescriptive period under
Article 291 of the Labor Code of the Philippines applies only to money claims specifically
recoverable under said Code, does not find support in the plain language of the provision.
Neither is the contention of the claimants in G.R. Nos. 104911-14 that said Article refers
only to claims "arising from the employer's violation of the employee's right," as provided
by the Labor Code supported by the facial reading of the provision.
VII
G.R. No. 104776
A. As to the first two grounds for the petition in G.R. No. 104776, claimants aver: (1) that
while their complaints were filed on June 6, 1984 with POEA, the case was decided only
on January 30, 1989, a clear denial of their right to a speedy disposition of the case; and
(2) that NLRC and the POEA Administrator should have declared AIBC and BRII in
39
default (Rollo, pp.
31-35).
Claimants invoke a new provision incorporated in the 1987 Constitution, which provides:
Sec. 16. All persons shall have the right to a speedy disposition of
their cases before all judicial, quasi-judicial, or administrative bodies.
It is true that the constitutional right to "a speedy disposition of cases" is not limited to the
accused in criminal proceedings but extends to all parties in all cases, including civil and
administrative cases, and in all proceedings, including judicial and quasi-judicial hearings.
Hence, under the Constitution, any party to a case may demand expeditious action on all
officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), "speedy disposition
of cases" is a relative term. Just like the constitutional guarantee of "speedy trial" accorded
to the accused in all criminal proceedings, "speedy disposition of cases" is a flexible
concept. It is consistent with delays and depends upon the circumstances of each case.
What the Constitution prohibits are unreasonable, arbitrary and oppressive delays which
render rights nugatory.
Caballero laid down the factors that may be taken into consideration in determining
whether or not the right to a "speedy disposition of cases" has been violated, thus:
In the determination of whether or not the right to a "speedy trial" has
been violated, certain factors may be considered and balanced against
each other. These are length of delay, reason for the delay, assertion of
the right or failure to assert it, and prejudice caused by the delay. The
same factors may also be considered in answering judicial inquiry
whether or not a person officially charged with the administration of
justice has violated the speedy disposition of cases.
Likewise, in Gonzales v. Sandiganbayan, 199 SCRA 298, (1991), we held:
It must be here emphasized that the right to a speedy disposition of a
case, like the right to speedy trial, is deemed violated only when the
proceeding is attended by vexatious, capricious, and oppressive
delays; or when unjustified postponements of the trial are asked for
and secured, or when without cause or justified motive a long period
of time is allowed to elapse without the party having his case tried.
Since July 25, 1984 or a month after AIBC and BRII were served with a copy of the
amended complaint, claimants had been asking that AIBC and BRII be declared in default
for failure to file their answers within the ten-day period provided in Section 1, Rule III of
Book VI of the Rules and Regulations of the POEA. At that time, there was a pending
motion of AIBC and BRII to strike out of the records the amended complaint and the
"Compliance" of claimants to the order of the POEA, requiring them to submit a bill of
particulars.
The cases at bench are not of the run-of-the-mill variety, such that their final disposition in
the administrative level after seven years from their inception, cannot be said to be
attended by unreasonable, arbitrary and oppressive delays as to violate the constitutional
rights to a speedy disposition of the cases of complainants.
The amended complaint filed on June 6, 1984 involved a total of 1,767 claimants. Said
complaint had undergone several amendments, the first being on April 3, 1985.
The claimants were hired on various dates from 1975 to 1983. They were deployed in
different areas, one group in and the other groups outside of, Bahrain. The monetary
claims totalling more than US$65 million according to Atty. Del Mundo, included:
1. Unexpired portion of contract;
2. Interest earnings of Travel and Fund;
3. Retirement and Savings Plan benefit;
4. War Zone bonus or premium pay of at least 100% of basic pay;
5. Area Differential pay;
6. Accrued Interest of all the unpaid benefits;
7. Salary differential pay;
8. Wage Differential pay;
9. Refund of SSS premiums not remitted to Social Security System;
10. Refund of Withholding Tax not remitted to Bureau of Internal
Revenue (B.I.R.);
11. Fringe Benefits under Brown & Root's "A Summary of Employees
Benefits consisting of 43 pages (Annex "Q" of Amended Complaint);
12. Moral and Exemplary Damages;
13. Attorney's fees of at least ten percent of amounts;
40
14. Other reliefs, like suspending and/or cancelling the license to
recruit of AIBC and issued by the POEA; and
15. Penalty for violation of Article 34 (Prohibited practices) not
excluding reportorial requirements thereof (NLRC Resolution,
September 2, 1991, pp. 18-19; G.R. No. 104776, Rollo, pp. 73-74).
Inasmuch as the complaint did not allege with sufficient definiteness and clarity of some
facts, the claimants were ordered to comply with the motion of AIBC for a bill of
particulars. When claimants filed their "Compliance and Manifestation," AIBC moved to
strike out the complaint from the records for failure of claimants to submit a proper bill of
particulars. While the POEA Administrator denied the motion to strike out the complaint,
he ordered the claimants "to correct the deficiencies" pointed out by AIBC.
Before an intelligent answer could be filed in response to the complaint, the records of
employment of the more than 1,700 claimants had to be retrieved from various countries
in the Middle East. Some of the records dated as far back as 1975.
The hearings on the merits of the claims before the POEA Administrator were interrupted
several times by the various appeals, first to NLRC and then to the Supreme Court.
Aside from the inclusion of additional claimants, two new cases were filed against AIBC
and BRII on October 10, 1985 (POEA Cases Nos.
L-85-10-777 and L-85-10-779). Another complaint was filed on May 29, 1986 (POEA
Case No. L-86-05-460). NLRC, in exasperation, noted that the exact number of claimants
had never been completely established (Resolution, Sept. 2, 1991, G.R. No. 104776,
Rollo, p. 57). All the three new cases were consolidated with POEA Case No. L-84-06-
555.
NLRC blamed the parties and their lawyers for the delay in terminating the proceedings,
thus:
These cases could have been spared the long and arduous route
towards resolution had the parties and their counsel been more
interested in pursuing the truth and the merits of the claims rather than
exhibiting a fanatical reliance on technicalities. Parties and counsel
have made these cases a litigation of emotion. The intransigence of
parties and counsel is remarkable. As late as last month, this
Commission made a last and final attempt to bring the counsel of all
the parties (this Commission issued a special order directing
respondent Brown & Root's resident agent/s to appear) to come to a
more conciliatory stance. Even this failed (Rollo,
p. 58).
The squabble between the lawyers of claimants added to the delay in the disposition of the
cases, to the lament of NLRC, which complained:
It is very evident from the records that the protagonists in these
consolidated cases appear to be not only the individual complainants,
on the one hand, and AIBC and Brown & Root, on the other hand. The
two lawyers for the complainants, Atty. Gerardo Del Mundo and Atty.
Florante De Castro, have yet to settle the right of representation, each
one persistently claiming to appear in behalf of most of the
complainants. As a result, there are two appeals by the complainants.
Attempts by this Commission to resolve counsels' conflicting claims
of their respective authority to represent the complainants prove futile.
