EDI-Staffbuilders International, Inc.

vs National Labor Relations Commission

on February 7, 2013

537 SCRA 409 Conflict of Laws Private International Law Proof of Foreign Law
In 1993, EDI-Staffbuilders, Inc. (EDI), upon request of Omar Ahmed Ali Bin Bechr Est. (OAB), a company in Saudi Arabia, sent to OAB resumes from which OAB can choose a computer specialist. Eleazar Gran was selected. It was agreed that his monthly salary shall be $850.00. But five months into his service in Saudi Arabia, Gran received a termination letter and right there and then was removed from his post. The termination letter states that he was incompetent because he does not know the ACAD system which is required in his line of work; that he failed to enrich his knowledge during his 5 month stay to prove his competence; that he is disobedient because he failed to submit the required daily reports to OAB. Gran then signed a quitclaim whereby he declared that he is releasing OAB from any liability in exchange of 2,948.00 Riyal. When Gran returned, he filed a labor case for illegal dismissal against EDI and OAB. EDI in its defense averred that the dismissal is valid because when Gran and OAB signed the employment contract, both parties agreed that Saudi labor laws shall govern all matters relating to the termination of Grans employment; that under Saudi labor laws, Grans termination due to incompetence and insubordination is valid; that Grans insubordination and incompetence is outlined in the termination letter Gran received. The labor arbiter dismissed the labor case but on appeal, the National Labor Relations Commission (NLRC) reversed the decision of the arbiter. The Court of Appeals likewise affirmed the NLRC. ISSUE: Whether or not the Saudi labor laws should be applied. HELD: No. The specific Saudi labor laws were not proven in court. EDI did not present proof as to the existence and the specific provisions of such foreign law. Hence, processual presumption applies and Philippine labor laws shall be used.

Under our laws, an employee like Gran shall only be terminated upon just cause. The allegations against him, at worst, shall only merit a suspension not a dismissal. His incompetence is not proven because prior to being sent to Saudi Arabia, he underwent the required trade test to prove his competence. The presumption therefore is that he is competent and that it is upon OAB and EDI to prove otherwise. No proof of his incompetence was ever adduced in court. His alleged insubordination is likewise not proven. It was not proven that the submission of daily track records is part of his job as a computer specialist. There was also a lack of due process. Under our laws, Gran is entitled to the two notice rule whereby prior to termination he should receive two notices. In the case at bar, he only received one and he was immediately terminated on the same day he received the notice. Lastly, the quitclaim may not also release OAB from liability. Philippine laws is again applied here sans proof of Saudi laws. Under Philippine Laws, a quitclaim is generally frowned upon and are strictly examined. In this case, based on the circumstances, Gran at that time has no option but to sign the quitclaim. The quitclaim is also void because his separation pay was merely 2,948 Riyal which is lower than the $850.00 monthly salary (3,190 Riyal).
Eriks PTE., Ltd. v. Court of Appeals [February 6, 1997] Effect of Doing Business in Philippines without a License: Barred From Access to Courts Facts: 1. Petitioner Eriks Pte., Ltd. is a nonresident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for industrial purposes, and PVC pipes and fittings for industrial uses. 2. Private respondent Delfin Enriquez, Jr., doing business under the name and style of Delrene EB Controls Center and/or EB Karmine Commercial, ordered and received from petitioner various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. 3. The transfer of goods were perfected in Singapore for private respondents account with a 90-day credit term. Subsequently, demands were made by petitioner upon private respondent to settle his account, but the latter failed/refused to do so. 4. Petitioner corporation filed with the RTC a complaint for the recovery of US$41,939.63. Private respondent responded with a Motion to Dismiss, contending that petitioner corporation had no legal capacity to sue. The trial court dismissed the action on the ground that petitioner is a foreign corporation doing business in the Philippines without a license.

5. On appeal, the respondent court affirmed the RTC as it deemed the series of transactions between petitioner corporation and private respondent not to be an isolated or casual transaction. Thus, respondent court found petitioner to be without legal capacity to sue. Issue: Is a foreign corporation which sold its products 16 times over a 5-month period to the same Filipino buyer without first obtaining a license to do business in the Philippines, prohibited from maintaining an action to collect payment therefor in Philippine courts? In other words, is such foreign corporation doing business in the Philippines without the required license and thus barred access to our court system? Held: 1.The Corporation Code provides: Section 133. Doing business without a license No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws. The aforementioned provision prohibits, not merely absence of the prescribed license, but it also bars a foreign corporation doing business in the Philippines without such license access to our courts. A foreign corporation without such license is not ipso facto incapacitated from bringing an action. A license is necessary only if it is transacting or doing business in the country. 2. The test to determine whether a foreign company is doing business in the Philippines, thus: x x x The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or whether it has substantially retired from it and turned it over to another. The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of, the purpose and object of its organization (Mentholaturn Co., Inc. v. Mangaliman). 3. The accepted rule in jurisprudence is that each case must be judged in the light of its environmental circumstances. It should be kept in mind that the purpose of the law is to subject the foreign corporation doing business in the Philippines to the jurisdiction of our courts. It is not to prevent the foreign corporation from performing single or isolated acts, but to bar it from acquiring a domicile for the purpose of business without first taking the steps necessary to render it amenable to suits in the local courts. 4. Thus, we hold that the series of transactions in question could not have been isolated or casual transactions. What is determinative of doing business is not really the number or the quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. The number and quantity are merely evidence of

such intention. The phrase isolated transaction has a definite and fixed meaning, i.e. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. Whether a foreign corporation is doing business does not necessarily depend upon the frequency of its transactions, but more upon the nature and character of the transactions. 5. Accordingly, petitioner must be held to be incapacitated to maintain the action a quo against private respondent. By this judgment, we are not foreclosing petitioners right to collect payment. Res judicata does not set in a case dismissed for lack of capacity to sue, because there has been no determination on the merits. Moreover, this Court has ruled that subsequent acquisition of the license will cure the lack of capacity at the time of the execution of the contract. By securing a license, a foreign entity would be giving assurance that it will abide by the decisions of our courts, even if adverse to it.

American Airlines vs Court of Appeals

6112010

1 Vote

327 scra 482

Contract of Carriage

Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets. In Geneva, the petitioner decided to forego his trip to Copenhagen, and go straight to New York, private respondent exchanged the unused portion of the conjunction ticket from International Air Transport Association clearing house in Geneva. Private respondent filed an action for damages before the RTC of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the petitioners security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the passengers have boarded.

ISSUE: Whether or not the Philippine courts have jurisdiction over the action for damages.

HELD: The Supreme Court ruled that the case was properly filed in the Philippines. It held that the petitioner acted as an agent of the Singapore Airlines under IATA rules and as an agent of the principal carrier the petitioner may be held liable under contract of carriage in Manila.