The bickerings by these two counsels are reflected in their pleadings.
In the charges and countercharges of falsification of documents and
signatures, and in the disbarment proceedings by one against the other.
All these have, to a large extent, abetted in confounding the issues
raised in these cases, jumble the presentation of evidence, and even
derailed the prospects of an amicable settlement. It would not be far-
fetched to imagine that both counsel, unwittingly, perhaps, painted a
rainbow for the complainants, with the proverbial pot of gold at its end
containing more than US$100 million, the aggregate of the claims in
these cases. It is, likewise, not improbable that their misplaced zeal
and exuberance caused them to throw all caution to the wind in the
matter of elementary rules of procedure and evidence (Rollo, pp. 58-
59).
Adding to the confusion in the proceedings before NLRC, is the listing of some of the
complainants in both petitions filed by the two lawyers. As noted by NLRC, "the problem
created by this situation is that if one of the two petitions is dismissed, then the parties and
the public respondents would not know which claim of which petitioner was dismissed
and which was not."
B. Claimants insist that all their claims could properly be consolidated in a "class suit"
because "all the named complainants have similar money claims and similar rights sought
irrespective of whether they worked in Bahrain, United Arab Emirates or in Abu Dhabi,
Libya or in any part of the Middle East" (Rollo, pp. 35-38).
A class suit is proper where the subject matter of the controversy is one of common or
general interest to many and the parties are so numerous that it is impracticable to bring
them all before the court (Revised Rules of Court, Rule 3, Sec. 12).
While all the claims are for benefits granted under the Bahrain Law, many of the claimants
worked outside Bahrain. Some of the claimants were deployed in Indonesia and Malaysia
under different terms and conditions of employment.
41
NLRC and the POEA Administrator are correct in their stance that inasmuch as the first
requirement of a class suit is not present (common or general interest based on the Amiri
Decree of the State of Bahrain), it is only logical that only those who worked in Bahrain
shall be entitled to file their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the
same (for employee's benefits), there is no common question of law or fact. While some
claims are based on the Amiri Law of Bahrain, many of the claimants never worked in that
country, but were deployed elsewhere. Thus, each claimant is interested only in his own
demand and not in the claims of the other employees of defendants. The named claimants
have a special or particular interest in specific benefits completely different from the
benefits in which the other named claimants and those included as members of a "class"
are claiming (Berses v. Villanueva, 25 Phil. 473 [1913]). It appears that each claimant is
only interested in collecting his own claims. A claimants has no concern in protecting the
interests of the other claimants as shown by the fact, that hundreds of them have
abandoned their co-claimants and have entered into separate compromise settlements of
their respective claims. A principle basic to the concept of "class suit" is that plaintiffs
brought on the record must fairly represent and protect the interests of the others
(Dimayuga v. Court of Industrial Relations, 101 Phil. 590 [1957]). For this matter, the
claimants who worked in Bahrain can not be allowed to sue in a class suit in a judicial
proceeding. The most that can be accorded to them under the Rules of Court is to be
allowed to join as plaintiffs in one complaint (Revised Rules of Court, Rule 3, Sec. 6).
The Court is extra-cautious in allowing class suits because they are the exceptions to the
condition sine qua non, requiring the joinder of all indispensable parties.
In an improperly instituted class suit, there would be no problem if the decision secured is
favorable to the plaintiffs. The problem arises when the decision is adverse to them, in
which case the others who were impleaded by their self-appointed representatives, would
surely claim denial of due process.
C. The claimants in G.R. No. 104776 also urged that the POEA Administrator and NLRC
should have declared Atty. Florante De Castro guilty of "forum shopping, ambulance
chasing activities, falsification, duplicity and other unprofessional activities" and his
appearances as counsel for some of the claimants as illegal (Rollo, pp. 38-40).
The Anti-Forum Shopping Rule (Revised Circular No. 28-91) is intended to put a stop to
the practice of some parties of filing multiple petitions and complaints involving the same
issues, with the result that the courts or agencies have to resolve the same issues. Said
Rule, however, applies only to petitions filed with the Supreme Court and the Court of
Appeals. It is entitled "Additional Requirements For Petitions Filed with the Supreme
Court and the Court of Appeals To Prevent Forum Shopping or Multiple Filing of
Petitioners and Complainants." The first sentence of the circular expressly states that said
circular applies to an governs the filing of petitions in the Supreme Court and the Court of
Appeals.
While Administrative Circular No. 04-94 extended the application of the anti-forum
shopping rule to the lower courts and administrative agencies, said circular took effect
only on April 1, 1994.
POEA and NLRC could not have entertained the complaint for unethical conduct against
Atty. De Castro because NLRC and POEA have no jurisdiction to investigate charges of
unethical conduct of lawyers.
Attorney's Lien
The "Notice and Claim to Enforce Attorney's Lien" dated December 14, 1992 was filed by
Atty. Gerardo A. Del Mundo to protect his claim for attorney's fees for legal services
rendered in favor of the claimants (G.R. No. 104776, Rollo, pp. 841-844).
A statement of a claim for a charging lien shall be filed with the court or administrative
agency which renders and executes the money judgment secured by the lawyer for his
clients. The lawyer shall cause written notice thereof to be delivered to his clients and to
the adverse party (Revised Rules of Court, Rule 138, Sec. 37). The statement of the claim
for the charging lien of Atty. Del Mundo should have been filed with the administrative
agency that rendered and executed the judgment.
Contempt of Court
The complaint of Atty. Gerardo A. Del Mundo to cite Atty. Florante De Castro and Atty.
Katz Tierra for violation of the Code of Professional Responsibility should be filed in a
separate and appropriate proceeding.
G.R. No. 104911-14
Claimants charge NLRC with grave abuse of discretion in not accepting their formula of
"Three Hours Average Daily Overtime" in computing the overtime payments. They claim
that it was BRII itself which proposed the formula during the negotiations for the
settlement of their claims in Bahrain and therefore it is in estoppel to disclaim said offer
(Rollo, pp. 21-22).
Claimants presented a Memorandum of the Ministry of Labor of Bahrain dated April 16,
1983, which in pertinent part states:
After the perusal of the memorandum of the Vice President and the
Area Manager, Middle East, of Brown & Root Co. and the Summary
of the compensation offered by the Company to the employees in
respect of the difference of pay of the wages of the overtime and the
difference of vacation leave and the perusal of the documents attached
thereto i.e., minutes of the meetings between the Representative of the
employees and the management of the Company, the complaint filed
42
by the employees on 14/2/83 where they have claimed as hereinabove
stated, sample of the Service Contract executed between one of the
employees and the company through its agent in (sic) Philippines,
Asia International Builders Corporation where it has been provided
for 48 hours of work per week and an annual leave of 12 days and an
overtime wage of 1 & 1/4 of the normal hourly wage.
xxx xxx xxx
The Company in its computation reached the following averages:
A. 1. The average duration of the actual service of the employee is 35
months for the Philippino (sic) employees . . . .
2. The average wage per hour for the Philippino (sic) employee is
US$2.69 . . . .
3. The average hours for the overtime is 3 hours plus in all public
holidays and weekends.
4. Payment of US$8.72 per months (sic) of service as compensation
for the difference of the wages of the overtime done for each
Philippino (sic) employee . . . (Rollo, p.22).
BRII and AIBC countered: (1) that the Memorandum was not prepared by them but by a
subordinate official in the Bahrain Department of Labor; (2) that there was no showing
that the Bahrain Minister of Labor had approved said memorandum; and (3) that the offer
was made in the course of the negotiation for an amicable settlement of the claims and
therefore it was not admissible in evidence to prove that anything is due to the claimants.
While said document was presented to the POEA without observing the rule on presenting
official documents of a foreign government as provided in Section 24, Rule 132 of the
1989 Revised Rules on Evidence, it can be admitted in evidence in proceedings before an
administrative body. The opposing parties have a copy of the said memorandum, and they
could easily verify its authenticity and accuracy.
The admissibility of the offer of compromise made by BRII as contained in the
memorandum is another matter. Under Section 27, Rule 130 of the 1989 Revised Rules on
Evidence, an offer to settle a claim is not an admission that anything is due.
Said Rule provides:
 Offer of compromise not admissible. — In civil cases, an offer of
compromise is not an admission of any liability, and is not admissible
in evidence against the offeror.
This Rule is not only a rule of procedure to avoid the cluttering of the record with
unwanted evidence but a statement of public policy. There is great public interest in
having the protagonists settle their differences amicable before these ripen into litigation.
Every effort must be taken to encourage them to arrive at a settlement. The submission of
offers and counter-offers in the negotiation table is a step in the right direction. But to bind
a party to his offers, as what claimants would make this Court do, would defeat the
salutary purpose of the Rule.
G.R. Nos. 105029-32
A. NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits
than those stipulated in the overseas-employment contracts of the claimants. It was of the
belief that "where the laws of the host country are more favorable and beneficial to the
workers, then the laws of the host country shall form part of the overseas employment
contract." It quoted with approval the observation of the POEA Administrator that ". . . in
labor proceedings, all doubts in the implementation of the provisions of the Labor Code
and its implementing regulations shall be resolved in favor of labor" (Rollo, pp. 90-94).
AIBC and BRII claim that NLRC acted capriciously and whimsically when it refused to
enforce the overseas-employment contracts, which became the law of the parties. They
contend that the principle that a law is deemed to be a part of a contract applies only to
provisions of Philippine law in relation to contracts executed in the Philippines.
The overseas-employment contracts, which were prepared by AIBC and BRII themselves,
provided that the laws of the host country became applicable to said contracts if they offer
terms and conditions more favorable that those stipulated therein. It was stipulated in said
contracts that:
The Employee agrees that while in the employ of the Employer, he
will not engage in any other business or occupation, nor seek
employment with anyone other than the Employer; that he shall devote
his entire time and attention and his best energies, and abilities to the
performance of such duties as may be assigned to him by the
Employer; that he shall at all times be subject to the direction and
control of the Employer; and that the benefits provided to Employee
hereunder are substituted for and in lieu of all other benefits provided
by any applicable law, provided of course, that total remuneration and
benefits do not fall below that of the host country regulation or
custom, it being understood that should applicable laws establish that
fringe benefits, or other such benefits additional to the compensation
herein agreed cannot be waived, Employee agrees that such
43
compensation will be adjusted downward so that the total
compensation hereunder, plus the non-waivable benefits shall be
equivalent to the compensation herein agreed (Rollo, pp. 352-353).
The overseas-employment contracts could have been drafted more felicitously. While a
part thereof provides that the compensation to the employee may be "adjusted downward
so that the total computation (thereunder) plus the non-waivable benefits shall be
equivalent to the compensation" therein agreed, another part of the same provision
categorically states "that total remuneration and benefits do not fall below that of the host
country regulation and custom."
Any ambiguity in the overseas-employment contracts should be interpreted against AIBC
and BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-
Union, 93 SCRA 257 [1979]).
Article 1377 of the Civil Code of the Philippines provides:
The interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity.
Said rule of interpretation is applicable to contracts of adhesion where there is already a
prepared form containing the stipulations of the employment contract and the employees
merely "take it or leave it." The presumption is that there was an imposition by one party
against the other and that the employees signed the contracts out of necessity that reduced
their bargaining power (Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).
Applying the said legal precepts, we read the overseas-employment contracts in question
as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.
The parties to a contract may select the law by which it is to be governed (Cheshire,
Private International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a
"system" to regulate the relations of the parties, including questions of their capacity to
enter into the contract, the formalities to be observed by them, matters of performance, and
so forth (16 Am Jur 2d,
150-161).
Instead of adopting the entire mass of the foreign law, the parties may just agree that
specific provisions of a foreign statute shall be deemed incorporated into their contract "as
a set of terms." By such reference to the provisions of the foreign law, the contract does
not become a foreign contract to be governed by the foreign law. The said law does not
operate as a statute but as a set of contractual terms deemed written in the contract (Anton,
Private International Law, 197 [1967]; Dicey and Morris, The Conflict of Laws, 702-703,
[8th ed.]).
A basic policy of contract is to protect the expectation of the parties (Reese, Choice of
Law in Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]).
Such party expectation is protected by giving effect to the parties' own choice of the
applicable law (Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice
of law must, however, bear some relationship to the parties or their transaction (Scoles and
Hayes, Conflict of Law 644-647 [1982]). There is no question that the contracts sought to
be enforced by claimants have a direct connection with the Bahrain law because the
services were rendered in that country.
In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the
"Employment Agreement," between Norse Management Co. and the late husband of the
private respondent, expressly provided that in the event of illness or injury to the
employee arising out of and in the course of his employment and not due to his own
misconduct, "compensation shall be paid to employee in accordance with and subject to
the limitation of the Workmen's Compensation Act of the Republic of the Philippines or
the Worker's Insurance Act of registry of the vessel, whichever is greater." Since the laws
of Singapore, the place of registry of the vessel in which the late husband of private
respondent served at the time of his death, granted a better compensation package, we
applied said foreign law in preference to the terms of the contract.
The case of Bagong Filipinas Overseas Corporation v. National Labor Relations
Commission, 135 SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the
facts of the cases at bench. The issue in that case was whether the amount of the death
compensation of a Filipino seaman should be determined under the shipboard employment
contract executed in the Philippines or the Hongkong law. Holding that the shipboard
employment contract was controlling, the court differentiated said case from Norse
Management Co. in that in the latter case there was an express stipulation in the
employment contract that the foreign law would be applicable if it afforded greater
compensation.
B. AIBC and BRII claim that they were denied by NLRC of their right to due process
when said administrative agency granted Friday-pay differential, holiday-pay differential,
annual-leave differential and leave indemnity pay to the claimants listed in Annex B of the
Resolution. At first, NLRC reversed the resolution of the POEA Administrator granting
these benefits on a finding that the POEA Administrator failed to consider the evidence
presented by AIBC and BRII, that some findings of fact of the POEA Administrator were
not supported by the evidence, and that some of the evidence were not disclosed to AIBC
and BRII (Rollo, pp. 35-36; 106-107). But instead of remanding the case to the POEA
Administrator for a new hearing, which means further delay in the termination of the case,
NLRC decided to pass upon the validity of the claims itself. It is this procedure that AIBC
and BRII complain of as being irregular and a "reversible error."
They pointed out that NLRC took into consideration evidence submitted on appeal, the
same evidence which NLRC found to have been "unilaterally submitted by the claimants
and not disclosed to the adverse parties" (Rollo, pp. 37-39).
44
NLRC noted that so many pieces of evidentiary matters were submitted to the POEA
administrator by the claimants after the cases were deemed submitted for resolution and
which were taken cognizance of by the POEA Administrator in resolving the cases. While
AIBC and BRII had no opportunity to refute said evidence of the claimants before the
POEA Administrator, they had all the opportunity to rebut said evidence and to present
their
counter-evidence before NLRC. As a matter of fact, AIBC and BRII themselves were able
to present before NLRC additional evidence which they failed to present before the POEA
Administrator.
Under Article 221 of the Labor Code of the Philippines, NLRC is enjoined to "use every
and all reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process."
In deciding to resolve the validity of certain claims on the basis of the evidence of both
parties submitted before the POEA Administrator and NLRC, the latter considered that it
was not expedient to remand the cases to the POEA Administrator for that would only
prolong the already protracted legal controversies.
Even the Supreme Court has decided appealed cases on the merits instead of remanding
them to the trial court for the reception of evidence, where the same can be readily
determined from the uncontroverted facts on record (Development Bank of the Philippines
v. Intermediate Appellate Court, 190 SCRA 653 [1990]; Pagdonsalan v. National Labor
Relations Commission, 127 SCRA 463 [1984]).
C. AIBC and BRII charge NLRC with grave abuse of discretion when it ordered the
POEA Administrator to hold new hearings for 683 claimants listed in Annex D of the
Resolution dated September 2, 1991 whose claims had been denied by the POEA
Administrator "for lack of proof" and for 69 claimants listed in Annex E of the same
Resolution, whose claims had been found by NLRC itself as not "supported by evidence"
(Rollo, pp. 41-45).
NLRC based its ruling on Article 218(c) of the Labor Code of the Philippines, which
empowers it "[to] conduct investigation for the determination of a question, matter or
controversy, within its jurisdiction, . . . ."
It is the posture of AIBC and BRII that NLRC has no authority under Article 218(c) to
remand a case involving claims which had already been dismissed because such provision
contemplates only situations where there is still a question or controversy to be resolved
(Rollo, pp. 41-42).
A principle well embedded in Administrative Law is that the technical rules of procedure
and evidence do not apply to the proceedings conducted by administrative agencies (First
Asian Transport & Shipping Agency, Inc. v. Ople, 142 SCRA 542 [1986]; Asiaworld
Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]). This principle is enshrined in
Article 221 of the Labor Code of the Philippines and is now the bedrock of proceedings
before NLRC.

Notwithstanding the non-applicability of technical rules of procedure and evidence in

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

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.

45
Renvoi
G.R. No. 172342 July 13, 2009
LWV CONSTRUCTION CORPORATION, Petitioner,
vs.
MARCELO B. DUPO, Respondent.
DECISION
QUISUMBING, J.:
Petitioner LWV Construction Corporation appeals the Decision 1 dated December 6, 2005
of the Court of Appeals in CA-G.R. SP No. 76843 and its Resolution2 dated April 12,
2006, denying the motion for reconsideration. The Court of Appeals had ruled that under
Article 87 of the Saudi Labor and Workmen Law (Saudi Labor Law), respondent Marcelo
Dupo is entitled to a service award or longevity pay amounting to US$12,640.33.
The antecedent facts are as follows:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent as
Civil Structural Superintendent to work in Saudi Arabia for its principal, Mohammad Al-
Mojil Group/Establishment (MMG). On February 26, 1992, respondent signed his first
overseas employment contract, renewable after one year. It was renewed five times on the
following dates: May 10, 1993, November 16, 1994, January 22, 1996, April 14, 1997,
and March 26, 1998. All were fixed-period contracts for one year. The sixth and last
contract stated that respondent’s employment starts upon reporting to work and ends when
he leaves the work site. Respondent left Saudi Arabia on April 30, 1999 and arrived in the
Philippines on May 1, 1999.
On May 28, 1999, respondent informed MMG, through the petitioner, that he needs to
extend his vacation because his son was hospitalized. He also sought a promotion with
salary adjustment.3 In reply, MMG informed respondent that his promotion is subject to
management’s review; that his services are still needed; that he was issued a plane ticket
for his return flight to Saudi Arabia on May 31, 1999; and that his decision regarding his
employment must be made within seven days, otherwise, MMG "will be compelled to
cancel [his] slot."4
On July 6, 1999, respondent resigned. In his letter to MMG, he also stated:
xxxx
46
I am aware that I still have to do a final settlement with the company and hope that during
my more than seven (7) [years] services, as the Saudi Law stated, I am entitled for a long
service award.5 (Emphasis supplied.)
xxxx
According to respondent, when he followed up his claim for long service award on
December 7, 2000, petitioner informed him that MMG did not respond. 6
On December 11, 2000, respondent filed a complaint7 for payment of service award
against petitioner before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch, Cordillera Administrative Region, Baguio City. In support of his
claim, respondent averred in his position paper that:
xxxx
Under the Law of Saudi Arabia, an employee who rendered at least five (5) years in a
company within the jurisdiction of Saudi Arabia, is entitled to the so-called long service
award which is known to others as longevity pay of at least one half month pay for every
year of service. In excess of five years an employee is entitled to one month pay for every
year of service. In both cases inclusive of all benefits and allowances.
This benefit was offered to complainant before he went on vacation, hence, this was
engrained in his mind. He reconstructed the computation of his long service award or
longevity pay and he arrived at the following computation exactly the same with the
amount he was previously offered [which is US$12,640.33].8 (Emphasis supplied.)
xxxx
Respondent said that he did not grab the offer for he intended to return after his vacation.
For its part, petitioner offered payment and prescription as defenses. Petitioner maintained
that MMG "pays its workers their Service Award or Severance Pay every conclusion of
their Labor Contracts pursuant to Article 87 of the [Saudi Labor Law]." Under Article 87,
"payment of the award is at the end or termination of the Labor Contract concluded for a
specific period." Based on the payroll,9 respondent was already paid his service award or
severance pay for his latest (sixth) employment contract.
Petitioner added that under Article 1310 of the Saudi Labor Law, the action to enforce
payment of the service award must be filed within one year from the termination of a labor
contract for a specific period. Respondent’s six contracts ended when he left Saudi Arabia
on the following dates: April 15, 1993, June 8, 1994, December 18, 1995, March 21, 1997,
March 16, 1998 and April 30, 1999. Petitioner concluded that the one-year prescriptive
period had lapsed because respondent filed his complaint on December 11, 2000 or one
year and seven months after his sixth contract ended.11
In his June 18, 2001 Decision,12 the Labor Arbiter ordered petitioner to pay respondent
longevity pay of US$12,640.33 or ₱648,562.69 and attorney’s fees of ₱64,856.27 or a
total of ₱713,418.96.13
The Labor Arbiter ruled that respondent’s seven-year employment with MMG had
sufficiently oriented him on the benefits given to workers; that petitioner was unable to
convincingly refute respondent’s claim that MMG offered him longevity pay before he
went on vacation on May 1, 1999; and that respondent’s claim was not barred by
prescription since his claim on July 6, 1999, made a month after his cause of action
accrued, interrupted the prescriptive period under the Saudi Labor Law until his claim was
categorically denied.
Petitioner appealed. However, the NLRC dismissed the appeal and affirmed the Labor
Arbiter’s decision.14 The NLRC ruled that respondent is entitled to longevity pay which is
different from severance pay.
Aggrieved, petitioner brought the case to the Court of Appeals through a petition for
certiorari under Rule 65 of the Rules of Court. The Court of Appeals denied the petition
and affirmed the NLRC. The Court of Appeals ruled that service award is the same as
longevity pay, and that the severance pay received by respondent cannot be equated with
service award. The dispositive portion of the Court of Appeals decision reads:
WHEREFORE, finding no grave abuse of discretion amounting to lack or in (sic) excess
of jurisdiction on the part of public respondent NLRC, the petition is denied. The NLRC
decision dated November 29, 2002 as well as and (sic) its January 31, 2003 Resolution are
hereby AFFIRMED in toto.
SO ORDERED.15
After its motion for reconsideration was denied, petitioner filed the instant petition raising
the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING
NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION ON THE PART OF PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING
THAT THE SERVICE AWARD OF THE RESPONDENT [HAS] NOT PRESCRIBED
WHEN HIS COMPLAINT WAS FILED ON DECEMBER 11, 2000.
47
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING IN THE CASE AT BAR [ARTICLE 1155 OF THE CIVIL CODE].
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
APPLYING ARTICLE NO. 7 OF THE SAUDI LABOR AND WORKMEN LAW TO
SUPPORT ITS FINDING THAT THE BASIS OF THE SERVICE AWARD IS
LONGEVITY [PAY] OR LENGTH OF SERVICE RENDERED BY AN EMPLOYEE.16
Essentially, the issue is whether the Court of Appeals erred in ruling that respondent is
entitled to a service award or longevity pay of US$12,640.33 under the provisions of the
Saudi Labor Law. Related to this issue are petitioner’s defenses of payment and
prescription.
Petitioner points out that the Labor Arbiter awarded longevity pay although the Saudi
Labor Law grants no such benefit, and the NLRC confused longevity pay and service
award. Petitioner maintains that the benefit granted by Article 87 of the Saudi Labor Law
is service award which was already paid by MMG each time respondent’s contract ended.
Petitioner insists that prescription barred respondent’s claim for service award as the
complaint was filed one year and seven months after the sixth contract ended. Petitioner
alleges that the Court of Appeals erred in ruling that respondent’s July 6, 1999 claim
interrupted the running of the prescriptive period. Such ruling is contrary to Article 13 of
the Saudi Labor Law which provides that no case or claim relating to any of the rights
provided for under said law shall be heard after the lapse of 12 months from the date of the
termination of the contract.
Respondent counters that he is entitled to longevity pay under the provisions of the Saudi
Labor Law and quotes extensively the decision of the Court of Appeals. He points out that
petitioner has not refuted the Labor Arbiter’s finding that MMG offered him longevity pay
of US$12,640.33 before his one-month vacation in the Philippines in 1999. Thus, he
"submits that such offer indeed exists" as he sees no reason for MMG to offer the benefit
if no law grants it.
After a careful study of the case, we are constrained to reverse the Court of Appeals. We
find that respondent’s service award under Article 87 of the Saudi Labor Law has already
been paid. Our computation will show that the severance pay received by respondent was
his service award.
Article 87 clearly grants a service award. It reads:
Article 87
Where the term of a labor contract concluded for a specified period comes to an end or
where the employer cancels a contract of unspecified period, the employer shall pay to the
workman an award for the period of his service to be computed on the basis of half a
month’s pay for each of the first five years and one month’s pay for each of the subsequent
years. The last rate of pay shall be taken as basis for the computation of the award. For
fractions of a year, the workman shall be entitled to an award which is proportionate to his
service period during that year. Furthermore, the workman shall be entitled to the service
award provided for at the beginning of this article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond his
control.17 (Emphasis supplied.)
Respondent, however, has called the benefit other names such as long service award and
longevity pay. On the other hand, petitioner claimed that the service award is the same as
severance pay. Notably, the Labor Arbiter was unable to specify any law to support his
award of longevity pay.18 He anchored the award on his finding that respondent’s
allegations were more credible because his seven-year employment at MMG had
sufficiently oriented him on the benefits given to workers. To the NLRC, respondent is
entitled to service award or longevity pay under Article 87 and that longevity pay is
different from severance pay. The Court of Appeals agreed.
Considering that Article 87 expressly grants a service award, why is it correct to agree
with respondent that service award is the same as longevity pay, and wrong to agree with
petitioner that service award is the same as severance pay? And why would it be correct to
say that service award is severance pay, and wrong to call service award as longevity pay?
We found the answer in the pleadings and evidence presented. Respondent’s position
paper mentioned how his long service award or longevity pay is computed: half-month’s
pay per year of service and one-month’s pay per year after five years of service. Article 87
has the same formula to compute the service award.
The payroll submitted by petitioner showed that respondent received severance pay of
SR2,786 for his sixth employment contract covering the period April 21, 1998 to April 29,
1999.19 The computation below shows that respondent’s severance pay of SR2,786 was
his service award under Article 87.
Service Award = ½ (SR5,438)20 + (9 days/365 days)21 x ½ (SR5,438)
Service Award = SR2,786.04
48
Respondent’s service award for the sixth contract is equivalent only to half-month’s pay
plus the proportionate amount for the additional nine days of service he rendered after one
year. Respondent’s employment contracts expressly stated that his employment ended
upon his departure from work. Each year he departed from work and successively new
contracts were executed before he reported for work anew. His service was not
cumulative. Pertinently, in Brent School, Inc. v. Zamora,22 we said that "a fixed term is an
essential and natural appurtenance" of overseas employment contracts,23 as in this case.
We also said in that case that under American law, "[w]here a contract specifies the period
of its duration, it terminates on the expiration of such period. A contract of employment
for a definite period terminates by its own terms at the end of such period."24 As it is,
Article 72 of the Saudi Labor Law is also of similar import. It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its
term. If both parties continue to enforce the contract, thereafter, it shall be considered
renewed for an unspecified period.25
Regarding respondent’s claim that he was offered US$12,640.33 as longevity pay before
he returned to the Philippines on May 1, 1999, we find that he was not candid on this
particular point. His categorical assertion about the offer being "engrained in his mind"
such that he "reconstructed the computation … and arrived at the … computation exactly
the same with the amount he was previously offered" is not only beyond belief. Such
assertion is also a stark departure from his July 6, 1999 letter to MMG where he could
only express his hope that he was entitled to a long service award and where he never
mentioned the supposed previous offer. Moreover, respondent’s claim that his monthly
compensation is SR10,248.9226 is belied by the payroll which shows that he receives
SR5,438 per month.
We therefore emphasize that such payroll should have prompted the lower tribunals to
examine closely respondent’s computation of his supposed longevity pay before adopting
that computation as their own.
On the matter of prescription, however, we cannot agree with petitioner that respondent’s
action has prescribed under Article 13 of the Saudi Labor Law. What applies is Article
291 of our Labor Code which reads:
ART. 291. 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.
xxxx
In Cadalin v. POEA’s Administrator,27 we held that Article 291 covers all money claims
from employer-employee relationship and is broader in scope than claims arising from a
specific law. It is not limited to money claims recoverable under the Labor Code, but
applies also to claims of overseas contract workers.28 The following ruling in Cadalin v.
POEA’s Administrator is instructive:
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:
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure]
cannot be enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of [Article] 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 x x x. 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.29

"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" x x x.
As a general rule, a foreign procedural law will not be applied in the forum.1avvphi1
Procedural matters, such as service of process, joinder of actions, period and requisites for
appeal, and so forth, are governed by the laws of the forum. This is true even if the action
is based upon a foreign substantive law (Restatement of the Conflict of Laws, Sec. 685;
Salonga, Private International Law, 131 [1979]).
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may
be viewed either as procedural or substantive, depending on the characterization given
such a law.
xxxx
xxxx
Thus, in our considered view, respondent’s complaint was filed well within the three-year
prescriptive period under Article 291 of our Labor Code. This point, however, has already
been mooted by our finding that respondent’s service award had been paid, albeit the
payroll termed such payment as severance pay.
WHEREFORE, the petition is GRANTED. The assailed Decision dated December 6, 2005
and Resolution dated April 12, 2006, of the Court of Appeals in CA-G.R. SP No. 76843,
as well as the Decision dated June 18, 2001 of the Labor Arbiter in NLRC Case No. RAB-
CAR-12-0649-00 and the Decision dated November 29, 2002 and Resolution dated
January 31, 2003 of the NLRC in NLRC CA No. 028994-01 (NLRC RAB-CAR-12-0649-
00) are REVERSED and SET ASIDE. The Complaint of respondent is hereby
DISMISSED.

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 Philippine 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 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.]).

49
Renvoi
G.R. No. L-16749 January 31, 1963
IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E.
CHRISTENSEN, DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased,
Executor and Heir-appellees,
vs.
HELEN CHRISTENSEN GARCIA, oppositor-appellant.
LABRADOR, J.:
This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N.
Cusi, Jr., presiding, in Special Proceeding No. 622 of said court, dated September 14,
1949, approving among things the final accounts of the executor, directing the executor to
reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen Christensen
Garcia as her legacy, and declaring Maria Lucy Christensen entitled to the residue of the
property to be enjoyed during her lifetime, and in case of death without issue, one-half of
said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in accordance with the
provisions of the will of the testator Edward E. Christensen. The will was executed in
Manila on March 5, 1951 and contains the following provisions:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the Philippines
about twenty-eight years ago, and who is now residing at No. 665 Rodger
Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no descendants
except my above named daughter, MARIA LUCY CHRISTENSEN DANEY.
xxx xxx xxx
7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now
married to Eduardo Garcia, about eighteen years of age and who,
notwithstanding the fact that she was baptized Christensen, is not in any way
related to me, nor has she been at any time adopted by me, and who, from all
information I have now resides in Egpit, Digos, Davao, Philippines, the sum of
THREE THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine
Currency the same to be deposited in trust for the said Maria Helen Christensen
with the Davao Branch of the Philippine National Bank, and paid to her at the
rate of One Hundred Pesos (P100.00), Philippine Currency per month until the
principal thereof as well as any interest which may have accrued thereon, is
exhausted..
50
xxx xxx xxx
12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said
MARIA LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing
as aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A.,
all the income from the rest, remainder, and residue of my property and estate,
real, personal and/or mixed, of whatsoever kind or character, and wheresoever
situated, of which I may be possessed at my death and which may have come to
me from any source whatsoever, during her lifetime: ....
It is in accordance with the above-quoted provisions that the executor in his final account
and project of partition ratified the payment of only P3,600 to Helen Christensen Garcia
and proposed that the residue of the estate be transferred to his daughter, Maria Lucy
Christensen.
Opposition to the approval of the project of partition was filed by Helen Christensen
Garcia, insofar as it deprives her (Helen) of her legitime as an acknowledged natural child,
she having been declared by Us in G.R. Nos. L-11483-84 an acknowledged natural child
of the deceased Edward E. Christensen. The legal grounds of opposition are (a) that the
distribution should be governed by the laws of the Philippines, and (b) that said order of
distribution is contrary thereto insofar as it denies to Helen Christensen, one of two
acknowledged natural children, one-half of the estate in full ownership. In amplification of
the above grounds it was alleged that the law that should govern the estate of the deceased
Christensen should not be the internal law of California alone, but the entire law thereof
because several foreign elements are involved, that the forum is the Philippines and even if
the case were decided in California, Section 946 of the California Civil Code, which
requires that the domicile of the decedent should apply, should be applicable. It was also
alleged that Maria Helen Christensen having been declared an acknowledged natural child
of the decedent, she is deemed for all purposes legitimate from the time of her birth.
The court below ruled that as Edward E. Christensen was a citizen of the United States
and of the State of California at the time of his death, the successional rights and intrinsic
validity of the provisions in his will are to be governed by the law of California, in
accordance with which a testator has the right to dispose of his property in the way he
desires, because the right of absolute dominion over his property is sacred and inviolable
(In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117
Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen
Christensen, through counsel, filed various motions for reconsideration, but these were
denied. Hence, this appeal.
The most important assignments of error are as follows:
I
THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE
HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED
NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN
DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE.
II
THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO
RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND
CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW.
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER
INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE,
THE INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE
DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E.
CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES.
IV
THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF
DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE
PHILIPPINE LAWS.
V
THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE
PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF
(1/2) OF THE ESTATE IN FULL OWNERSHIP.
There is no question that Edward E. Christensen was a citizen of the United States and of
the State of California at the time of his death. But there is also no question that at the time
of his death he was domiciled in the Philippines, as witness the following facts admitted
by the executor himself in appellee's brief:
In the proceedings for admission of the will to probate, the facts of record show
that the deceased Edward E. Christensen was born on November 29, 1875 in
New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an appointed
school teacher, was on July 1, 1901, on board the U.S. Army Transport
"Sheridan" with Port of Embarkation as the City of San Francisco, in the State of
California, U.S.A. He stayed in the Philippines until 1904.
51
In December, 1904, Mr. Christensen returned to the United States and stayed
there for the following nine years until 1913, during which time he resided in,
and was teaching school in Sacramento, California.
Mr. Christensen's next arrival in the Philippines was in July of the year 1913.
However, in 1928, he again departed the Philippines for the United States and
came back here the following year, 1929. Some nine years later, in 1938, he
again returned to his own country, and came back to the Philippines the
following year, 1939.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1äwphï1.ñët
Being an American citizen, Mr. Christensen was interned by the Japanese
Military Forces in the Philippines during World War II. Upon liberation, in
April 1945, he left for the United States but returned to the Philippines in
December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622,
as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-
Daney" and p. 473, t.s.n., July 21, 1953.)
In April, 1951, Edward E. Christensen returned once more to California shortly
after the making of his last will and testament (now in question herein) which he
executed at his lawyers' offices in Manila on March 5, 1951. He died at the St.
Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3)
In arriving at the conclusion that the domicile of the deceased is the Philippines, we are
persuaded by the fact that he was born in New York, migrated to California and resided
there for nine years, and since he came to the Philippines in 1913 he returned to California
very rarely and only for short visits (perhaps to relatives), and considering that he appears
never to have owned or acquired a home or properties in that state, which would indicate
that he would ultimately abandon the Philippines and make home in the State of
California.
Sec. 16. Residence is a term used with many shades of meaning from mere
temporary presence to the most permanent abode. Generally, however, it is used
to denote something more than mere physical presence. (Goodrich on Conflict
of Laws, p. 29)
As to his citizenship, however, We find that the citizenship that he acquired in California
when he resided in Sacramento, California from 1904 to 1913, was never lost by his stay
in the Philippines, for the latter was a territory of the United States (not a state) until 1946
and the deceased appears to have considered himself as a citizen of California by the fact
that when he executed his will in 1951 he declared that he was a citizen of that State; so
that he appears never to have intended to abandon his California citizenship by acquiring
another. This conclusion is in accordance with the following principle expounded by
Goodrich in his Conflict of Laws.
The terms "'residence" and "domicile" might well be taken to mean the same
thing, a place of permanent abode. But domicile, as has been shown, has
acquired a technical meaning. Thus one may be domiciled in a place where he
has never been. And he may reside in a place where he has no domicile. The
man with two homes, between which he divides his time, certainly resides in
each one, while living in it. But if he went on business which would require his
presence for several weeks or months, he might properly be said to have
sufficient connection with the place to be called a resident. It is clear, however,
that, if he treated his settlement as continuing only for the particular business in
hand, not giving up his former "home," he could not be a domiciled New
Yorker. Acquisition of a domicile of choice requires the exercise of intention as
well as physical presence. "Residence simply requires bodily presence of an
inhabitant in a given place, while domicile requires bodily presence in that place
and also an intention to make it one's domicile." Residence, however, is a term
used with many shades of meaning, from the merest temporary presence to the
most permanent abode, and it is not safe to insist that any one use et the only
proper one. (Goodrich, p. 29)
The law that governs the validity of his testamentary dispositions is defined in Article 16
of the Civil Code of the Philippines, which is as follows:
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 be the nature of
the property and regardless of the country where said property may be found.
The application of this article in the case at bar requires the determination of the meaning
of the term "national law" is used therein.
There is no single American law governing the validity of testamentary provisions in the
United States, each state of the Union having its own private law applicable to its citizens
only and in force only within the state. The "national law" indicated in Article 16 of the
Civil Code above quoted can not, therefore, possibly mean or apply to any general
American law. So it can refer to no other than the private law of the State of California.
The next question is: What is the law in California governing the disposition of personal
property? The decision of the court below, sustains the contention of the executor-appellee
52
that under the California Probate Code, a testator may dispose of his property by will in
the form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d
877, 176 P. 2d 952. But appellant invokes the provisions of Article 946 of the Civil Code
of California, which is as follows:
If there is no law to the contrary, in the place where personal property is
situated, it is deemed to follow the person of its owner, and is governed by the
law of his domicile.
The existence of this provision is alleged in appellant's opposition and is not denied. We
have checked it in the California Civil Code and it is there. Appellee, on the other hand,
relies on the case cited in the decision and testified to by a witness. (Only the case of
Kaufman is correctly cited.) It is argued on executor's behalf that as the deceased
Christensen was a citizen of the State of California, the internal law thereof, which is that
given in the abovecited case, should govern the determination of the validity of the
testamentary provisions of Christensen's will, such law being in force in the State of
California of which Christensen was a citizen. Appellant, on the other hand, insists that
Article 946 should be applicable, and in accordance therewith and following the doctrine
of the renvoi, the question of the validity of the testamentary provision in question should
be referred back to the law of the decedent's domicile, which is the Philippines.
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws rule of the
forum refers a jural matter to a foreign law for decision, is the reference to the
purely internal rules of law of the foreign system; i.e., to the totality of the
foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to accept the
renvoi, that is, applied the Conflict of Laws rule of Illinois which referred the
matter back to Michigan law. But once having determined the the Conflict of
Laws principle is the rule looked to, it is difficult to see why the reference back
should not have been to Michigan Conflict of Laws. This would have resulted in
the "endless chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the internal
law of Illinois, thus rejecting the renvoi or the reference back. Yet there seems
no compelling logical reason why the original reference should be the internal
law rather than to the Conflict of Laws rule. It is true that such a solution avoids
going on a merry-go-round, but those who have accepted the renvoi theory
avoid this inextricabilis circulas by getting off at the second reference and at
that point applying internal law. Perhaps the opponents of the renvoi are a bit
more consistent for they look always to internal law as the rule of reference.
Strangely enough, both the advocates for and the objectors to the renvoi plead
that greater uniformity will result from adoption of their respective views. And
still more strange is the fact that the only way to achieve uniformity in this
choice-of-law problem is if in the dispute the two states whose laws form the
legal basis of the litigation disagree as to whether the renvoi should be accepted.
If both reject, or both accept the doctrine, the result of the litigation will vary
with the choice of the forum. In the case stated above, had the Michigan court
rejected the renvoi, judgment would have been against the woman; if the suit
had been brought in the Illinois courts, and they too rejected the renvoi,
judgment would be for the woman. The same result would happen, though the
courts would switch with respect to which would hold liability, if both courts
accepted the renvoi.
The Restatement accepts the renvoi theory in two instances: where the title to
land is in question, and where the validity of a decree of divorce is challenged.
In these cases the Conflict of Laws rule of the situs of the land, or the domicile
of the parties in the divorce case, is applied by the forum, but any further
reference goes only to the internal law. Thus, a person's title to land, recognized
by the situs, will be recognized by every court; and every divorce, valid by the
domicile of the parties, will be valid everywhere. (Goodrich, Conflict of Laws,
Sec. 7, pp. 13-14.)
X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving
movable property in Massachusetts, England, and France. The question arises as
to how this property is to be distributed among X's next of kin.
Assume (1) that this question arises in a Massachusetts court. There the rule of
the conflict of laws as to intestate succession to movables calls for an
application of the law of the deceased's last domicile. Since by hypothesis X's
last domicile was France, the natural thing for the Massachusetts court to do
would be to turn to French statute of distributions, or whatever corresponds
thereto in French law, and decree a distribution accordingly. An examination of
French law, however, would show that if a French court were called upon to
determine how this property should be distributed, it would refer the distribution
to the national law of the deceased, thus applying the Massachusetts statute of
distributions. So on the surface of things the Massachusetts court has open to it
alternative course of action: (a) either to apply the French law is to intestate
succession, or (b) to resolve itself into a French court and apply the
Massachusetts statute of distributions, on the assumption that this is what a
French court would do. If it accepts the so-called renvoi doctrine, it will follow
the latter course, thus applying its own law.
This is one type of renvoi. A jural matter is presented which the conflict-of-laws
rule of the forum refers to a foreign law, the conflict-of-laws rule of which, in
turn, refers the matter back again to the law of the forum. This is renvoi in the
narrower sense. The German term for this judicial process is 'Ruckverweisung.'"
(Harvard Law Review, Vol. 31, pp. 523-571.)
53
After a decision has been arrived at that a foreign law is to be resorted to as
governing a particular case, the further question may arise: Are the rules as to
the conflict of laws contained in such foreign law also to be resorted to? This is
a question which, while it has been considered by the courts in but a few
instances, has been the subject of frequent discussion by textwriters and
essayists; and the doctrine involved has been descriptively designated by them
as the "Renvoyer" to send back, or the "Ruchversweisung", or the
"Weiterverweisung", since an affirmative answer to the question postulated and
the operation of the adoption of the foreign law in toto would in many cases
result in returning the main controversy to be decided according to the law of the
forum. ... (16 C.J.S. 872.)
Another theory, known as the "doctrine of renvoi", has been advanced. The
theory of the doctrine of renvoi is that the court of the forum, in determining the
question before it, must take into account the whole law of the other jurisdiction,
but also its rules as to conflict of laws, and then apply the law to the actual
question which the rules of the other jurisdiction prescribe. This may be the law
of the forum. The doctrine of the renvoi has generally been repudiated by the
American authorities. (2 Am. Jur. 296)
The scope of the theory of renvoi has also been defined and the reasons for its application
in a country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27,
1917-1918, pp. 529-531. The pertinent parts of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the conflict of laws
are to be understood as incorporating not only the ordinary or internal law of the
foreign state or country, but its rules of the conflict of laws as well. According to
this theory 'the law of a country' means the whole of its law.
xxx xxx xxx
Von Bar presented his views at the meeting of the Institute of International Law,
at Neuchatel, in 1900, in the form of the following theses:
(1) Every court shall observe the law of its country as regards the application of
foreign laws.
(2) Provided that no express provision to the contrary exists, the court shall
respect:
(a) The provisions of a foreign law which disclaims the right to bind
its nationals abroad as regards their personal statute, and desires that
said personal statute shall be determined by the law of the domicile, or
even by the law of the place where the act in question occurred.
 (b) The decision of two or more foreign systems of law, provided it be
certain that one of them is necessarily competent, which agree in
attributing the determination of a question to the same system of law.
xxx xxx xxx
If, for example, the English law directs its judge to distribute the personal estate
of an Englishman who has died domiciled in Belgium in accordance with the
law of his domicile, he must first inquire whether the law of Belgium would
distribute personal property upon death in accordance with the law of domicile,
and if he finds that the Belgian law would make the distribution in accordance
with the law of nationality — that is the English law — he must accept this
reference back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws rule, while the
rule applied in In re Kaufman, Supra, its internal law. If the law on succession and the
conflict of laws rules of California are to be enforced jointly, each in its own intended and
appropriate sphere, the principle cited In re Kaufman should apply to citizens living in the
State, but Article 946 should apply to such of its citizens as are not domiciled in California
but in other jurisdictions. The rule laid down of resorting to the law of the domicile in the
determination of matters with foreign element involved is in accord with the general
principle of American law that the domiciliary law should govern in most matters or rights
which follow the person of the owner.
When a man dies leaving personal property in one or more states, and leaves a
will directing the manner of distribution of the property, the law of the state
where he was domiciled at the time of his death will be looked to in deciding
legal questions about the will, almost as completely as the law of situs is
consulted in questions about the devise of land. It is logical that, since the
domiciliary rules control devolution of the personal estate in case of intestate
succession, the same rules should determine the validity of an attempted
testamentary dispostion of the property. Here, also, it is not that the domiciliary
has effect beyond the borders of the domiciliary state. The rules of the domicile
are recognized as controlling by the Conflict of Laws rules at the situs property,
and the reason for the recognition as in the case of intestate succession, is the
general convenience of the doctrine. The New York court has said on the point:
'The general principle that a dispostiton of a personal property, valid at the
domicile of the owner, is valid anywhere, is one of the universal application. It
had its origin in that international comity which was one of the first fruits of
civilization, and it this age, when business intercourse and the process of
accumulating property take but little notice of boundary lines, the practical
wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict
of Laws, Sec. 164, pp. 442-443.)
54
Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as
the national law is the internal law of California. But as above explained the laws of
California have prescribed two sets of laws for its citizens, one for residents therein and
another for those domiciled in other jurisdictions. Reason demands that We should enforce
the California internal law prescribed for its citizens residing therein, and enforce the
conflict of laws rules for the citizens domiciled abroad. If we must enforce the law of
California as in comity we are bound to go, as so declared in Article 16 of our Civil Code,
then we must enforce the law of California in accordance with the express mandate thereof
and as above explained, i.e., apply the internal law for residents therein, and its conflict-of-
laws rule for those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the contrary in the
place where the property is situated" in Sec. 946 of the California Civil Code refers to
Article 16 of the Civil Code of the Philippines and that the law to the contrary in the
Philippines is the provision in said Article 16 that the national law of the deceased should
govern. This contention can not be sustained. As explained in the various authorities cited
above the national law mentioned in Article 16 of our Civil Code is the law on conflict of
laws in the California Civil Code, i.e., Article 946, which authorizes the reference or
return of the question to the law of the testator's domicile. The conflict of laws rule in
California, Article 946, Civil Code, precisely refers back the case, when a decedent is not
domiciled in California, to the law of his domicile, the Philippines in the case at bar. The
court of the domicile can not and should not refer the case back to California; such action
would leave the issue incapable of determination because the case will then be like a
football, tossed back and forth between the two states, between the country of which the
decedent was a citizen and the country of his domicile. The Philippine court must apply its
own law as directed in the conflict of laws rule of the state of the decedent, if the question
has to be decided, especially as the application of the internal law of California provides
no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil Code of the
Philippines, makes natural children legally acknowledged forced heirs of the parent
recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil.
105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil.
130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision
can not possibly apply in the case at bar, for two important reasons, i.e., the subject in each
case does not appear to be a citizen of a state in the United States but with domicile in the
Philippines, and it does not appear in each case that there exists in the state of which the
subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code.
We therefore find that as the domicile of the deceased Christensen, a citizen of California,
is the Philippines, the validity of the provisions of his will depriving his acknowledged
natural child, the appellant, should be governed by the Philippine Law, the domicile,
pursuant to Art. 946 of the Civil Code of California, not by the internal law of California..
WHEREFORE, the decision appealed from is hereby reversed and the case returned to the
lower court with instructions that the partition be made as the Philippine law on succession
provides. Judgment reversed, with costs against appellees.

55
Renvoi
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.
BENGZON, J.P., J.:
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
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
56
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
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 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.

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 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.

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